The high cost of free trade

Shopping at the expense of others

Courtesy Tony Khoury

 

By Justina Wasicek

Everyone likes a bargain, but if we stop to consider why manufacturers and retailers are able to sell so many consumer goods so cheaply, we would realize that somewhere along the line they must have significantly reduced—or totally avoided— the true costs of production and distribution.

In this era of globalization, the true cost of these supposed bargains is largely invisible to American consumers. That’s because when goods are manufactured overseas, we don’t see the pollution emitted from under-regulated factories; the unsafe and inhumane working conditions that “cheap” foreign laborers often endure; or the health and environmental consequences of transporting goods long distances. Nor do we always connect the dots between these imports and the loss of local jobs. And although these issues have repeatedly made headlines, we still face danger from adulterated medicines and toxic toys that are imported without inspection. If the true costs of cheap goods were evident to American consumers, we might think twice about our purchases.

The primary reason these costs are not taken into account is that the authors of our current free trade agreements did not adequately explore the environmental and human consequences of moving goods across borders. The result: free trade rules that harm workers, consumers, and the environment.

Since 1993, a number of free trade agreements have been signed. First there was NAFTA (among the U.S.,Mexico, and Canada), which was followed by CAFTA (among the U.S. and six Central American countries), and then a flurry of bilateral agreements were signed, most recently the U.S. – Peru Free Trade Agreement. Currently, a U.S. – Colombia trade agreement is being considered by Congress.

Unfortunately, all of these free trade agreements have several negative side-effects.

Free trade agreements allow outside interests to override domestic environmental policies.

After the World Trade Organization (WTO) was established in 1995 to settle trade disputes between member countries, corporations and foreign governments were able to sue member countries when their laws and regulations violated a WTO agreement. For example, in 1991 the U.S. banned Mexican tuna because it failed to meet U.S. dolphin-safety laws. After the WTO was established, it found that the U.S. protections were discriminatory, because under WTO rules, it is illegal to discriminate against a product because of how that product is produced—or in this case, caught. Under the WTO, all tuna products are considered equivalent, no matter how many dolphins are killed in the process. This WTO ruling forced the U.S. to resume the importation of tuna that was not dolphin-safe, despite American laws to the contrary.

Similarly, in 1995, when the U.S. established cleaner standards for gasoline under the Clean Air Act, Venezuela successfully charged discrimination. The WTO ruling forced the EPA to change its regulations so that Venezuela’s dirtier gasoline could be imported. This ruling had a direct and detrimental effect on America’s air quality and the health of our citizens.

These provisions work against environmental protection in other countries as well. In one case, a U.S. corporation successfully sued Mexico when that country denied a permit for the expansion of a hazardous waste transfer station. In the end, the corporation was awarded $15.6 million by a NAFTA trade tribunal, further reinforcing the idea that trade rules and investor rights supersede environmental protection under the WTO.

Rulings of this sort are also expected to hamper our country’s efforts to move forward on climate change. The Sierra Club’s Responsible Trade Campaign notes that carbon intensive industries will be tempted to relocate to countries with less stringent climate protection measures. The campaign encourages the creation of a new, green trade model that would allow “exceptions for climate protection measures that might otherwise violate trade rules.”

The US has lost manufacturing jobs, and free trade agreements have not provided sufficiently for workers’ safety or their rights to a fair wage. 

Given that corporations can avoid costly U.S. environmental, health, and safety standards by moving their operations abroad, it is not surprising that Pennsylvania has lost more than 207,400 manufacturing jobs to overseas workers since 2000. In addition, the Pennsylvania Fair Trade Coalition estimates that over a million other jobs in our state could be moved offshore.

When corporations “offshore” jobs, not only are American jobs lost, but foreign workers often suffer as well. In China, where many American manufacturing jobs have been transferred, workers toil 10 to 16 hour days, often seven days a week. The New York Times reported that many of these workers are underage, work in dangerous conditions, and are frequently paid 60 % below China’s own minimum wage standards. In the quest for ever-lower manufacturing costs, desperate workers are forced to work longer hours for less and less. Even more egregious is the situation in Colombia, where the advocacy group Public Citizen has reported the murder of 434 unionists since 2002, many of whom were highly visible union leaders. Despite this, the Bush administration continues to push for the Colombian free trade agreement that is currently before Congress.

We need to ensure that the countries with whom we trade can afford to protect their workers. Decent worker conditions and reasonable minimum wages should be incorporated into any free trade agreements. “Fair” trade, rather than just “free” trade, should be our goal.

Pennsylvania is polluted by the transportation of imported goods.
Part of the real price Pennsylvanians pay for cheap goods is the effect they have on our air quality. As tractor trailers transport imported goods to and through our state, their highly polluting diesel exhaust contaminates our air. Since Pittsburgh, Philadelphia and central Pennsylvania are hubs for distributing goods around the Eastern seaboard, it’s not surprising these areas rank within the top 25 most-polluted areas in the country for short-term and long-term particulate matter pollution.

What you can do

Consume less, and factor the real price of a product into your buying decisions.
Buy local. Locally produced goods do not have to be transported and distributed over long distances, saving on fuel consumption and transportation emissions. Buy “fair trade” products that protect workers and the environment. You can also support changes to trade agreements so that trade rules cannot be used to override environmental and climate protection measures. Learn about bills like the “TRADE” bill to review and renegotiate trade agreements. This was introduced in Congress on June 4, 2008 as S.3083 co-sponsored by PA Sen. Casey, and is also  in H.R. 6180 co-sponsored by  PA Congressmen Holden and Murtha.

For more information, check out the Sierra Club’s responsible trade campaign at www.sierraclub.org/trade/climate. You can also watch the highly entertaining and informative Story of Stuff at www.storyofstuff.com.

Justina Wasicek chairs the Chapter’s international trade committee and serves as co-chair of the Chapter's energy committe.

Published November 2007