Time to Take a Second Look at Our “Free Trade” Agreements

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By Mark Weisbrot

“Battle in Seattle” opens September 19-26 in movie theaters across the country, a rare combination of high drama and history-making events as they actually happened when thousands of protesters shut down the World Trade Organization in Seattle nearly nine years ago. It has an all-star cast including Oscar-winning beauty Charlize Theron, Woody Harrelson, Michelle Rodriguez, Ray Liotta, and Andre Benjamin (of Outkast hip-hop fame). Perhaps most unusual for a feature film, it gives the protesters credit for what they accomplished: they changed the debate over what has been deceptively marketed as “free trade.” They were beaten and jailed, choked with tear gas and shot with rubber bullets, but they succeeded in raising awareness about what these organizations and international agreements really do.

Prior to the Seattle protests in 1999, almost nobody knew that the World Trade Organization was not so much about “free trade” as about creating new rights and privileges for corporations at the expense of the environment, public health, and the public interest in general. The WTO and NAFTA’s provisions on “intellectual property,” for example, are the exact opposite of free trade, according to standard economic analysis. They increase the cost of medicines by extending and protecting the patent monopolies of big pharmaceutical companies and stifling international free trade in generic medicines, some of which are desperately needed in developing countries.

The debate has widened and now the Democratic presidential nominee, Senator Barack Obama, has proposed to renegotiate NAFTA. And why not? This agreement was approved in 1993, before anyone knew what was in it. Among other things, it contained “sleeper” provisions that enabled corporations, for the first time, to sue governments directly for environmental regulation that affects their bottom line.

We also have nearly 15 years of experience with NAFTA and it clearly did not deliver on most of its promises. It was sold as a job creator, but the United States has actually lost jobs, especially in manufacturing, as our trade deficit with Mexico has grown. Even more importantly, NAFTA has helped perpetuate the downward pressure on wages that have made the United States a much more unequal society over the last three decades. From 1973-2007, wages in the United States barely grew at all, as compared to a 74 percent increase from 1948-1973.

This change in the economy is partly the result of subjecting the majority of the American labor force – the more than 70 percent that do not have a college degree – to increased international competition, while maintaining protectionism for highly paid professionals such as lawyers, doctors, and upper management. It is also what standard economic theory would predict. Yet almost every newspaper editorial board in the country has someone who took an Econ 101 course and thinks they learned that increasing trade must be good because it makes “countries” better off. The late A.M. Rosenthal, a long-time New York Times editor and columnist, summed it up while NAFTA was being debated in Congress: “how they would howl, those journalistic and academic supporters of NAFTA who have shown so little care, compassion or understanding about the fears of working people who might lose their jobs, how they would howl if their own jobs were in danger.”

Unfortunately NAFTA does not appear to have helped Mexico either, where growth since it was implemented in 1994 has been sluggish, wages stagnant, and hundreds of thousands of families displaced from farming as they were forced to compete with U.S. agriculture.

NAFTA did, however, increase trade. But trade is not an end in itself; the goal is to improve people’s living standards.

So by all means, let’s renegotiate NAFTA – and the WTO agreement too. We’re likely to end up with better agreements now that people know something about what is being negotiated.