Back to the Future ! Why the Term Free Trade is Pure Corporate Propaganda.

CK Patton's Class War Chronicles

Part 2 in a series on US Trade Negotiations and the TPP

"The problem is....we have corporate lobbyists often times involved in negotiating these trade agreements, but the AFL-CIO hasn’t been involved, ordinary working people haven’t been involved."
Presidential candidate Barack Obama, AFL-CIO Presidential Forum August 7, 2007


Ahh, free trade....that neutral, harmonious-sounding phrase that appears to describe the benign process of removing barriers (tariffs) between countries to enable the free exchange of goods and services, for the benefit of all citizens.

It's rhetoric used by different U.S. Presidents, with each and every new trade agreement, centered around vague promises of economic prosperity. A way to cure our nation's economic ills, while "modernizing" and promoting democracy in the countries we trade with.

Who can forget President Bill Clinton describing NAFTA as he signed the final "side agreements" before submitting the package to Congress :

NAFTA means jobs. American jobs, and good-paying American jobs. I believe that NAFTA will create a million jobs in the first five years of its impact. And I believe that that is many more jobs than will be lost

The NAFTA cynics - organized labor and a large percentage of alarmed US workers  - were quickly dubbed free trade "cynics," selfish Americans labeled as  "special interest groups " when they voiced concerns over their economic future. In the pre-NAFTA build-up, we were all meant to be swayed by Presidential economic pseudo-logic.

President Clinton worked eagerly - around the clock - to help pass what then seemed so damaging to workers, choosing early on in his Presidency to side with the investor class, a precursor of things to come.

The charismatic President, now supposedly contrite about deferring to the Wall Street elite,  gave a brief speech at the NAFTA signing :

As the benefits of economic growth are spread in Mexico to working people, what will happen? They'll have more disposable income to buy more American products and there will be less illegal immigration because more Mexicans will be able to support their children by staying home. "

Seriously – he said that. The logic sounded convoluted even then. A few years later, the number of Mexican farmers put out of business by subsidized American agribusiness began what turned into the flood of Mexican immigrants we are now wrestling with.

By 2010, Clinton was stumping for donations to his charitable foundation to assist the  farmers he had put out of business as President. The ex-President addressed the nonsense he used to spread throughout the nation's capital surrounding NAFTA, and other trade deals,  describing their logic as  "laughable."

According to a Voice of America article in 2010, Clinton acknowledged his policies as part of a "wrong-headed global trend."

Clinton says the theory behind that global trend was that wealthy countries could provide poorer countries with cheaper food than their farmers could grow.  That would lead poor countries to skip directly to industrialization. But Clinton says, once he left office and saw the effects of that policy on farmers in developing countries, he changed his mind.

"It is unrealistic to expect that a country can totally obliterate its capacity to feed itself and just skip a stage of development," he says. "It seems almost laughable now that we ever thought it."
"President Calls Free Trade Policies a Mistake"

It's not like the information wasn't widely available when Clinton was President. Knowledgeable economic observers predicted nearly exactly the consequences for American (and Mexican) workers.

Back then, the Center for Immigration Studies wrote about how the lucky few -- they hadn't yet been labeled the one percent - would benefit  greatly from the pro-investor NAFTA, while workers in industries like "auto parts, textiles and apparel, electronics, electrical machinery, furniture, and fixtures" as well as "low-income U.S. workers ...displaced from high-impact industries" would lose out.

On the now trendy subject of US income inequality, the Center in 1993 offered an ominous prediction :

"it is unlikely...Mexico will be able to sustain enough growth to simultaneously absorb [its] growing work force and the mounting numbers who would be displaced from marginal rural and urban industries....

Mexican emigration to the United States will contribute to the growing polarization of U.S. incomes, though it could reduce surplus supplies in Mexico and contribute to modest improvements in the wages of Mexican workers. On balance, however, NAFTA will probably widen income gaps in the United States and Mexico

And what about that other great Clintonian vision of Mexican workers transitioning into high-wage jobs, spending their new disposable income on US exports as their own economy grew?

20 years later, the balance sheet reflects “huge disparities in the number of people entering the work force and the number of jobs available” according to Tim Wise,  policy research director at the Global Development and Environment Institute at Tufts University. Wise says that the results are in, and describes a "huge migration problem despite the increased enforcement.” NY Times

After the corporate push, the agreement passed relatively easily, in an atmosphere of bi-partisan co-operation - or co-optation.

photo : Holly Dutton/NT Daily

It's the Side Agreements, Stupid

As NAFTA's consequences became clear, "free trade opponents" flocked to Washington to protest, sporting their union colors and chanting loudly on the steps of the Capitol building - while corporate-hired lobbyists and lawyers worked the halls inside, meeting  with the representatives who'd decide the fate of the pact.

As he signed the agreement, President Clinton tried to appease NAFTA's critics. 

“In a few moments, I will sign side agreements to NAFTA that will make it harder than it is today for businesses to relocate solely because of very low wages or lax environmental rules. These side agreements will make a difference.”

The President neglected to point out that NAFTA's side agreements were excluded from the core NAFTA agreement so that ultimately,  they would not be enforceable.

Lt Col Chris D. McMenomy, USMC, in an analysis written for the National War College at the National Defense University captured precisely how organized labor - and its demand for worker protections - were boxed out of NAFTA, in part due to its lack of an alternative :

The concessions [US Trade Representative Mickey] Kantor made to organized labor were far weaker than concessions made to environmentalists. [Kantor]  knew that labor interests in the U.S. had less leverage in the domestic-level bargain. Although a strong political force, labor lost their ability to influence the action--they would not support any NAFTA proposal.

On the domestic employment side, the Center for Immigration Studies, cited "a number of studies" that forecast "net employment losses for the United States that range from 290,000 to 900,000 over ten years. Estimates by the Economic Policy Institute, for example, put the probable U.S. job losses from NAFTA at 550,000 after ten years.5

The Center also cited the United States' Office of Technology Assessment (OTA) that

"NAFTA would produce downward pressure on U.S. wages and labor standards, with less well-educated workers likely to lose one percent of real wages annually."

That must have been the reason those guys with the bright jackets were chanting on the steps of the Capitol building.

The losers - most of the American workforce - were left with the lament of then House Minority Whip David E. Bonior (D-Mich.) who elaborated  :

"[NAFTA] will cost jobs. It will drive down our standard of living...If we don't stand up for the working people in this country, who is going to?"  Washington Post

Ohio Rep Marcy Kaptur had the last word on the Clinton capitulation  :
I think he [Clinton] is the candidate of Wall Street, not Main Street.

As for the Congress that went along finally ratified the pact, one of their own offered this assessment  :

The NAFTA debate shows no damn difference between Republicans and Democrats.
U.S. Representative James A. Traficant


Free Trade Agreements : Why they Have More Pages than the King James Bible

photo : Jim Richardson, National Geographic

Any agreement truly about "free trade" would be relatively simple - and short. A country, or group of countries, lowers tariffs to permit the goods of the other(s) to flow more freely. But in reality, 'free trade' agreements - FTAs - have more to do with rigging international markets for transnational corporations and preventing competition.

That takes a lot of legal maneuvering, and it all has to be on paper. NAFTA, for example, was 1,700 pages long with exhibits.

Buried in the detail - and outside the side agreements - were the corporate world's true aims :

  • Limits on regulation

  • No worker protections (or only described in unenforceable side agreements)

  • No environmental protections (also only described in unenforceable side agreements)

  • Increased protection for intellectual property

The most pernicious - and controversial - heritage of NAFTA, manifested in today's trade-on-steroids deals, however, is the creation out of legal thin air, of new, binding rights and privileges for investors.

Investor-State Dispute Settlement is a corporate legal tangle designed to circumvent what the average American assumes to be rules, laws and regulations normally left to state and federal governments. NAFTA's Chapter 11 clause effectively obliterated this, leading to the creation of this controversial body and governing process.

The name says it all : linking the words "investor" and "state" so that they become, effectively, one. If you're new to the concept, as most Americans are, this dubious mechanism of investor-state enforcement

… “allows foreign firms to skirt domestic court systems and directly sue governments for cash damages (read : your US tax dollars) over alleged violations of their new rights before UN and World Bank tribunals staffed by private sector attorneys who rotate between serving as "judges" and bringing cases for corporations.”

Let's think about this for a minute : private, for profit legal concerns - corporations - are elevated to the same legal, equal footing as sovereign nations, and able to sue for "expected profits!" Who among us remembers being taught in elementary school that private investors could be a state??

While investor corporations are states, they are, simultaneously, treated as 'persons'  according to the United States Supreme Court. So when are you a state and when are you a person? It depends on the suit you’re wearing – or bringing - that day! Secondly, who ever decreed that a "profit forecast" was somehow a fact, or even that profit is the preeminent right in the world? The agreements did, and do.

Of course, corporations -- and the one tenth of one percenters who manage them - often have powerful reasons to "forecast profits." According to one business dictionary :

"companies try to sway predictions by providing lots of data to show that the company is a good investment. The predictions issued by analysts are used by investors when deciding to purchase or sell shares of a specific company." Investorwords

The natural consequence - and catastrophic net result - especially for the unlucky majority left to live in this brave new world will be the series of lawsuits brought to legally void the health and safety regulations of nations because they ‘interfere with expected profits.'

As we wrote in part 1, Americans aren't the only country concerned by this. South Korea's highest judiciary body shares the same concerns.

They're by no means alone. Want the hard evidence? Here are just some of the 500+ investor state cases  filed so far under FTAs.  In fact according to a recent study, the UN Conference on Trade and Development reports a tenfold increase in the cumulative number of cases since 2000 (despite the fact that the system has existed since the 1950s) :


Some of the high - or low-lights :

  • Chevron - trying to evade liability for its toxic contamination Ecuadorian Amazon  (Only one of many controversies for this corporation, whose enduring power extends to and controls the air, sea, and forests. Have a glance at the full list of Chevron controversies and marvel at how they stand to benefit from becoming an "investor state.")






Not the kind of brand awareness they're looking for

Big tobacco ran into hard times in the US market, before the ever-so innovative electronic cigarette, their innovative solution to claw it back.

Largely due to smoking prevention campaigns, and anti-smoking policy, cigarette use in the United States has declined to a new all-time low. This means the newer markets afforded by FTAs to corporate investor states like the Altria Group - the multi-national corporation that produces some of the world's most recognizable cigarette packages - offer significant revenue growth!

But those countries also have scientists and health officials and they may catch on, or even get big ideas like restricting smoking in public places, or raising taxes on cigarettes, two key factors in helping those who are trying to quit and save their lives.

The investor state dispute settlement system would allow Altria, and others, with their squads of attorneys and trade negotiators, to contest those laws and public health programs, much like they used to in the good old US of A, through corporate front lobby groups like the American Legislative Exchange Council (ALEC). And it just so happens... most of the countries that the US is trying to promote as part of the expanded TPP, for example, Vietnam, Singapore, Malaysia are currently enduring smoking epidemics!

This is one reason why the trade talks must be kept secret, according to Public Citizen Director Lori Wallach:

It’s easy to see why...US negotiators are keen to keep the TTIP/TAFTA negotiations secret. They are in no hurry to explain the impact the agreement would have at every level of government: federal, state and local authorities would be obliged to revise their policies from top to bottom so as to satisfy the appetite of the private sector... Le Monde Diplomatique

And the hits just keep coming ...

  • European firms attacking Egypt's post-revolution minimum wage increase

  • South Africa's post-Apartheid affirmative action law

  • Renco Group (US) attacking Peru for its anti-toxic emissions policy

  • Vattenfall (Sweden) demands billions of dollars in compensation from Germany over its coal-fired electricity plant regulations and its phase-out of nuclear energy.

  • The World Trade Organization (WTO) condemned the US over:

    • Its rules on the “dolphin-safe” labeling of tuna and country-of-origin labelling of meat

    • For banning candy-flavored cigarettes, which it ruled were barriers to free trade

  • The WTO also ordered the EU to pay hundreds of millions of euros in penalties over its ban on imports of genetically modified organism (GMO) foods

The expanded agreements now advocated by President Obama under the TPP and TAFTA  owe their parentage to the free trade full court propaganda press staged by the Clinton administration to push NAFTA on US workers - the very people who got him elected. After years on the outskirts of power during the Reagan's year,  it became the central piece of the new democratic party's " bargain with the devil," in former President Clinton's words..

Lt Col McMenomy cited a Republican operative who summarized the political calculations and maneuvering that culminated in the passage of NAFTA, the original "trade deal on steroids." 

“it is a measure of how much the world and rules have changed when Republicans pitch in to help Bill Clinton realize George Bush’s legacy.”

Call us cynics for presuming that the handover of our voting rights on trade and economic policy will not lead to the world-wide democratic, benign consumer society the current President and his corporate cronies envision.

For ideas for this space, email CK Patton

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