Newspaper article The Christian Science Monitor

The Case for Fair Trade over Free Trade

Newspaper article The Christian Science Monitor

The Case for Fair Trade over Free Trade

Article excerpt

A major frustration for protesters at the Quebec Summit of the Americas last month was the little attention given their arguments by the media. The coverage was almost all about a wire fence, tear gas, and the performance of George W. Bush.

Of course, a minority of demonstrators were there for a window- busting rampage. But most had a serious goal - to question the merits of burgeoning free trade and globalization.

Their task is not easy. Free trade has become economic gospel. Even globalization, involving international investment and finance as well as trade, is seen as a necessity for progress, though with some unhappy consequences.

Those attacking these trends tend to be seen as savages at the gate, a threat to civilization and prosperity.

That's not the view of a minority of economists. For one, Robert Scott of the Economic Policy Institute in Washington, says the problem is not so much free trade itself, but poor rules of the game.

Free trade in North America has been dandy for investors, financiers, and business, but awful for workers in all three nations.

So before launching a Free Trade Area of the Americas, linking 800 million people on two continents by Jan. 1, 2005, as proposed by President Bush, Congress should look at the results of the North American Free Trade Agreement.

Mr. Scott and colleagues from Canada and Mexico have done just that for the seven-year-old deal. The results are not pretty.

The US's growing trade deficit with Mexico and Canada has led to the loss of 766,000 American jobs since 1994. Those affected were primarily non-college-educated workers in manufacturing. Most of them found work elsewhere in the booming 1990s. But these jobs were mostly in the service sector, where the average wage is 77 percent of that in manufacturing.

The job switch also depressed wages in the service sector. The living standard of most American workers began to improve only in the past two or three years.

Business frequently threatened to shift manufacturing facilities to Mexico to weaken labor unions in the bargaining process.

A combination of diminished unions, lost manufacturing jobs, new import competition, and other factors has raised income inequality in the US. …

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