Free Trade for America

After tumultuous talks April 20-22 in Quebec, America’s democratic leaders developed a sound framework to expand economic prosperity in the Western Hemisphere. The Free Trade Agreement of the Americas (FTAA) should provide benefits to both advanced and underdeveloped nations alike.

The FTAA relies on the same sound principle as the North American Free Trade Agreement (NAFTA) before it: eliminating international trade barriers promotes economic growth. In addition, free trade increases economic interdependence and helps developing nations increase their standards of living. The FTAA, by binding America’s democracies more closely together, should not only increase the hemisphere’s prosperity but also spur cooperation among the nations as their welfare becomes more intertwined.

The protesters who flooded Quebec’s streets have legitimate worries about labor standards, environmental protections and non-tariff trade barriers. Unfortunately, because nations are on unequal economic footing, it is relatively more expensive for developing nations to protect workers and the environment than it is for the U.S. When the U.S. has attempted to establish these standards, developing nations have perceived them as merely protectionist tactics.

Some labor and environmental protections should be included, but at a level that will not preclude the active participation of developing countries. If unrealistic and unattainable standards are set, they will emasculate the FTAA and prevent any expansion of trade, to the detriment of all concerned. Less-wealthy nations cannot be coerced into adopting restrictive labor and environmental protections—they must be convinced that such standards are in their long-term self-interest, partially by experiencing the economic benefits of free trade.

Non-tariff barriers present more of a dilemma. Disturbing trends have been developing under the World Trade Organization: governments have been sued because they refused to open essential public services to private competition. For instance, UPS recently sued Canada because it subsidizes its post office—assaults on our northern neighbor’s nationalized healthcare system cannot be far behind.

Nations ought to be able to exempt certain basic services from private competition; governments ought not to depend on private organizations to deliver a nation’s mail, or even provide a nation’s healthcare, if that government so chooses. Such exemptions and protections ensure that governments will have the ability to directly provide for the day-to-day functioning of society and be accountable for those services’ successes and failures.

The FTAA pledge that only democratic governments will be eligible to participate goes a long way towards addressing protestors’ concerns about a “democratic deficit” in the decision-making process. Of course, members of the business community should not be the only ones deciding what constitutes a restrictive trade practice—member governments should appoint impartial arbiters to decision-making panels, and conflicts of interest should be strenuously avoided.

The FTAA promises to help developing nations and wealthy countries alike by expanding NAFTA’s successful free trade experiment. By ensuring that nations’ basic government services are protected and legitimate labor and environmental standards are included, the FTAA should be able to increase economic prosperity while at the same time respecting workers’ rights and the environment.