The Spread of 'Free Trade'

Oxfam International has a great article on ‘free trade’ entitled ‘Signing Away The Future: How Trade and Investment Agreements Between Rich and Poor Countries Undermine Development. Here is but a sampling of the summary but I encourage you to read the whole piece.

"Rich countries are using these bilateral and regional ‘free trade agreements’ (FTAs) and investment treaties to win concessions that they are unable to obtain at the World Trade Organization (WTO), where developing countries can band together and hold out for more favourable rules. The USA has called its approach ‘competitive liberalization’, and the EU declared its intention to use bilateral deals as ‘stepping stones to future multilateral agreements’. The EU argues that this new generation of bilateral and regional agreements is vital in order for developing countries in Africa, the Caribbean and the Pacific to maintain their access to European markets in a form that is compatible with WTO rules. It has also repeatedly told poor countries that it has no commercial ‘offensive interests’ in the negotiations and that there will be long periods for implementation. Yet its far-reaching proposals and aggressive approach appear to contradict these statements. The quiet advance of trade and investment agreements between rich and poor countries threatens to deny developing countries a favourable foothold in the global economy.

Powerful countries, led by the USA and the European Union (EU), are pursuing regional and bilateral free trade agreements with unprecedented vigour. This is happening without the fanfare of global summitry and international press coverage. Around 25 developing countries have now signed free trade agreements with developed countries, and more than 100 are engaged in negotiations. An average of two bilateral investment treaties are signed every week. Virtually no country, however poor, has been left out."

Read the whole article here.

America's Globalized Economy

I will preface this post with a quote by Ross Perot back in 1993 during a debate with Al Gore, when he stated that America was "in a race to the bottom". Looking back, it is remarkable just how true his statement has become.

The pundits today talk about the economy in mostly glowing terms. The economy is strong, inflation is low, housing will bounce back in some future date which is always revised, unemployment is low, etc. Never reality, just the rosy projections that have no base in the economic world we actually live in.

The economy of the United States is, in fact, becoming more and more globalized each year. This, in turn, leads to the globalization of assets and wealth. As the value of labor decreases due to competition with cheap foreign labor, the assets held by American workers falls in direct relation to their declining wage. Let's study this for a moment.

Greg, a manufacturing employee had a job paying $55.000 but his company decided to outsource and he was laid off. He was then forced to take a similar job but now makes only about $25,000 a year. What is he to do? How can he afford to pay for the assets that he has, such as his home or debt that he has incurred? The truth is, he can't do it. No amount of cheap foreign goods, low paying jobs or the much vaunted tax cuts for the rich will restore his former standard of living.

So what is really happening? The American worker is seeing a decline in their standard of living and this will not be ending in the near future. In time, their descending worth, both of wages and assets, will meet with the rising worth of the global labor force. What a glorious day when the American worker can proudly stand by his Chinese counterpart and discuss how globalization had somehow managed to make them both equally poor while their respective companies have doubled in size and wealth.

Adding to these woes deregulation and privatization have resulted in the rising costs of good and services even while the value of wages and assets decline. It has not helped that the Treasury Department has become addicted to printing money primarily to finance the Iraq adventure (occupation). This little adventure will soon reach the unbelievable 1 trillion dollar mark! And this from the President that just today talked about being fiscally responsible with the "people's money". Go figure...

The standard of living of many Americans has experienced the steepest decline in over a half century. Foreclosures, bankruptcies and personal debt are at all time highs. Meanwhile, wages and assets (i.e. property values) continue their downward spiral.

Ask yourself, was globalization good for you? How have you benefited? What about 'free trade' and all of those benefits? Does the American trade deficit even matter to you? Do you care? It can be seen that after years of this so-called 'globalization', which is nothing more than a redistribution (on a global scale) of wealth, the few at the top are cashing in while the rest of us are left picking up the ever-decreasing crumbs.