change lives with everything you buy
Why Free Trade is Not Fair
Check out the labels on your clothes. I bet you can only find a few pieces made in the USA, or so the label says. Instead, you will find clothes manufactured in China, Cambodia, Bangladesh, and other non-Western countries. Now look at other products in your house. How many are made in China? The answer: most of them.
Even many candy bars are now manufactured in Mexico. Hershey, the largest candy maker in North America, closed its Oakdale, CA plant the beginning of this year and moved production to Monterrey, Mexico. Over the next two years Hershey plans to eliminate 1,500 jobs and one-third of production lines, including closing plants in Reading, PA and Smith Falls, Ontario, Canada. Guess where Hershey will open new plants to replace the ones it closes in Reading and Canada?
How did America come to be a nation that outsources almost of all of its manufacturing to other countries? A trip down memory lane is required to answer that question.
Representatives from 44 countries met in Bretton Woods, NH a year before World War II ended. Out of that historic meeting the World Bank, the International Monetary Foundation (IMF), and the General Agreement on Tariffs and Trade (GATT) were established. GATT completed eight rounds of multilateral trade negotiations, and the last one, the Uruguay Round, established the World Trade Organization in 1993.
The purpose of the WTO is to open markets for transnational companies, which weakens local markets. According to Citizen.org, “The WTO is one of the main mechanisms of corporate globalization.” The rules and procedures of the WTO are “undemocratic, un-transparent and non-accountable and have operated to marginalize the majority of the world's people.”
WTO rules may be forced through the use of sanctions. “The WTO's authority even eclipses national governments,” the non-profit organization Global Exchange states.
North American Free Trade Agreement
A few years ago a wheelchair company based in Fresno, CA announced it will move part of its manufacturing to a factory in Mexico. Since the passage of the North American Free Trade Agreement (NAFTA) Mexico has become one of the leading producers of medical devices. Signed by the United States, Canada, and Mexico in 1992, NAFTA took effect in 1994, immediately lifting tariffs on the majority of goods produced by the three participating nations.
NAFTA was touted as a way to lift Mexico out of poverty, but it has actually increased poverty. The Economic Policy Institute’s 2001 report stated, “Mexican wages have decreased 27% since NAFTA, while hourly income from labor is down 40%.”
The 2001 report by the Economic Policy Institute also found that when Mexico began NAFTA negotiations it had “noncompetitive production costs… due to higher prices for inputs such as diesel and electricity, higher financial costs, and higher marketing costs (due to deficient infrastructure in highways and warehouse storage…among other factors).”
Factories called maquiladoras were established along the U.S.-Mexican border in order to create a “border zone” where protections are not in place for labor unions, health, safety, and environmental laws. By definition a maquiladora is a foreign-owned assembly plant. American companies move their factory production to Mexico to save money. In other words they can pay a Mexican worker far less than an American worker.
A startling statistic comes from the Mexican government. Between 1993 and 2000 the disparity between Mexican and American manufacturing wages increased from $9.6 to $12.1 per hour.
Reports by the Organization for Economic Co-operation and Development (OECD) state that wages in Mexico have dropped by 10% since 1995 while labor production increased by 45%. Work hours have increased from eight to twelve hours a day during the same time period. The number of people working more than 48 hours per week has increased since 1988 from 2.3 million to 9.3 million.
Economists at the National University in Mexico City wrote a study that cited 13.3 million workers in 2000 earned less than around $3.93 a day. The study also mentions that labor production’s part of the Gross Domestic Product has decreased from 34.16% to 30.66%.
Central American Free Trade Agreement
The Central American Free Trade Agreement (CAFTA), which includes the U.S., Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras and Nicaragua, was approved by the Congress summer 2005, and signed by President Bush. All participating nations approved the trade agreement.
CAFTA does not contain worker or environmental protections. It ignores the standards set by the International Labor Organization, and requires only that participating countries enforce existing laws. In Central America, laws for workers are far from adequate. The U.S. Trade Representative’s (USTR) CAFTA Policy Brief claims that, “The enforcement of labor laws in the region needs more attention and resources.” (p.2)
CAFTA is a stepping stone to FTAA, Free Trade Americas Agreement, which would include the United States and every Latin American and Caribbean country, except Cuba, totaling 34 countries.
Central America and the Dominican Republic make up the second largest U.S. export market behind Mexico, and is the 10th largest U.S. market worldwide. There is an economic chasm between the U.S. and Central America the size of Texas. The combined Gross Domestic Product (GDP) of Central America is equal to less than 0.5 percent of the U.S. GDP.
Central American farmers are concerned that they will not be able to compete with U.S. exports. Two/thirds of the Central American population rely on agriculture for employment.
The Pew Hispanic Center estimates twenty-two percent of undocumented workers are from Central America. If NAFTA is any indication, the implementation of CAFTA will increase the number of immigrants from Central American countries, who will end up being exploited as cheap labor for both corporations and farmers.
Why Chinese Goods Flood the U.S.
President Bill Clinton signed into law a bill called the Permanent Normal Trade Relations Act in October 2000 which granted permanent most favored nation status to China. The act ended 20 years of annually reviewing trade ties with China. The legislation passed in the Senate 83 in favor to 15 opposed, and in the House 237 to 197.
Republican presidential candidate John McCain voted for the Senate legislation, as did Democratic Vice-Presidential candidate Joe Biden. Democratic presidential candidate Barack Obama was not a congressional member at the time. Since taking congressional office, Obama voted for out of eleven times for free trade agreements.
Clinton touted the act as a "major step toward China's entry into the WTO and a major step toward answering some of the central challenges of this new century." When China joined the WTO on December 11, 2001, Clinton said, "It will open its markets to American products...and our companies will be far more able to sell goods without moving factories or investments there."
Clinton's optimism proved baseless. Last year's trade deficit with China was $256,206.7 million. This year's trade deficit as of last July was $142,339.7 million.
According to Ned Barker, an associate producer of the documentary Is Walmart Good for America, the Chinese market has been good for "large U.S. multinantionals like Boeing, Caterpillar, and Cargill," but a "tougher market to crack for smaller and mid-sized American companies."
Yvonne Smith, a communications director for the Port of Long Beach, the busiest U.S. port, said that the U.S. is importing $36 billion annually from China, and only exporting $3 billion. "We export cotton, we import clothing," Smith reports. "We export hides, we bring in shoes. We export scrap metal. We bring back machinery. We're exporting waste paper, we bring back cardboard boxes with products inside them," Smith noted.
Even many candy bars are now manufactured in Mexico. Hershey, the largest candy maker in North America, closed its Oakdale, CA plant the beginning of this year and moved production to Monterrey, Mexico. Over the next two years Hershey plans to eliminate 1,500 jobs and one-third of production lines, including closing plants in Reading, PA and Smith Falls, Ontario, Canada. Guess where Hershey will open new plants to replace the ones it closes in Reading and Canada?
How did America come to be a nation that outsources almost of all of its manufacturing to other countries? A trip down memory lane is required to answer that question.
Representatives from 44 countries met in Bretton Woods, NH a year before World War II ended. Out of that historic meeting the World Bank, the International Monetary Foundation (IMF), and the General Agreement on Tariffs and Trade (GATT) were established. GATT completed eight rounds of multilateral trade negotiations, and the last one, the Uruguay Round, established the World Trade Organization in 1993.
The purpose of the WTO is to open markets for transnational companies, which weakens local markets. According to Citizen.org, “The WTO is one of the main mechanisms of corporate globalization.” The rules and procedures of the WTO are “undemocratic, un-transparent and non-accountable and have operated to marginalize the majority of the world's people.”
WTO rules may be forced through the use of sanctions. “The WTO's authority even eclipses national governments,” the non-profit organization Global Exchange states.
North American Free Trade Agreement
A few years ago a wheelchair company based in Fresno, CA announced it will move part of its manufacturing to a factory in Mexico. Since the passage of the North American Free Trade Agreement (NAFTA) Mexico has become one of the leading producers of medical devices. Signed by the United States, Canada, and Mexico in 1992, NAFTA took effect in 1994, immediately lifting tariffs on the majority of goods produced by the three participating nations.
NAFTA was touted as a way to lift Mexico out of poverty, but it has actually increased poverty. The Economic Policy Institute’s 2001 report stated, “Mexican wages have decreased 27% since NAFTA, while hourly income from labor is down 40%.”
The 2001 report by the Economic Policy Institute also found that when Mexico began NAFTA negotiations it had “noncompetitive production costs… due to higher prices for inputs such as diesel and electricity, higher financial costs, and higher marketing costs (due to deficient infrastructure in highways and warehouse storage…among other factors).”
Factories called maquiladoras were established along the U.S.-Mexican border in order to create a “border zone” where protections are not in place for labor unions, health, safety, and environmental laws. By definition a maquiladora is a foreign-owned assembly plant. American companies move their factory production to Mexico to save money. In other words they can pay a Mexican worker far less than an American worker.
A startling statistic comes from the Mexican government. Between 1993 and 2000 the disparity between Mexican and American manufacturing wages increased from $9.6 to $12.1 per hour.
Reports by the Organization for Economic Co-operation and Development (OECD) state that wages in Mexico have dropped by 10% since 1995 while labor production increased by 45%. Work hours have increased from eight to twelve hours a day during the same time period. The number of people working more than 48 hours per week has increased since 1988 from 2.3 million to 9.3 million.
Economists at the National University in Mexico City wrote a study that cited 13.3 million workers in 2000 earned less than around $3.93 a day. The study also mentions that labor production’s part of the Gross Domestic Product has decreased from 34.16% to 30.66%.
Central American Free Trade Agreement
The Central American Free Trade Agreement (CAFTA), which includes the U.S., Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras and Nicaragua, was approved by the Congress summer 2005, and signed by President Bush. All participating nations approved the trade agreement.
CAFTA does not contain worker or environmental protections. It ignores the standards set by the International Labor Organization, and requires only that participating countries enforce existing laws. In Central America, laws for workers are far from adequate. The U.S. Trade Representative’s (USTR) CAFTA Policy Brief claims that, “The enforcement of labor laws in the region needs more attention and resources.” (p.2)
CAFTA is a stepping stone to FTAA, Free Trade Americas Agreement, which would include the United States and every Latin American and Caribbean country, except Cuba, totaling 34 countries.
Central America and the Dominican Republic make up the second largest U.S. export market behind Mexico, and is the 10th largest U.S. market worldwide. There is an economic chasm between the U.S. and Central America the size of Texas. The combined Gross Domestic Product (GDP) of Central America is equal to less than 0.5 percent of the U.S. GDP.
Central American farmers are concerned that they will not be able to compete with U.S. exports. Two/thirds of the Central American population rely on agriculture for employment.
The Pew Hispanic Center estimates twenty-two percent of undocumented workers are from Central America. If NAFTA is any indication, the implementation of CAFTA will increase the number of immigrants from Central American countries, who will end up being exploited as cheap labor for both corporations and farmers.
Why Chinese Goods Flood the U.S.
President Bill Clinton signed into law a bill called the Permanent Normal Trade Relations Act in October 2000 which granted permanent most favored nation status to China. The act ended 20 years of annually reviewing trade ties with China. The legislation passed in the Senate 83 in favor to 15 opposed, and in the House 237 to 197.
Republican presidential candidate John McCain voted for the Senate legislation, as did Democratic Vice-Presidential candidate Joe Biden. Democratic presidential candidate Barack Obama was not a congressional member at the time. Since taking congressional office, Obama voted for out of eleven times for free trade agreements.
Clinton touted the act as a "major step toward China's entry into the WTO and a major step toward answering some of the central challenges of this new century." When China joined the WTO on December 11, 2001, Clinton said, "It will open its markets to American products...and our companies will be far more able to sell goods without moving factories or investments there."
Clinton's optimism proved baseless. Last year's trade deficit with China was $256,206.7 million. This year's trade deficit as of last July was $142,339.7 million.
According to Ned Barker, an associate producer of the documentary Is Walmart Good for America, the Chinese market has been good for "large U.S. multinantionals like Boeing, Caterpillar, and Cargill," but a "tougher market to crack for smaller and mid-sized American companies."
Yvonne Smith, a communications director for the Port of Long Beach, the busiest U.S. port, said that the U.S. is importing $36 billion annually from China, and only exporting $3 billion. "We export cotton, we import clothing," Smith reports. "We export hides, we bring in shoes. We export scrap metal. We bring back machinery. We're exporting waste paper, we bring back cardboard boxes with products inside them," Smith noted.
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