For years fair trade groups have warned that the “free trade” model being pushed by multinational corporations is driving a race-to-the-bottom in environmental and labor standards. By giving companies new powers to locate anywhere while limiting elected governments’ ability to pass public interest laws, systems such as the World Trade Organization (WTO) and the proposed Free Trade Area of the Americas (FTAA) undermine protections for workers and the environment, the argument goes. Eager to increase profits no matter what the social and environmental costs, corporations will naturally flee to those countries where regulations are loosest, forcing other nations to lower their standards to compete. The “free trade” system sets up a brutal survival-of-the-fittest contest in which the countries with the weakest standards prove the strongest—while ordinary people and the planet suffer.
The plight of Mexico’s maquiladora industry offers a bleak confirmation of these warnings. Mexico was once a “free trade” poster child, its lines of maquilas “proof” that low wages and loose regulations could attract investment. But cheap as Mexico’s labor is, it is not as cheap as that in Asia or Eastern Europe. In the last two years, Mexico’s maquiladora sector has lost at least 280,000 jobs with the closing of 400 plants. Many of the jobs have been transferred to China.
The ultimate affront: Statuettes of the beloved Virgin of Guadalupe now carry the “Made in China” label.
Groups such as Global Exchange have long criticized the assembly plants along the US-Mexico border as a dead-end model of development. The foreign-owned maquilas rarely transfer technology to Mexican industry, instead relying on workers to assemble already-manufactured parts. Wages hardly ever rise above subsistence levels, while union organizing drives are invariably crushed. For Mexico’s maquila workers, the departure of the assembly plants adds injury to years of insult.
A typical Mexican worker in an assembly plant makes a fraction of the average U.S. wage—between $2 and $2.50 an hour. A similar worker in China earns no more than 80 cents per hour. For a multinational corporation with no allegiance to any community, the comparison is no contest: lower wages usually win out. No wonder that Philips Electronics, Microsoft, and Canon have moved factories from Mexico to East Asia.
The flood of jobs from Mexico shows that the sweatshop model of development is not only inequitable, but also unsustainable. If a better deal comes along, corporations will jump for it, leaving workers in the lurch. In a global economy driven by the whims of investors on Wall Street, short-term profits are always going to trump the long- term investment that leads to genuine prosperity. Under the “free trade” system, communities shouldn’t expect to be regarded as anything more than disposable resources. The race-to-the bottom is real.
Such criticisms of the “free trade” agenda will be on display this September when the WTO holds a ministerial summit in Cancún, Mexico. WTO officials hope to advance a new round of “reforms” that will help corporations invest wherever they like while avoiding government regulations. But Mexican groups are determined to make Cancún the next Seattle, where trade talks were derailed in 1999 in the midst of citizen protests.
Campesino organizations are already mobilizing to bring to Cancun thousands of farmers who are outraged at how “free trade” policies have helped collapse crop prices.
U.S. organizations hope to make a similar splash in November, when the ministerial summit for the FTAA takes place in Miami. The FTAA’s backers say the proposed deal will be a bigger version of NAFTA, extended to all the countries of the Western Hemisphere (except Cuba.) Fair trade groups say that is exactly the problem. NAFTA has given corporations new powers to attack government health and safety laws if they interfere in any way with a company’s profits. Now corporate executives want to use the FTAA to speed up the privatization of key social services including health care and education. During the Miami conference, fair trade advocates will take to the streets to say, “No Way, FTAA!”
Hopefully the government officials at the trade conferences will heed the voices of the citizens instead of remaining in the pockets of their corporate funders. If they don’t, the race-to-the-bottom will keep accelerating, and the damage will become more difficult to repair.
Challenge Corporate Globalization
From September 10 to 14, the WTO will hold a Ministerial Summit in Cancún, Mexico. Tens of thousands of people are expected to protest the organization’s corporate-driven policies during the meeting. At the same time, communities around the world are calling for solidarity protests on September 13—a Global Day of Action Against Corporate Globalization and War. To get your community involved, write firstname.lastname@example.org .
GX is also organizing a Free Trade vs. Fair Trade Reality Tour in Mexico during the week leading up to the summit. To learn more about the tour, contact Xiomara at email@example.com  or 415-575-5541.
Then, November 20-21, the FTAA will hold its own Ministerial Summit in Miami, Florida. To get involved with demonstrations coinciding with the Miami meetings, write to firstname.lastname@example.org .