I used to be a big supporter of free trade and was glad to hear that we had setup free trade agreements such as NAFTA. My reasoning was simple, in the early days of this country, each state controlled imports of goods with tariffs and the country was struggling economically. With the growth of the Federal government and the elimination of interstate tariffs, the economy started to grow. By the same measure, I thought that setting up free trade agreements with other countries would enrich both countries and raise the standard of living in the other countries.

But our free trade agreements are anything but free. There are several things that other countries do to game the system and give themselves a competitive advantage. One way is to manipulate currency rates. China has set up an artificial exchange rate and does not let their currency to be valued on the free market. Instead, they set their currency value to always be a specific percentage of the dollar and the euro. This guarantees a favorable exchange rate for Chinese products. Another technique is to ensure that your labor costs are less by forcing wages to remain low, not having over-time pay, and by not limiting how many hours a worker can work. And if the government owns the companies, then they can dump products below cost to put the competition out of business. Government owned companies don't have to worry about a profit because the taxes will support it. The globalization of companies also allows companies to bypass safety and environmental laws by shopping their jobs to countries with few or no regulations.

I think the only true way to have free and equal trade is to eliminate these problems. For instance, the members of the World Trade Organization (WTO) could setup minimum rules for wages and hours worked. They could also setup rules regarding minimal safety and environmental standards. And if a country does not want to abide by the minimum standards then they do not get to participate in free trade agreements with the major industrial/consumer nations.

Maybe then the promise of free trade could become a benefit for everyone.

- Thomas Paine 2

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