It’s time for a final break with ‘free trade’
The ideology of “free trade” reminds me of my ex-girlfriend telling me not to make promises I cannot keep. From Adam Smith to Bill Clinton, elites have contended that “free trade” means less war and more jobs. To be more precise, “free trade” is freedom. In its most recent history, its promise of growth and prosperity has remained unfulfilled, however.
Economic growth remains sluggish despite trade barriers being at an all-time low. While I continued to make promises, world leaders continue trying to stretch the boundaries of the possible once again.
The latest promise of free trade comes in form of the Transatlantic Trade and Investment Partnership (TTIP), a free trade zone stretching from the Baltic Sea to the Hawaiian Islands. Just as my girlfriend grew discontented with my promises and broke up with me, peoples across the globe have grown outright hostile to free trade. TTIP might just push people on both sides of the Atlantic over the edge.
In the beginning were the Zapatistas
This year marks the 20th anniversary of the North American Free Trade Agreement (NAFTA) which came into effect on January 1, 1994. On that day a group of indigenous peoples from Chiapas, Mexico or simply referred to as the “Zapatistas” assembled under the banner of the EZLN to march on the capital. With balaclavas pulled over their faces and on horseback their protest was primarily symbolic yet they inspired a new cycle of global protest against the unjust trade policies come to known as “globalization” and “free trade.”
At the time, the Zapatistas’ ideas appeared outlandish. A free trade zone stretching from the Mexican-Guatemalan border to the Canadian North Pole would bring growth, prosperity and jobs for all. Twenty years later, it is safe to say that history has proven the Zapatistas right. Poverty is rampant in Mexico. More than 20 million Mexicans live in “food poverty”, and 2 million farmers have been forced to leave their land. As a consequence nearly half a million Mexicans take the deadly risk to migrate into the USA every year. North of the border an estimated 700,000 jobs have been lost in the US.
Five years later, the Zapatistas were no longer the only ones campaigning against “free trade”. On November 30, 1999, a powerful coalition of trade unionists and environmental activists – Teamsters and Turtles – brought inner-city Seattle to a standstill so to shut down the World Trade Organization (WTO) negotiations. In the years to follow, G20 states such as Brazil and negotiators from poorer nations of the Global South joined in protest. No longer was “free trade” seen as a benevolent force by the majority of the world’s population. It is no surprise then that the Doha Round of the WTO has been in deadlock. Though states have successfully circumvented this impasse. Instead of pursuing multilateral trade agreements, states and free trading blocs such as the European Union (EU), states have moved toward bilateral trade agreements. For example, the EU has ratified 18 bilateral free trade agreements since 2001.
A high price to pay
For multinationals and bureaucratic elites on both sides of the Atlantic, TTIP appears to be a remedy against their prolonged economic woes. Since the collapse of Lehman Brothers in 2008, the Unites States’ average 2 percent in annual economic growth are leaving it behind the BRICS. It appears that the housing bubble, once the nation’s engine of growth, has burst once and for all. Today, prices remain 15 percent below their peak value. US capital is forced to find new areas of growth and expansion. In the EU, member countries’ productivity rates cannot catch up with those of its economic powerhouse Germany, hence leading to unsustainable trade imbalances within the eurozone. In countries like Spain and Greece, youth unemployment amounts to more than 55 percent.
At first sight, TTIP would boost exports from 14 US industrial sectors. Yet, at a closer look these figures mean little given the high levels of export/import between the US and EU. According to the Centre for Economic Policy Research which has the most optimistic calculations the establishment of this ‘free zone’ will lead to a 0.5 percent increase in growth in the EU and 0.4 percent in the US respectively – when fully implemented by 2027. This is an awfully high price to pay for such a miserable outcome. It is a sick joke! While previous ‘free trade’ deals promised growth, jobs and prosperity, TTIP’s only aim is to remain globally competitive against rising economic powers such as China, India and Brazil.
According to WTO estimates, customs duties average 3.5 percent in the US, and 5.2 percent in the EU. To introduce ‘free trade’ tackles the wrong problem. Ulrike Herrman argues that the far bigger problem is currency speculation which raises prices of imports/exports: “Up to USD 5.3 trillion are in use every day around the world to speculate on currencies. By contrast, the entire world trade was only USD 18.4 trillion in 2012 – that is, in a year. Daily currency speculation has long since been disconnected from trade flows.”
In light of this, what is TTIP really about? Supposedly, it is about ‘harmonization’ so that German or US car manufacturers no longer will need to produce both a European and American model. Supposedly, it is about moving toward a new era of innovation in manufacturing. In reality, it is about a further redistribution of wealth in the interest of multinationals, finance capital and other capital fractions, popularly referred to as the one percent.
The poverty of ‘free trade’
The fact that TTIP supporters on both sides of the Atlantic no longer make any grand claims, reveals that this deal is more about keeping the ideology of ‘free trade’ alive than creating jobs, growth and prosperity. The worries that the crisis would lead states to rediscover ‘protectionism’ has been unfounded. The daily amount of products and services – worth roughly 1.8 billion euros – will continue to be exchanged between the US and Europe regardless whether TTIP is enacted or not.
And it seems that opponents are on a good path of blocking TTIP’s enactment despite the level of secrecy surrounding it. So far, more than 700,000 citizens across the two continents have signed the petition against the plan. At the beginning of the fifth round of negotiations, protesters assembled in Bruxelles. Now civil society organizations, trade unions, environmental and religious groups are organizing toward a day of action on July 12.
With the Doha Round of the WTO in deadlock, the Anti-Counterfeiting and Copyright Agreement (ACTA) on ice, the odds are stacked against TTIP. Unfortunately, opponents in the EU concentrate on the import of chlorine chicken from the US. This misses the point that trade negotiators on both sides have made exemptions in the past and are likely to do so in the future. Only if opponents are willing to break-up with these ‘free trade’ deals once and for all can TTIP be defeated. And if I have ever learnt anything from my ex-girlfriend: The more promises broken, the easier the break-up.