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The US and the meaning of 'fair trade'
By Devin T Stewart
standards, jeopardizing another kind of security. Part of the problem is simply
keeping tabs on corporate behavior and publicizing the findings. Oxfam and the
Business and Human Rights Resource Center have excelled in this area. A
country's human-rights record may matter little if the trading partner feels
that the exported good, for example oil, is vital to its national security. The
United States must do its part to lower oil demand and invest in renewable
energies, helping oil-exporting nations to
shed the resource curse.
Freedom to trade with impunity
As the greatest beneficiary of globalization, the United States has a
responsibility to give back to the system from which it benefits. In practical
terms, this means the US has an interest in working toward nurturing freedom
and fairness not only at home but also in the global economy. It can do so by
promoting fair and ethical trade practices, socially responsible business
models, expanded stakeholder rights, and a stronger global civil society. The
responsibility is great but fair for the biggest consumer of the world's
resourses.
These limits on free action can guide a fairer trade policy. Constructive
policies are available to implement that vision. The US Congress has made a
promising start by passing bills to raise the minimum wage, make higher
education more affordable, and eliminate subsidies for the US oil industry,
shifting resources toward developing clean energy technologies. It is also
promising that Max Baucus, the new chairman of the Senate Finance Committee,
would like to renew the Trade Adjustment Assistance Program. He also supports a
broader "global adjustment assistance program" that would offer benefits to
workers displaced not just by trade, but by all aspects of globalization.
Enacting fair trade
To combat protectionist temptation and build on the ability of the country to
cope with the tides of globalization, US trade policy should also tailor its
primary and secondary education systems to equip graduates with the skills to
compete in a global economy by emphasizing science, engineering and foreign
languages. The United States will be forced to take a look at redirecting
resources away from war and toward upgrading its own infrastructure. New York
City's status as the pre-eminent financial center is threatened by such cities
as London and Tokyo.
To realize Baucus' goal of renewing fast-track trade-negotiation authority, the
US Congress must feel it has the capital to support trade agreements, otherwise
fast-track will be stuck in a pit stop. "Fair trade" agreements or
comprehensive economic partnership agreements would continue the tradition of
including labor and environmental provisions, like those with Jordan and Chile.
A Washington trade journalist recently put it: "Labor and environmental
enforcement is needed so that politicians feel comfortable enough to support
free-trade agreements without getting clobbered by labor groups. Then we can
renew fast-track."
These comprehensive agreements commit partners to enforce their own
environmental and labor laws, which in turn comply with the International Labor
Organization. They could also offer deeper integration in the areas of labor
movement and port screening, for example, to trading partners that honor the
freedoms of speech, assembly and religion. These three freedoms are good
proxies for transparency, labor rights and civil society, all necessary for the
establishment of fair trade practices.
Other powerful approaches include fair trade and ethical trade initiatives. As
clean-energy consultant David Dell puts it: that which is truly profitable is
also sustainable, and that which is truly sustainable is profitable. Social
entrepreneurs, local governments, and increasingly business gurus such as
Michael Porter have reached this axiom. To these ends, fair trade initiatives,
such as HandCrafting Justice and Global Goods Partners, seek to cut out the
middleman, pay producers fair wages, and reinvest in community health and
education.
Ethically traded goods are those produced by companies that ensure labor
standards are enforced within their own company and by their suppliers. Another
idea is for companies to shoulder some of the burden of providing a safety net
to those laid off when jobs are moved to take advantage of cheaper labor. Trade
adjustment insurance and freer labor flows are part of the compact of free
trade that is yet unfulfilled.
The above initiatives define corporate social responsibility: philanthropy and
reinvestment, good labor practices, and business models that benefit people and
the planet as a whole. They help sustain a healthy trading system and act as a
de facto "trade Peace Corps", putting a human face to a US-led free market
system. Given the services these initiatives provide to US leadership, the US
government should consider bolstering them by establishing a fund to support
grassroots fair-trade activities and giving tax breaks to socially responsible
business models.
Notice that tariffs and competitive devaluations are not on the list. Although
both of these approaches are advocated under the guise of protecting fairness
and even human rights, history and economics tend to dispute those claims.
Instead, openness - with the proper safety net - can help advance human rights.
For the United States to justify and prolong its international leadership, it
must ensure that the rest of the world can access the benefits of
globalization. It can start by promulgating a more thoughtful approach to trade
- one that is neither protectionist nor free-market fundamentalist. By finding
a middle road between these extremes, the US can realize its own dream of
freedom and justice for all.
Devin T Stewart is director of the
Global Policy Innovationsprogram at the
Carnegie Council for Ethics in International Affairs.
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