By Donella Meadows

–November 13, 1997–

There were plenty of bad reasons why Congress turned down President Clinton’s “fast track” trade bill — the normal “do anything to humiliate Clinton” stuff, payoffs from protectionists and labor, isolationists who fear trade because they fear the world.

But there were good reasons, too, strengthened by the fact that NAFTA, the free trade agreement with Mexico, has failed to fulfill the grandiose promises made for it on either side of the border.  Since NAFTA Americans are beginning to hear the pro-trade drumbeat — globalization is inevitable, we’ll be left in the competitive dust, trade grows the economy, trade creates jobs — as so much bunkum.

To start with, trade just doesn’t look like a problem to the average American.  We already get apples from Chile and cars from Japan.  We send corn to Africa, jets to the Middle East.  Our computers and sneakers travel to Asia before they reach us.  Our music and movies play all over the globe.  What more do we need?

If there’s any trade problem we’ve heard about, it’s the Nike story, the Asian workers paid a pittance for long hours of stifling work putting together shoes that inexplicably cost us $100 a pair.  And we know about the maquiladoras, the shiny new factories on the Mexican side of the border, built by Sony, Black & Decker, GM, Ford, which pay not $5 an hour, but $5 a DAY, and which pour out toxic brews that would never be permitted if the pipes and smokestacks were just a few miles north.

Those factories are becoming the symbol of free trade.  People whose minds are not trapped in business logic take one look at them and sense something wrong.  Those who look more closely — including the labor and environment advocates who bombarded Congress to defeat “fast track” — see them as evidence of a systemic perversity, which they call “race to the bottom.”  Far from being an economic boon, they argue, “free trade” as currently structured will bring economic ruin, especially to the nations that currently enjoy high social and environmental standards.

Economists, trained at an early age to chant “trade is always, always, always good,” can’t seem to see this perversity, but anyone else can.  If a company finds a place where it is not taxed to support schools or sewage treatment, where it can dump any kind of gunk without penalty, where desperate people will work for peanuts, it will go there.  If it doesn’t, its competitors will.  That’s the market’s inevitable tendency to reward those who put costs off onto someone else — in this case onto workers, families, communities, and the environment.

A nation can put those costs back where they belong by requiring business to pay decent wages, keep workplaces safe, support local infrastructure, and clean up its messes.  That helps not only the society, but the market itself, by forcing prices to include very real costs.  But the nation can’t then allow imports of cheap products, undermining the companies that comply with the rules.  It has to ban those products or put tariffs on them.  The “free trade” the world is hurtling toward, the kind that Bill Clinton is promoting, undercuts our ability to do exactly that.

Under the new trade regime, Venezuela and Brazil have challenged part of the U.S. Clean Air Act that forbids the import of more-polluting gasoline mixtures from their refineries.  The U.S. is contesting Europe’s ban on beef fed artificial hormones.  Numerous countries object to the U.S. requirement that shrimp be caught in nets that do not destroy endangered sea turtles.  Meanwhile, in any kind of business that can move, American workers are losing jobs and communities losing companies.

That’s just the start of the race to the bottom.

So far Bill Clinton has addressed this major problem with minor gestures.  To get NAFTA passed he created a North American Development Bank to clean up the border.  At the moment it has $450 million, with a promise of maybe $3 billion someday.  That sounds like a lot unless you know that a sewage treatment plant for just one Mexican town (Naco, Sonora, just across the border from Naco, Arizona) will cost $830 million.  The region needs at least $8 billion for drinking water, sewage treatment, and garbage pickup for all its residents.  Providing it through the NADB or any other public handout means that U.S. and Mexican taxpayers must cover what ought to come from property taxes on maquiladoras.

It’s no wonder that taxpayers, workers, and environmentalists are beginning to equate fast track with pulling a fast one.  The knee-jerk response of economists, politicians and companies is to call such people protectionists.  They are, but not in the sense that they are trying to protect special privileges (though that happens in the debate as well).  The abiding critics of fast track are trying to protect the society, the environment, and therefore the economy, which cannot function without clean air, clean water, public infrastructure, operational communities, secure families, and educated children.

There are plenty of protectionist barriers that ought to be weeded out of the global trade regime.  But not at the cost of a race to the bottom.  Trade is not always, always, always good.  There are ways of enhancing its good while preserving the public welfare and the ability of market prices to tell the whole truth.  The mindless abolition of any regulation that any industry in any country finds annoying is not one of them.

If Bill Clinton learns anything from his present humiliation, let’s hope he learns that.

Copyright Sustainability Institute 1997