The way trade works in the global economy can be insane – it wastes resources, worsens climate change, and undermines the livelihoods of millions of small-scale producers worldwide. Yet it is an almost unavoidable consequence of de-regulatory ‘free trade’ agreements and the billions of dollars in supports and subsidies – many of them hidden – that prop up the global economy.

To raise awareness about this issue, we’ve produced a short film and a fully-referenced factsheet that helps to explain how and why ‘insane trade’ happens:Read our ‘Insane Trade’ Factsheet (PDF)

Some Jaw-Dropping Facts
about Insane Trade

• More than half of the seafood caught in Alaska
is processed in China; much of it is sent right back to American supermarkets – Alaska Journal of Commerce, 2018.

• Mexican calves fed American corn are exported to the United States, where they are butchered for meat, which is then sold in Mexico – The New York Times, 2017.

• African-grown coffee is often packed in India, Canadian prawns are processed in Iceland, and Bolivian nuts are packed in Italy – UK Times, 2007.

1) Say NO to Insane Trade

Eliminating unnecessary trade would immediately reduce pollution
– including CO2 emissions – and slow resource depletion.

– Speak up – Share our Insane Trade factsheet and short film.

– Call for an end to corporate subsidies and tax breaks. For links to other organizations working on these issues, see the Resisting Corporate Power, Globalization, & ‘Free’ Tradecategory on our Links page. Read more about subsidies on our blog.

– Critically question “free trade” dogma. See our Independent Media Sources page for a list of sites that critically cover free trade. Head to our blog to read more about why so few people are informed about trade issues, and what can be done to stop free trade treaties.

– Support steps to internalize the costs of fossil fuels. For links to other organizations working on this issue, see the Environmental Justice, Climate, & Energy category on our Links page.

2) Say YES to Local Economies

Localizing helps small farms and local businesses to thrive,
strengthens community, and supports personal well-being.

– Buy local food and other local products.

– Help build local food systems and local business alliances. For links to other organizations working on these issues, see the Local Economies and Rethinking Economies and Food & Agriculture categories on our Links page.

– Grow the movement by organizing a workshop, study group, or film screeningabout economic localization.

Frequently Asked Questions
about Insane Trade

How is it cheaper to ship food across the world for processing than to process it where it was grown or caught?

Companies often relocate labor-intensive work overseas to minimize costs – Scotland’s minimum wage is about four times that of China, for instance, which explains why Scottish fish is often processed in China.

With global fossil fuel subsidies (direct and indirect) on the order of $5 trillion per year, this energy-intensive way of doing business is often less expensive for large food distributors, though it carries great costs for the environment and for livelihoods in the food’s country of origin. Lax international free trade rules help make this possible as well.

Why else might countries “re-import” their own products?

In many cases, companies export and re-import goods to benefit from tax policy loopholes. For example, China’s value-added tax (VAT) allows businesses to claim tax rebates by exporting their products, while other businesses can then re-import those same products to claim rebates of their own. Fossil fuel subsidies, which reduce transport costs for businesses, help make this a viable strategy.

The results are absurd. For example, in most years since 2005, China has imported more from itself than from the United States – despite being the US’s third-largest export market.

Availability of crops varies seasonally – is this a factor in global trade?

Not really. Even in the height of apple season in the northern USA, apples from New Zealand and Chile flood supermarket shelves – and regardless of origin, many supermarket apples stay in cold storage for up to a year, so the season doesn’t matter.

Distributors source from wherever is least expensive within their established channels. Supermarkets will choose apples from 10,000 miles away if they’re cheaper than apples grown just 10 miles away. Same with other fresh foods.

The main contributors to insane trade are subsidized transport, free trade agreements, import-export tax rebates, and differences in labor costs and environmental and safety regulations – not seasonal availability of fresh produce.

What about differences between regional crop and livestock varieties? Does this explain why countries both import and export identical foods?

In most cases, NO. In the world of big agribusiness and global trade, foods are interchangeable commodities – they’re grown in large quantities, and regional differences are something to be eliminated. For monocultural producers and large- scale marketers, the goal is uniformity.

Sometimes, regional differences in foods do influence global trade – but not in the way you might expect. For example, beef from factory- farmed cows in the USA is usually too fatty to be sold as hamburger meat. So, that beef gets shipped abroad, and leaner grass-fed beef gets imported. Changing animal husbandry practices in the USA would solve this problem (and several others) – but because of subsidies for fossil fuels and transport infrastructures, insane trade is the industry’s most profitable “solution”.

How does global trade affect the climate?

In 2012, commercial ships produced over a million tons of CO2 per day – more than the emissions of the UK, or Canada, or Brazil. That’s roughly 4% of the world’s CO2 emissions – and it’s set to grow to 17% by 2050 if current trade rules continue.

The growing aviation industry will produce another 20% of global emissions by 2050. And that doesn’t account for the infrastructure needed to support long-distance trade – including cement production, which already contributes 8% of the world’s emissions per year.

Remarkably, climate agreements like the Paris Accords do not account for the emissions from international trade: the CO2 emitted by the thousands of oil tankers, container ships and cargo-carrying aircraft that crisscross the globe do not appear in any nation’s CO2 accounting. Why? Because policymakers believe that trade – and the growth of global GDP – is more important than the climate. Insane!

Do people just want to buy food, and other things, from far away?

Watch and Share our Insane Trade film (3.10min)

Read and Share our ‘Insane Trade’ Factsheet (PDF)

Photo by ImipolexG

The post How Insane is Global Trade? Here are the facts appeared first on P2P Foundation.

For freedom is an ambiguous word. It can be seen as freedom from something or freedom for something; freedom for action or freedom for inaction; freedom to own and freedom to share; freedom for people and freedom from people.

Free trade and the global political economy

A large part of the modern global construct of institutions is justified on one particular interpretation of freedom: freedom of trade. From the General Agreement on Tariffs and Trade, to the institutions of Washington Consensus (IMF, World Bank and the US Treasury Department) and the EU common market and the Eurozone; to the controversies of the Trans-Pacific Partnership and the Transatlantic Trade & Investment Partnership, a large volume of the world-wide struggle and conflict concerns the regulation of international trade and the related financial flows.

And this is something more than a certain political choice of the time. The exchange of commodities is a practice that is hard-wired into the very core of the industrial production and capitalism. From the very beginnings of the industrial revolution the protrusion of exchange as a social practice has been recognised. Adam Smith in the first chapters of the Wealth of Nations unveils this trade-off in early industrial society, which is traced back to the division of labour, a central aspect in the development of industrial production. In a society with developed division of labour individuals produce only a small fraction of the goods or services that are necessary to satisfy their needs. Therefore, they have to exchange the products of their own labour to those of other people’s labour. Labour, in turn, becomes itself a commodity, valued and exchanged like any other, rationalising human exploitation in economic affairs.

Admittedly, Smith’s era was not the first time when the practice of exchange appeared in human societies. Trade has been around for much of the documented human history. But in the industrial society it was the first time that a certain level of technology and the organisation of the production rationalised trade as a crucial function for societies. In turn, the price system institutionalised markets as the determinants of the value of things.

Subsequently, the pursuit of freedom become institutionalised through the promotion of free trade. The idea of free trade as an emancipatory force for nations also has its roots back to the classical political economy and the theory of David Ricardo. The main concept justifying the Ricardian theory of free trade is the comparative advantage. Ricardo suggested that when a nation concentrates its productive resources to that sector where there is an advantage in terms of the cost of production in comparison to other nations, it can become more competitive and dominate the international markets in this sector.

However, what Ricardo widely dismissed is that there are qualitative differences between different economic activities. It is easy to understand how a nation producing agricultural products and raw materials cannot compete with a nation producing high value-added manufactures and technological products. For the first one, becoming competitive is a race to the bottom, constantly pushing wages and prices down, as well as its national income, while for the second one, competitiveness comes from technological innovation and higher productivity. Moreover, similarly to individuals, when nations produce only a fraction of the goods they need, based on their comparative advantage, they cannot abstain from importing the rest of them. The declining terms of trade against nations with lower levels of technology will eventually lead to the explosion of their trade deficits and international debt. Thus the only comparative advantage they are developing is one in becoming and remaining poor.

The rich and technologically advanced nations have widely exploited this function of global trade. They feed their manufactures to the countries that are practically deprived of the ability to industrialise and offer huge amounts of money in the form of loans, purported to help developing nations service their external debts. In return they force further liberalisation of trade and finance, so that indebted countries can keep buying their products, while they take advantage of the deregulation to take control of their resources, leading to devastating results for the developing economies. Seven decades of development aid programmes and other three of fiscal consolidation programmes for indebted countries testify to this direction. The neo-liberal fallacy has led to a new form of colonial expansion of rich nations against poor ones.

Joseph A. Schumpeter graphically summarises the Ricardian theory of free trade in one sentence: “It is a perfect theory that can never be refuted and lacks nothing but sense”. The divorce of the theory from reality is as vast as the inequality it has caused in the world. And all that global  institutions seem to be doing is feeding their disillusions, with policies that further strengthen the forces generating this inequality in the first place.

“Free as in freedom”: why free tech matters

Richard Stallman in 1983 initiated the free software movement and the pursuit of an alternative interpretation of freedom: the freedom of people to use, study, share and improve the technological means of computation. A different approach of people’s capacity to create and relate to each other. While the free software movement is focusing this effort on computers, it is in fact a struggle that concerns technology in general. It refers to the freedom of humans to control the fundamental means of their subsistence; the freedom to pursue their own meaning of freedom.

What would have happened if the international institutions were promoting free technology instead of free trade? What if TTIP stood for “Transatlantic Technology and Innovation Partnership” setting down the rules for the diffusion of knowledge and technology?

There is indeed one historical moment that illustrates the potential outcome of such an effort within the current global structure. President Harry S. Truman in his 1949 inaugural address announced the famous “Point Four” foreign aid program. With the Cold War pressure intensifying, Truman called for this “bold new program” as essential for combating  the appeal of communism to the impoverished nations. Instead of the provision of financial aid, point four consisted in the provision of technical assistance and foreign investment to developing nations. Even though a total of 400 million USD had been invested until 1954, including on-spot visits of technical experts to developing nations and the education of their students in the US, it is no surprise that in absence of predefined trade agreements and guarantees US business was reluctant to provide support. Simultaneously, like the Marshall plan, point four was directed by the US and never got adopted on UN level, while the plan has been harshly criticised by neo-liberal advocates.

Nevertheless, Point Four has arguably created a viable survival strategy for developing nations within the Cold War insanity, while it contributed to the emergence of the “non-aligned movement”, a group of states following their own political objectives without formally committing to either power bloc. Indeed, the free flow of technology and know-how can create unique opportunities for societies to prosper. Technological diffusion, in contrast to comparative advantage reinforces variety within the economy and generates the conditions for the development of synergies and balanced development.

Technological advance defines the boundaries of the sphere of the feasible. It is a fundamental force that pushes the ever-moving frontier of the human knowledge forward. Whereas freedom of trade merely relates to the maximisation of individual gain, freedom of technology means the freedom for humanity to improve as a whole. An this implies an emancipation of technology from capitalism; a new global political economy where technology enables and enhances people, societies and nature.

A global political economy based on the freedom of technology relates to the freedom of nations to choose how they mobilise and allocate their resources and the freedom of people to relate to each other. It doesn’t necessarily mean that all nations would reach the same level of technology and would stop competing with each other. Technological advance is a systemic and context-specific process, while cultural and territorial proximity matters. But it could instead allow for a fairer type of competition, one that is subsumed under cooperation and participation on equal footing. Individual and collective success would then be more genuine, rather than a result of exploiting the less advantaged. It could eventually lead to freer nations or to an international order beyond the nation-state.

It is obvious that free tech is not a much desired outcome from the supporters of free trade. They will not easily give up their own comparative advantage in being rich, even though it is becoming more and more obvious that the continuous deterioration of global inequality is feeding back to the rich economies as well. International trade is a zero-sum game: someone must lose in order for someone else to win; and right now it seems we are running out of “losers”. Likewise, technological advance can only create a positive-sum result, when coupled with freedom: the freedom for people to pursue the edge of their own capabilities.  

Free tech is indeed a better objective for the global political economy and most probably a more viable one. And it is surely one for societies to start fighting for.

Lead image by Wicker Paradise. Additional image by TODO

The post Free trade vs free tech appeared first on P2P Foundation.