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What Are Free Trade Agreements, Really?

What Are Free Trade Agreements, Really?

“Free trade agreements.” Many union members and other workers might tell you that so-called FTAs (of which NAFTA—the North American Free Trade Agreement—­is the most well-known) haven’t been effective at creating jobs or raising standards of living—and they’d be right. But what are these FTAs, really

Well, first of all, “free trade agreements” are only somewhat about trade and have very little to do with making it “free.” At least if we are talking about U.S.-style trade agreements since 1993, when NAFTA went into effect. 

Instead, U.S.-style FTAs put in place hundreds of pages of rights and privileges for private companies who trade and invest abroad, but don’t put in place any reciprocal requirements on these companies toward their customers, employees, or even the countries in which they operate. The result has been to create a system of globalization that has skewed nearly all of the benefits toward global corporations and the richest 1% while the workers whose daily efforts add value to products and services get a smaller and smaller share of the wealth they create.

The current system is unfair and unsustainable in the long run. It has promoted competition for investment in which the “winner” is often the country with the lowest wages, weakest labor rights and worst environmental standards. Who does that help? Certainly not our brothers and sisters trying to organize and engage in collective bargaining. If workers continue to become impoverished in a global race to the bottom, who will buy all those goods and services the world economy is producing?

The AFL-CIO has a better idea: trade and globalization based on a new model, with rules that benefit working families and create shared prosperity. The Obama administration is currently negotiating a “free trade agreement” with 10 other Pacific Rim nations (known as the TPP, or Trans-Pacific Partnership FTA), and it is about to begin negotiating two more so-called FTAs (one with Europe and one with 20 nations over trade in services). 

Will these agreements benefit America’s working families any more than prior agreements have? They could—but only if they adopt a new model. It’s up to President Obama to use the old approach or adopt a new one. 

Click to read the AFL-CIO’s Executive Council statement, titled “The Trans-Pacific Partnership: Working Families Need a New Trade Model,” and then click to tell President Obama to adopt the AFL-CIO’s recommendations.  

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