“Free Trade” Deals: Undermining Defense, Sovereignty, and the American Job Market

A powerful conglomerate consisting of Wall Street moguls, multi-national corporate elites, and political insiders — the one percent cabal as some call them — are mounting an assault on the American economy, endangering national defense, and subverting U.S. sovereignty. Their weaponry includes so-called “free trade” treaties like the North American Free Trade Agreement (NAFTA) — the godfather of subsequent deals — and the establishment of regulatory agencies such as the World Trade Organization (WTO) and the General Agreement on Tariffs and Trade (GATT).

That’s a mouthful of allegations, but let me address each charge. First, the once percent cabal.

Paul Craig Roberts was the Assistant Treasury Secretary in Ronald Reagan’s cabinet. He’s written eight books and his articles appear in leading publications like The New York Times, BusinessWeek, and the Wall Street Journal. He knows his stuff. Roberts concisely defines the power elites:

The U.S. now resembles an oligarchy of private interests. The most powerful ones are Wall Street, AIPAC (the American Israel Public Affairs Committee), the military/security complex, the oil industry, agri-business, insurance and pharmaceuticals. These private interests control economic and foreign policy, write the legislation that Congress passes and the President signs, and have achieved the monopolization of the U.S. economy by large-scale commercial organizations. As far as I can tell, traditional conservatives scarcely exist in the U.S. today. They have been eliminated by the neoconservatives, essentially militarists committed to U.S. world hegemony.

Now let’s get to the real deal of “free trade” vs. American sovereignty.

Free trade treaties have nothing to do with free or fair trade: they are managed commerce arrangements. The NAFTA pact (January 1st marked its 20th birthday) had over a thousand pages of fine print — it was filled with favors and exceptions for special interests, while imposing obligations and restrictions on the beleaguered American manufacturing sector. Free trade deals pose a threat to national sovereignty by ceding trading controls and accountability to such international agencies as the World Trade Organization. In his 1998 book, The Great Betrayal: How American Sovereignty and Social Justice Are Being Sacrificed to the Gods of the Global Economy, pundit Patrick Buchanan has noted, “The WTO elevates trade to the highest good. It is trade uber alles. Trade trumps the environment. Trade trumps human rights. It trumps the security of countries. It trumps the sovereignty of countries. It should never have been created.”

The fine print contained in the investment chapters of free trade deals grant foreign corporations property rights that are nonexistent under U.S. constitutional law. These rights enable foreign corporations to drag the U.S. before international tribunals seeking money to compensate for the costs of complying with “free trade” regulations (an oxymoron) that protect their self-interests. During the debate over the Korea free trade pact, the International Brotherhood of Teamsters President Jim Hoffa issued this statement: “One of the real dangers of this deal is that it gives South Korean multinationals new rights to challenge U.S. laws. Why should a foreign company or investor have more power in this country than our own small businesses?”

When this writer interviewed Ian Fletcher, author of Free Trade Doesn’t Work: What Should Replace it and Why, he referenced the recent Korea free trade deal as an example of how international courts can overrule U.S. jurisdictions: “Korean corporations can take any dispute with federal or state laws, regulations, or rules to the WTO. There are over a two hundred corporate affiliates of Korean firms in the U.S. that can obtain these new rights under the free trade agreement to challenge local, state and national laws.”

Congressmen Ron Paul (R-TX) and Walter Jones (R-NC) wrote a letter to their House colleagues stating:

Free trade theorists such as Adam Smith and David Ricardo must be rolling in their graves to see pacts like President Obama’s Korea Agreement called ‘free trade.’ It includes endless pages of rules and regulations enforced by foreign tribunals. This act is a sneaky form of international preemption, undermining the critical checks and balances and freedoms established by the U.S. Constitution’s reservation of many rights to the people or state governments.

An example of how free trade pacts can widen national security cracks in foreign policy can be found in the deal with South Korea as well. The Associated Press called the Korea Free Trade Agreement (KFTA) “the largest U.S. trade deal since the 1994 North American Free Trade Agreement.” As usual, the mammoth 1,000-plus page Korea deal micro-manages U.S. trade from the age of cows to the size of auto engines.

Yet when the Korean free trade pact came under scrutiny, this shocking news came to light: U.S. tax dollars will actually flow into North Korea via its Kaesong Industrial Complex, a “free trade” haven for sweatshops where South Korean firms employ some 44,000 North Koreans for wages of about 38 cents an hour (their autoworker counterparts in South Korea earn $23.30 an hour). North Korean-manufactured automobile parts can be built into South Korean cars sold in the U.S. The KFTA deal allows up to 65% of these auto parts to be purchased from North Korea — then shipped here duty-free (for details, see the Huffington Post article, “Korea Trade Agreement Would Subsidize North Korea Government,” for detai).

Although N. Gregory Mankiw, chairman of President George W. Bush’s Council of Economic Advisors thinks that, “outsourcing is just a new way of doing international trade,” the January, 2011 National Defense Magazine (see “Outsourcing U.S. Defense: National Security Implications”) has observed, “Politicians and labor unions demand that the Defense Department buy American when, in fact, the reliance on foreign suppliers has increased sharply in the last decade and is likely to do so even more in the future … The use of foreign suppliers and concern about the decline of the U.S. defense industrial base has been on the radar among some for years.”
Uncle Sam just can’t learn new tricks. Now we’re negotiating the Trans-Pacific Partnership (TPP) — a deal that sets rules on non-trade issues such as food safety, Internet freedom, medicine costs, financial regulation, and the environment. TPP binding regulations would require the U.S., Australia, Brunei, Canada, Chile, Japan, Malaysia, and other Asian nations to conform their domestic policies to its rules. This time, incredibly, it is being cobbled together in secret: 600 corporate “trade advisors” are withholding the text from Members of Congress, governors, state legislators, the press, and the public. In an appearance on the Bill Moyers program, Dean Baker, co-director of the Center for Economic and Policy Research stated, “This really is a deal that’s being negotiated by corporations for corporations and any benefit it provides to the bulk of the population of this country will be purely incidental.” Yves Smith, an investment-banking expert who runs the Naked Capitalism blog added: “There would be no reason to keep it so secret if it was in the interest of the public.”

William Greider, author of Secrets of the Temple: How the Federal Reserve Runs the Country and One World Ready or Not: The Manic Logic of Global Capitalism, sums up the “free trade” scam this way: “The great, unreported story in globalization is about power, not ideology. It’s about how finance and business regularly, continuously insert their own self-interested deals and exceptions into rules and agreements that are then announced to the public as ‘free trade.’”


This article appeared in the Unz Review (www.unz.com), January 24, 2014

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