Ideas for Change: Replace Free Trade With Fair Trade

by Emily Gertz

Published January 10, 2009 @ 02:21PM PT

I've invited finalists of the Ideas for Change in America competition with ideas relevant to stopping global warming to tell us more about her or his idea. I'll be posting their responses between now and the end of the voting: 5 pm Eastern on Thursday, Jan. 15.

This post is by Keith Rouda, the author of the idea Replace Free Trade With Fair Trade. Take it away, Keith:

Unrestrained competition puts the producer's focus 100% on providing the best product for their market at the best price. In a purely competitive environment any dilution of this focus risks failure. We learned long ago in the United States that this focus MUST be extended for competition and capitalism to work. The only way to allow companies to do this is to make all of them extend in the same way. This keeps the playing field level and allows producers to continue to compete successfully.

The only way to ensure that companies (and nations as a whole) can afford to divert competitive energy and resources to concerns such as child labor, environmental protection, global warming, worker safety, and other broad societal imperatives is to remove them as competitive factors. These concerns can be removed as competitive factors by using tariffs to ensure that no companies or nations with lower mandated requirements benefit economically by doing so.

We have mandated that US producers meet certain requirements with regard to a wide variety of societal concerns. What we have not done, with our Free Trade policies, is extend these mandates to our trading partners. In promoting Free Trade we have created an uneven playing field wherein companies that pay good wages, companies that invest in worker safety, companies that invest in environmental protection and sustainable production practices, and companies that direct money toward avoiding global warming end up with an economic disadvantage compared to those that don't bother.

This is the "race to the bottom." The only companies that can survive are the ones that find ways to avoid these investments and control their costs.

Fair Trade components to our trade agreements would remove the competitive advantage that is gained by racing to the bottom. In fact, it would do just the opposite. It would create an economic advantage for companies (and nations) that race to the top!

If our trade with another country includes provision for whichever country has the highest government mandated standards to add tariffs that eliminate the advantage gained by the country with lower mandated standards, every country would race to have higher standards...for workers, for the environment, for safety, for consumer and investor protection, and for sustainability.

That's why we need to add Fair Trade language to our Free Trade agreements.