New Internationalist

Race to the bottom

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Issue 374

Free trade is a social issue as well as an economic one. To attract investors, countries compete to lower costs. That can mean offering cheap labour, weak environmental laws, lax health and safety standards or reduced social services. The lower your standards, the higher the investment.

1 Social security Free trade agreements open public services to private investors eager to access these ‘markets’. Profit-oriented healthcare and education corporations can set up abroad and demand equal rights.

2 Environment Free trade rules encourage the export of primary resources at the lowest possible price. Debt-strapped poor countries are caught on a destructive treadmill: resource exports increase to earn foreign exchange –> world markets are over-supplied –> prices fall –> exports are increased to make up the drop in income –> greater environmental destruction.

3 Food security Free trade benefits big landowners and agribusiness by lifting controls on food exports and imports. Switching from growing food for local markets to food for export increases hunger, lowers incomes of small farmers and reinforces unsustainable, chemically dependent industrial agriculture.

4 Political sovereignty ‘National treatment’ clauses force governments to treat foreign investors like domestic ones. Investor-state dispute mechanisms allow foreign companies to challenge laws and regulations which may hinder profits – including allowing corporations to sue local governments for ‘future loss of profits’.

5 Culture and health Corporations get protection for their intellectual and property rights while undermining the rights of workers and local cultures – investor rights trump human rights. Companies can patent seeds, genes and medicines thus alienating indigenous peoples and others from access to local traditional health treatments and resources.

Illustrations: P J Polyp
Race to the bottom, illustrated by: P J Polyp

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This article was originally published in issue 374

New Internationalist Magazine issue 374
Issue 374

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