FREE TRADE !!!-----An Illusion.------Smoke and Mirrors.-----No such thing.

Never has been-----and Never will be !!

Within the compass of this website, there are two articles which ostensibly dealt with "Trade." The one was called "trade"----yet dealt with this subject primarily from the perspective of "currencies." The second was called "Globalization", and while it also dealt with trade, it's discourse was in large part devoted to the dangers of "Multi-Nationals" or "Conglomerates." So why now a third article.

The concept and the reason for yet another article on trade, is driven by Philosophical Thought on the subject. Perhaps not an analysis of particulars. Generated primarily from FEAR perhaps. What the underlying essential reasons are perhaps, is-----if one can coin a phrase, "The Silence Of The Lambs." No matter how large or how vociferous the meetings of those who fear and oppose the concept of so-called Free Trade, its impact on the political elite who meet to discuss and formulate this agenda is felt to be totally lacking. One has the impression that there is no impact at all. One is reminded of all those vast array of parabolic discs pointing into deep space constantly searching for intelligent life out there, and that incessant digital message going out. "Is there anyone out there."----"Are you listening." And finally.....The Utter silence !!

Nobody is listening. And that is the tragedy of it all. The question that begs an answer; is to be addressed to the Politicians. To whom do you owe your allegiance to. The masses who voted for you----or is it to the Companies and Conglomerates and Multi-Nationals who subscribed to your election campaign. Maybe one should answer that for them, as one fears that they have not the courage to give an answer. The Companies and Conglomerates HAVE NO VOTE----and the rest of the population has!!! So if there is to be such a thing as "allegiance," then prove it! LISTEN TO THE PEOPLE!

If one were to go on the Internet and log on to just two Search Engines such as Google and Yahoo and pose a search for "globalization" and "trade" this is what transpires:

Google: " Globalisation" is reflected by 254,000 web pages. Spelt as "globalization" results in 599,000 web pages. For 'Trade" the question is replied to as being 18,700,000 web pages!

Yahoo: "Globalisation" is reflected by 142,000 web pages. Spelt as "globalization" results in 310,000 web pages. For "Trade" the question is replied to as being 8,430,000 web pages!

So it is evident that on the Internet at least , both subjects are adequately catered for. Putting aside the constant exposure via newsprint, radio and television world-wide. Yet with all this , there seems to be no impact on the political scene.

So how can one's voice be heard. Evidently the only way one can be heard.......and loud and clear at that, is through the ballot box. Whenever there are to be "Provincial"---"State"----or "government" elections to Parliament----( Congress and / or Senate), those seeking election should Not Be Bothered with those STANDARD QUESTIONS----" Are you for or against Abortion-----Gays and Lesbians-The Environment. Only one question should be asked. "ARE YOU FOR OR AGAINST FREE TRADE." And before an answer is given------should be told, "you're not getting our vote if you are For Free Trade!" The same should apply when discussing "PARTY" policy. As a final gesture, their answer to the question should be requested to be "in writing." Cast in stone as it were. Thus when elected there is no ambiguity as to where his or her allegiance lies and what is expected of them "when a vote is taken."

In other words, whatever other" party policy" is, it is understood that one's job "is on the line" on that issue. One sees no other logical way of getting the message across. Perhaps it is time to get to the specifics of this.

One is reminded of an old nursery rhyme which includes the following words:

THE BUTCHER.......THE BAKER......THE CANDLE-STICK MAKER.

We will alter that slightly to:

THE BUTCHER.......THE BAKER......THE GROCERY STORE.

In a small village there are one each of these and the residents buy their respective requirements at each of these establishments. Everyone is happy. Each business has the total required segment of trade from the population. However one day the Grocer decides to include a bakery section in his store, and this results in the Bakery losing a considerable amount of trade. Eventually, in an effort to compete prices fall to the extent that one day that bakery had to close. The same fate eventually overtook the butcher when the grocer opened yet another division.

The "MORAL" to that story-------is why FREE TRADE CANNOT WORK !!

In any given society ; in any given domestic economic entity of CONSUMPTION there are definitive limits.

Nothing is INFINITE!!! Thus when one speaks of "free trade"........"open borders to the flow of goods and services," it's all HOGWASH! PIE -IN-THE SKY! For want of a more "definitive word".....BULLSHIT! Let us try a few examples.

An excellent area in which to make a start is NAFTA. ( North America Free Trade Agreement.)

We are going to study the regional share of world trade with the United States as it was reflected in the year 1993 and as it's end result in the year 2000 during the advent of NAFTA.

                1993                                                                                   2000

NAFTA share of U.S. Trade         28.3 %                         32.8 %         An increase of     4.5 %

Japan "    "    "    "    "                 14.7 %                         10.6 %                 A loss of     4.1 %

European Union "    "    "    "        18.9 %                         19.3 %         An increase of     0.4 %

Rest of World "    "    "    "           38.1 %                         37.3 %                 A loss of     0.8 %

These figures were extracted from "The Economist" magazine dated April 21st Year 2001.

The evidence is stark. Primarily Canada and Mexico's share increased primarily at the expense of one country.........Japan. The problem with figures, is that they can and invariably are interpreted differently. So let us put the best perspective to it as a start. Ostensibly over 7 years of NAFTA trade their share of the increase in trade amounted to 4.5 %. Shared between them. While not equal, their divided "average" was 2.25 %. Taken over the 7 year period , the average annual growth equates to 0.32 % per year. And this was during the period of the greatest growth in G.D.P. EVER EXPERIENCED IN THE U.S.A.

The contemplated expansion into an expanded trading zone of another 31 countries into that of 34 in total boggles the imagination. Especially so while the U.S.A. at the same time pursues an International Agenda to encompass THE WHOLE WORLD into a Global Free Trade Agreement! The umbrella under which this new Regional trade entity is to operate under is to be called FTAA. Free Trade Association of the Americas. Thus it is expected to either "include" NAFTA or "supersede" NAFTA as Mexico and Canada and the U.S.A. will be within both.

If one deals with just a few of the problems that have occurred and still exist between the members of NAFTA it can be better understood how the larger grouping becomes nonsensical in concept. While there is meant to be "FREE TRADE" between them, this does not as yet exist-----even after 10 years. While it may be meant to eventually be so----it may never happen as such. This was evidently meant to be a gradual process, and because problems were expected to arise, there are mechanisms by which it is expected that these be AMICABLY dealt with. However finely stated in print and honestly meant as "intention", this has created and still does result both as a constant irritation and "hurt."

Constant problems arise with Canadian Lumber exports. Problems with steel rails and other steel products. Pigs----pork----and pigs bellies. Potatoes from the Eastern Provinces of Canada, advertising in magazines. One can relay innumerable problems and irritations that constantly arise between the two countries. Doubtless this also occurs between Mexico and the U.S.A. as well, yet not that openly acknowledged. One recent argument entailed the transport of products by Mexican owned and driven trucks carrying goods into the "States." While U.S. truckers are not limited in their delivery of goods to anywhere in Mexico, the Mexican truckers are limited to deliver supplies to designated areas just across the border of the U.S.A. for trans-shipment to American truckers. After strenuous objection by Mexico, it was stated that this was a "road safety measure," as Mexican trucks were older and less efficiently maintained as were those in the U.S. One believes that the matter is being resolved to some extent by Mexican truckers having to obtain "roadworthy clearance certification" from American authorities.

As the proposed Free Trade Area of the Americas----which we shall now constantly refer to as the "FTAA" relies primarily on the U.S. domestic market for it's growth. it's "catalyst" and it's "engine," let us examine this aspect. As the strongest economy in the world, and the single biggest consumer of goods and services, it is a natural corollary to assume that each member expects their exports to the U.S.A. to grow to a marked extent. For not, after all, are we talking about the biggest consumer market in the world? However, sad to say, there are limits to EVERYTHING. Even consumer markets. One must never forget that the PRIMARY SUPPLIER of any domestic market----are Domestic Manufacturers of Goods and Services. For after all it is the domestic output or supplier of these that creates the jobs for it's fellow citizens and it is from these people whose tax's sustain the economy of the country.

If there is to be a PRIMARY FACTOR which will prove to be the unraveling of the concept of FREE TRADE-----it will be the fear of job loss. The second will most probably be the conflicting interests of American Exporters to that of American Importers. So let us deal with these two first. The success of NAFTA, however slow in growth percentage, is factually real, and in "dollar terms" quite remarkably so. Yet having said that, there are and were specific reasons for this. First of all is the factor of proximity. Mexico has a common border at the Southern end, and Canada's stretches for thousands of miles along their common border to the North. There is as well the disparity in labor cost due to the differences in currency values. So the two "C's" exist. Convenience and Cheap. And if not quite "cheap." then at least "cheaper" in a number of respects. Another extremely important factor is that of "ownership." Apart from the importation of oil, which in itself forms the greatest single monetary value entity of imports from Mexico, is that perhaps 95 % of the goods moving across the border between Mexico and the U.S.A., are "American owned." They are produced by American owned manufacturers located in Mexico! As a result the primary Mexican content is LABOR. Thus in reality, where figures are quoted as being bi-lateral trade between the two, is not so in essence. It can best be described as a C.M.T. operation. Cut---Make---and---Trim as described in the garment industry. When in the past in the U.K. and in Europe it was referred to as screwdriver factories when these "assembly plants" were first set up in those regions by Japan.

When Japan was faced with the problem of trade barriers, high tariffs and "quotas," the remedy offered to them was to put up assembly plants in the U.K. and Europe. Thus was born those "screwdriver factories." The product was manufactured in Japan and sent in kit form to the "assembly plant " where the local labor screwed in a few screws or tightened a few bolts and nuts----and "Voila!" those goods became "manufactured in......." etc. etc. At a very much later stage pressure was brought to bear on Japan to start with "local content" to an ever increasing percentage. The same applied when Japan put up motor assembly plants in the U.S.A.

So to a large extent, aside from oil imports, those so-called "import / export " monetary value figures are decidedly skewed. They are in reality American goods traveling "North and South" for a given moment in time.

Why did NAFTA work, and why does it still work to a degree. There is an old saying that perhaps explains it best. We quote : "There is a time and a place for everything." It came at a time when America was starting it's greatest economic boom or expansion in it's history. It came at the time of the advent of the "Technological Revolution," and the U.S. was at the forefront of it. The leader of it. A time when despite the loss of jobs due to the movement of manufacturing to Mexico and overseas, job replacement in the Tech Industry was such that unemployment figures shrunk from 6.5 % to 3.9 % during those years. So the time was right Logic perhaps dictated that "the place" was right as well. Cheap, close and accessible labor to the South and abundant resources and highly skilled labor to the North. As an added advantage was the proximity. That is why it worked.

Alas it is no more so! The U.S. economy is slowing. For whatever reason. Placing perhaps the best perspective and hoped-for end result, it may not end as a "recession," but it will be a slower growing economy with resultant and inevitable job loss. And there are no guarantees as to how long this phase will last. But until such time as it stops "shrinking," it cannot be perceived to grow---at whatever minor pace that will be. So the expected success of NAFTA cannot presage the success of any new undertaking, especially one so large , diverse and spread-out as FTAA. None of the ingredients that are in NAFTA are present elsewhere.

One cannot see American labor, union and non-union ever agreeing to a situation where the possibility exists that the unemployment figures will once again creep up to figures in the 8 / 10 / 12 range. One should never forget that however slow World economic growth increases in the next 5 years, it gives that much time to everyone else to play "catch-up " technologically to the stage at which the U.S. is presently in advance of everyone else. It would be fatal for the U.S. to assume that they have the monopoly on the "world's intelligence."

It is perhaps time to study that second factor mentioned, which was U.S. Exporters versus U.S. Importers. Those businesses and companies who developed export markets are by and large not the same as those who are importing goods and services for domestic consumption. They are diametrically opposing factors. The aim of one is to increase sales by selling overseas, while the other is to import in order to make a profit on one's domestic market. To make the difference even more stark, the one depends on a lower foreign tariff barrier while the other depends on a lower domestic barrier. One would say that the obvious solution would be to reduce or eliminate both, but there are obvious reasons to contra that assumption. The exported goods may threaten the jobs of other trading partners, whereas the imported goods either threaten one's own fellow citizens, or may be no threat at all, and thus enable goods to be purchased at a cheaper price than obtainable from local manufacture. It is the DEGREE to which these factors apply that ends up to be the deciding factor. However the words "FREE TRADE" means just that! No barriers or hindrance to the free flow of goods and services. Above all it includes the free flow of money. This factor will be remarked upon shortly. The definitive difference between exports and imports, is that exports have little or no bearing on job loss, and they may very well have the opposite effect in creating new jobs, while imports may have the opposite effect. So one ends up with two opposing forces with two different philosophies and two different "lobby groups". To an extent, attempting to influence voters as well as elected officers.

An added complication are those who are ---or could be classified as being both exporters and importers.

Let us examine a few scenarios in this relation. We are now presuming the existence of the FTAA. An American company sets up a plant in Guatemala for the express purpose of exporting these goods into the U.S. for it's domestic consumption. At the same time an identical or similar product is produced in Brazil and Paraguay. By the determining factor that they are all members of the same regional trading group they may all export without hindrance to the U.S. Yet there are differences. The plant in Guatemala has access to the U.S. Congress by virtue of it being U.S. owned , while the other two do not have that facility. On the other hand, although the three Latin-American Countries are all members of FTAA, only Brazil and Paraguay are also members of "Mercosur" which is a separate trading block encompassing Argentina, Brazil, Bolivia, Chile, Paraguay and Uruguay. Many of the clauses in that trading agreement may be in conflict with what may be eventually agreed upon under FTAA. To take this a stage further, what if American Conglomerates who are in competition with each other both domestically as well as Internationally, decide to either set-up or purchase Manufacturing or Mining Companies in a number of the Countries within FTAA. Who is to determine their market share of the U.S. domestic market if it is their intention to export their output into the U.S.A.

While these imponderables are being contemplated , what of the 33 members other than the U.S. who are attempting to export their products into the U.S. domestic market. Who gets the coffee, the shoes, the beef, the sheep, the wool, the cotton----etc. etc. Maybe you get the picture!

Now one has to bring in other factors. Would the cotton growers of the Southern States of the U.S. WELCOME the flood of competing raw cotton. Would the citrus growers of California and Florida welcome the influx of similar fruit. Would the welcome mat be in place for sugar imports. And what of Idaho and potatoes. Either nobody is making "a noise"-----or nobody is listening.

What of the rest of the World who enjoy reciprocal trade with the U.S. Would they sit idly by while their market share goes elsewhere. One thinks not! Surely retaliation is the name-of-the-game. Why purchase American goods when their exports to the USA, either dwindle or disappear altogether.

Perhaps a final point on the matter. While politicians may make voluminous agreements with many clauses and sign these documents, they end up having perhaps an entirely different effect in practice. Politicians are by and large not in the business of importing and exporting, and more than likely not involved directly as well in supplying goods and services for the domestic market. So no matter how many agreements they sign, they CANNOT FORCE an importer or exporter to sell or purchase from any desired source. While there may end up to be a " no tariff " barrier to imports from Latin-American Countries, the Importer may still find it cheaper or better to purchase their requirements elsewhere.

Some form of so-called "Free Trade" exists and is seen to work for a given period in time. It goes by the name of Bi- Lateral Trade Agreements. These are essentially trade agreements entered into between two countries, and generally cover specific aspects of trade between them. They could concern specific tariffs or specific commodities or for that matter anything and everything that is of mutual concern to the parties to the agreement, with regards to trade between them. However these are "government-to-government" signed documents, and while they are meant to deal with trade in specific commodities and services, these factors are generally carried out by specific businesses and Industries. And there-in lies it's weakness. While it may have been meant to enhance the trade of specifics or protect the trade of specifics, it cannot bind specific Companies or Industries to specific Importers on either side. There is a mechanism used which is intended to overcome this aspect, and that is Export Permits and / or Import Permits ( or allocation ) whereby say a given volume or value of goods or services are permitted within the agreement and the Importer / Exporter may apply for a share thereof. However, where this invariably breaks down, is either from the pressure exerted from local manufacturers who object to the volume of imports, or as said elsewhere, one cannot force an Importer to buy from a particular source, or for that matter export to a particular source.

We will pass no comment on how many "Agreements"-----signed "in good faith" end up being either discarded, circumvented, or ignored!

Putting aside the flow of goods. What of the flow of MONEY. "Sovereignty is a big issue with many countries. Especially those who have weak or struggling economies. And those who have these sort of economies---have weak currencies as a result. With the unfettered flow of finance across borders, the fear is that "for peanuts" a Country's wealth of Banks, Manufacturing, Mining and "what-have-you" can end up being foreign owned. While this may be inconsequential to a country as rich and powerful as the U.S.A., it is decidedly not so elsewhere. Foreign owned "business" can for any reason and at any time "pull-up-stakes" and re-locate elsewhere, with sometimes devastating effect on the local economy. The four largest Mutual Funds in the United States could possibly purchase 50 % or more of the entire wealth of any 15 countries who are to form part of FTAA. SO THIS FEAR IS PALPABLE to many of these countries.

As we come to the end of this article, an image comes to mind. It is that of 33 Mouse Traps baited with cheese. We close this with an apology to all the poets of the World.

LEST WE

BEWARE

AND THE MOUSE TRAPS SPRUNG

THE MICE ARE GONE

THE CHEESE STILL THERE.