October 23, 2017

Free trade and the environment

Free trade is a situation in which the maximisation of trade is given precedence over all quantitative and qualitative constraints on trade; constraints which have usually been imposed to satisfy social, biological, moral, ecological and other imperatives.

It is easy to verify that where these constraints have been removed there has been a consequent reduction in the material welfare of the poor, a deterioration in their health, a marked fall in public morality, and the most terrible environmental degradation.

A striking example is that of the so-called “export processing zones” in the Third World, where, to attract foreign industrialists, labour laws and environmental controls have been seriously reduced or even eliminated. The area on the Mexican/U.S. border, where the so-called “Maquiladores” operate is a case in point.

Equally eloquent are conditions today in those countries in the Third World that have been subjected to IMF “Structural Adjustment Programmes” which force them into the global economy at the expense of their local economy, and eliminate all barriers to trade with other nations

There is every reason to suppose that the implementation of the NAFTA. Maastricht, and GATT Uruguay Rounds agreements will lead to even more serious social and environmental problems.

One reason is that for rich countries to be competitive with much poorer countries such as India, where wages are at least ten times lower, social and environmental expenditures by government and industry must be drastically reduced. Hence the inevitable trend towards “deregulation” or the elimination of “red tape”. In the UK the government is systematically phasing out the welfare state which falls into this category, as do environmental controls.

Worst still environmental laws are increasingly being invoked to declare environmental controls illegal on the basis of the trade laws adopted by NAFTA, the EEC, and the GATT. Thus British Columbia was made to abandon reafforestation programmes to avoid heavy export taxes imposed by Canada in response to US lumber industry claims that the programmes represented unfair subsidies. A Danish law requiring all beer and soft drinks to be sold in returnable containers has had to be rescinded as a result of a decision taken by the Court of Justice of the European Community under pressure from foreign competitors.

The European Union (EU) has just published a list of Californian and US environmental laws that it believes it can challenge as illegal trade barriers if the GATT Uruguay Rounds are ratified by Congress. These include the Safe Drinking Water and Toxic Enforcement Act (Proposition 65) which requires appropriate labels on all commercial products containing substances known to cause cancer, California’s glass recycling laws, a Californian State law setting tolerance levels for lead in wine, the Corporate Average Fuel Economy Regulations or the “Gas Guzzler” tax to encourage the production of smaller, more fuel-efficient cars, etc.

It has been suggested that as much as 85% of America’s environmental laws could be judged illegal in this way, as indeed could a considerable proportion of EEC environmental laws. It should seem clear that the regime of global free trade that has been institutionalised by the GATT and that will be ruthlessly imposed by the World Trade Organization, must, if thoroughly implemented, transform the world into one vast “export-processing zone”. The consequences would clearly be intolerable.

Indeed, if we want our children to have any sort of future on this planet, then economic activity must be systematically subordinated to social and ecological requirements, not the other way round. In other words, Free Trade, in particular at a global level, is not a serious option in a responsible society.


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