January 2018Policy

Using Trade to Develop Nations and Protect Workers

Our current trade treaties focus on building a global market dominated by multinationals and soon a mercantile China. This market is used to pit nations and workers against each other while maximizing profits for the few.

A different trade goal could be to create a more even development of the world’s nations. Trade could, for example, aid the development of India or a group of South American or African nations. If development of nations were more even, then a major crisis, like climate change, would be less of a threat to global stability because nations would have similar capabilities and self-reliance.

The current neoliberal focus of trade treaties promotes multinational companies’ projects and even allows them to sue countries for a loss of business when their plans face domestic interference. These treaties are a boon to transnational profits, but because not all economic sectors and actors are represented in treaty negotiations, they do not consider potential economic disruptions. Market externalities are not covered, resulting in poverty, health problems, and now a climate crisis.

In designing NAFTA, for example, no one considered the impact on Mexican farmers of subsidized American agriculture. After NAFTA was introduced, the subsidized U.S. farming industry undercut Mexican agriculture, leading workers to immigrate to the United States when Mexican markets were crushed. Developed countries have heavily subsidized agriculture and are a trade hazard to African and Middle Eastern markets. Also, the U.S. steel industry has been undercut by the expansion of China’s industry, which produces steel beyond Chinese needs. The goal of maximizing profits doesn’t lead to stable national growth or social cohesion, but multinationals care only about profits. That produces inequality, emigrants, and poverty.

A less disruptive trade and development policy goal would be to create a more equitable spread of national industries. The goal would be to protect a base of industry in each country. Countries would be allowed tariffs on a certain percentage of their imports. For instance, if a country buys three million cars a year but only makes two million, it would be allowed to place a tariff on the million imported cars. The exact tariffs and percentages would have to be negotiated. If a country produced more cars than it used and exported the surplus, then that country’s cars would likely face foreign tariffs. Equal markets would protect domestic industries. China, for example, has been selling photovoltaic panels below cost and wiping out the U.S. industry, but this policy would remedy that. Protecting the U.S. solar power industry is needed now at least as much as China needs its own solar power so its people can breathe.

This policy would require negotiations on many variables, such as how to count the domestic production of a foreign carmaker’s cars in your own country and how to count domestic production when many of a unit’s parts are imported. A negative result could be protections that allow obsolete industries to survive, but this would be balanced by the ability for a country to satisfy its consumers’ desires.

The world faces a major challenge with climate change, which could be addressed more effectively if all countries had viable industry and education. Climate change is already with us, as seen in vast forest fires and stronger hurricanes. It will diminish as renewables replace fossil fuels. Although some countries are making progress, developing local and national industries would help by eliminating poverty and promoting self-reliance in major emergencies.

The world needs a system motivated by more than greed or money. Doing a good job, using our expertise, and serving the people motivate most of us. We humans also need to think in longer terms if we are to do justice to our planet, our children, and ourselves. We need a new system that rewards service and innovation. Let’s find that new way.

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