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Free – but not for you and me: Winners and Losers in proposed Free Trade Agreements with South Korea, Colombia and Panama

August 2011

With the political extravaganza of the debt ceiling debate now in their rear view mirror, the U.S. Congress will soon vote on “free” trade agreements with Panama, Colombia and South Korea. Despite major concerns raised by legislators and advocacy groups in the US (and in those countries), the majority in the US Congress are expected to approve the three agreements as a means to strengthen a debilitated US economy.

This recent round of Free Trade proposals demonstrate once again that democracy and corporate influence don’t mix as corporate lobbyists have influenced key players in Congress away from the concerns of their constituencies who have suffered with unemployment. Like in other similar trade agreements, such as NAFTA, these bilateral or multilateral agreements have a few winners and many losers and behind the numbers of economy gains we find policies that increase the social and economic gap and fuel a climate disaster.

Winners in the Free Trade Gamble

Transnational corporations are the big winners. They don’t just get a thicker slice, they get the whole cake. These free trade agreements will erase tariffs, meaning that corporations will pay less to sell their products. For instance, with reduced tariffs an electronics producer, like Apple, can keep their prices to consumers the same and still boost their bottom line. Profits of corporations don’t necessarily translate into higher tax revenues to governments either, since companies often play with fluctuation in the currencies to transfer money from one country to another. With a weaker dollar, corporations are leaving the money in other countries where the currency is stronger and interest rates are higher. But mostly, many corporations use tax havens to avoid taxation and keep as large a portion of their revenues as possible. As a good step to expose tax havens and hopefully curb tax evasion by transnational corporations and market speculators, a global campaign to End Tax Secrecy has been launched.

Big boxes retailers also gain. Free trade agreements guarantee a steady supply of cheap goods from one place to another. Big boxes continue to play their “price tag” game by lowering prices of certain products to attract new customers while simultaneously reducing costs by slashing personnel or wages and benefits. Trade agreements’ tax incentives and less restrictions for multinational companies, such as WalMart, also destroy local competition and small businesses. WalMart has invested heavily in lobbying for a free trade agreement with Colombia, even though there are great concerns among people in the US about assassinations of workers and union organizers there. For example, Rafael Tobón Zea, a mining worker and organizer affiliated to SINTRAMIENERGETICA, was recently brutally murdered by paramilitaries. WalMart, well-known for its practices of union-busting, seems not to worry about that.

Market speculators continue to get away with their gambling. Often, speculators benefit as free trade agreements eliminate financial and environmental regulations for international investors. With fewer strings attached and little accountability, investors can more easily get away with wrongdoings. After the 2008 economic meltdown, speculators are eager to find new ways to make a profit. Free trade agreements are critical for them to continue their gambling. For instance, they still can invest in predatory mining without much risk to be held accountable.

Losers: The rest of us!

Workers in the U.S. and in developing countries lose big time. Free trade agreements open the doors for U.S. companies to relocate where cheap labor is abundant. As we learned from NAFTA, free trade creates a race to the bottom as employers look for the cheapest possible wages regardless of country address. Like their predecessors, new free trade agreements create an exploitation of minimum-wage workers in impoverished nations and simultaneous unemployment growth in the wealthier nation. To keep “investments” such as maquilas and African palm plantations for agro-fuels, governments are willing to maintain sub-par minimum wages and eliminate labor protections. The negotiations of free trade agreements have stalled in US Congress because some lawmakers were not willing to include funding for federal worker assistance programs that will benefit families affected by the outsourcing of their jobs to other places.

Farmers in the U.S. and in less developed countries won’t make a buck. Because of the industrial agriculture model, farmers are increasingly dependent on transnational agribusinesses, such as Monsanto, ADM and Syngenta, to buy seeds and agrochemicals. Most of the time, family farmers barely break even. Corporations that also control distribution and processing of agricultural products end up with the larger profit. The tendency is to have few farmers (as in people farming) and larger conglomerates of agribusinesses. Without a chance to make a buck and continue their parents’ trade, more and more farmers are taking drastic measures. Suicide is a growing phenomenon among desperate farmers in the global South and even in the U.S. In 2003, South Korean farmer and lawmaker Lee Kyung Hae killed himself at the World Trade Organization meeting in Cancun, in protest against neo-liberal economic policies, such as free trade agreements.

Developing Nations often seen as the beneficiaries of free trade agreements because of U.S. jobs being outsourced there are actually losers too. Nations with less developed economies or in disadvantaged positions in terms of controlling their resources and patents on technology gain little in terms of jobs and lose a lot in terms of resources. As noted above, corporations move there in the first place for two reasons – cheap and exploitable labor and abundant natural resources. Obtaining access to the latter and having a ready supply of the former means land and water policies that enable corporations to control those resources (for e.g. land for agrofuel cultivation or mining, rivers for dam construction or industrial irrigation, and forests for timber); displacing hundreds of thousands of self-sustaining peasant and indigenous communities and turning them into cheap labor. And then there is the matter of little or no regulations on, and lots of tax incentives for corporations, which leaves those countries at the mercy of speculative investors and powerful corporations.

Mother Earth is effectively dealt a death sentence. Free trade agreements neglect the rights of Mother Earth, as stated in the Cochabamba Protocol: People’s Agreement on Climate. Also, free trade criminalizes environmental stewards, including indigenous peoples, peasants, and local communities, for their defense of Mother Earth’s rights. Free trade benefits those who want short term profit, even at the expense of long-term sustainability and climate justice. With the death of Mother Earth everyone loses. Please sign on to our petition on the Korea-US Free Trade Agreement.


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