Trade is now a favorite topic for many politicians and the media, especially between China and the U.S. Likewise, labor and progressive groups continue to delve deeper into trade issues, offering a variety of working class solutions. The far right, too, is obsessed with trade, using it to fuel nationalism and anti-China sentiment. No subject is prone to so much demagoguery combined with so little explanation.
Before one can offer a vision of "fair trade," it's helpful to understand what "trade" is.
A popular misconception of trade is that governments trade goods between themselves. The false implication here is that trade is a national issue, equally important to all that fall within the boundaries of certain countries. This mistaken premise -- promoted by both media and politicians -- leads to erroneous conclusions.
In reality, governments have very little to do with trade. Instead, giant corporations are the main actors behind global trade:multinational corporations produce goods -- in China -- and sell these goods overseas to other corporations -- to Wal-Mart, for example.
The Chinese and U.S. governments basically do nothing. This is "free-trade" in action: goods and services -- including investment cash and factories -- freely flow between nations, unobstructed by government interference.
Free trade is negative for the international working class for numerous reasons. When labor and regulation costs are too high for competitive super profits in the U.S., for instance, corporations jump ship and leave the country to exploit the slave wages of poor countries, working with subjected foreign nations that limit labor and human rights to keep the poverty wages in place. Free trade also pumps cheaper goods into poor nations, wiping out their local agricultural and other industries, causing mass unemployment and migrations.
Under capitalism, corporations dominate the global economy, and governments are left with only one recourse if they want to intervene over trade issues: they can lower or raise import/export costs at the border. The U.S. government can raise taxes (called tariffs or duties) on Chinese goods, which have the effect of limiting Chinese imports, and giving U.S. corporations greater dominance over the U.S. consumer market. Raising taxes on imports -- or keeping them out completely (an embargo) -- is referred to as protectionism, which can and often does keep prices high in the domestic market.
Protectionism is still capitalism dominated by giant corporations at the expense of the rest of us, but unfortunately, many labor and progressive organizations believe that protectionism offers relief to the U.S. working class. They demand that the U.S. government intervene in trade issues by keeping out foreign goods, thereby "protecting jobs." This same solution is also advocated by the far right, including neo-Nazis -- people who have not a progressive bone in their body.
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