Free Trade or Corporate Welfare?

We live in a global world today, where there is a high division of labor and a lot of trading constantly going on across the planet.  While some people see this is a bad thing, it makes us more prosperous.

Free trade is beneficial for all parties.  It allows even poor people in other countries, with little capital, to share in at least a little prosperity.  People can specialize in one particular thing, whether it is working in a factory, or growing a certain kind of food, or anything else.

Free trade across countries is beneficial, just as it is beneficial between states, cities, and individuals in a neighborhood.  If trade is beneficial within a country, then it applies the same to trade between people in different countries.

Unfortunately, politicians exploit the mantra of free trade in order to get handouts for their buddies.  Free trade agreements are used as a cover for corporate welfare and other power plays.

These so-called free trade agreements, such as NAFTA and GATT, are not free trade agreements at all.  You don’t have to have some complex agreement to ensure free trade.

If two countries really believe in free trade, they can just make an agreement not to levy any tariffs and to not interfere with any peaceful trade.  It is really that simple.  Unfortunately, this isn’t what is happening with these agreements.

Guatemala to Subsidize U.S. Corporate Giants

There was a trade agreement signed back in 2005 call CAFTA-DR.  It is an agreement between Central American countries and the U.S.  It contains a provision that would essentially give a monopoly on certain plants or seeds to the companies that supposedly discovered them.  It is sold as a protection of intellectual property rights, as if anyone should have the right to own the rights to a particular type of seed or plant.

In order to abide by the agreement, the government in Guatemala passed the “Law for the Protection of New Plant Varieties”.  Critics of the new law have appropriately called it the “Monsanto Law”, named after the giant U.S. corporation.  I would be surprised if Monsanto lobbyists didn’t help write the agreement and the law.

The law in Guatemala would make it illegal to own certain types of seeds or possess any plants derived from them.  This would be punishable by fines, and even possible prison time.

Fortunately, because of the uproar of farmers and other groups in Guatemala, the highest court there has suspended the law.  If the country doesn’t abide by the provision in the original “free trade” agreement, then it is possible Guatemala will get dropped from the agreement.  Of course, it is always dangerous for foreign politicians to defy the U.S. government.

It is amazing that corporate lobbyists in the U.S. not only affect U.S. residents, but also those in poor foreign countries.  As if some rural farmer in Guatemala were not poor enough, let’s grant a monopoly to Monsanto and other giant U.S. companies so that the poor guy can’t grow a particular plant on his land.  And if the poor farmer doesn’t obey, then just throw him in jail.

This is what our politicians call free trade.  I’m guessing this isn’t quite what Adam Smith had in mind when he wrote The Wealth of Nations.

We must not be fooled by labels.  These so-called free trade agreements may have some good aspects, but they generally do more harm than good.  They are written by lawmakers and corporate lobbyists.

The Occupy Wall Street crowd is correct in complaining about the top 1%.  But it isn’t the top 1% of wealthy people they should be complaining about.  It is the top 1% who get their money and power from political connections and government favors.  At least the people in Guatemala seem to understand what U.S. politicians are doing.