Food First Trade Principles

Peter Rosset | 10.01.1999

Food First Backgrounder, Fall 1999, Vol. 5, No. 2

Since 1973 the income gap between rich and poor nations has grown from 44 to 1 to 72 to 1. The gap between rich and poor within most countries has grown rapidly as well, followed closely by deepening social problems. We have seen increased homelessness and hunger in America, even in times of economic prosperity. Behind this alarming picture lie structural changes in the global economy brought about by rapid increases in trade and capita flows.

Free Trade at the Millennium

Trade is the most important issue that defines the end of the millennium and the start of the next one. Since the 1970s the global economy has been transformed by advances in communications and transport technology, making it possible for companies to rapidly shift production around the world in search of lower wages and new markets. Transnational corporations have used their financial and political muscle to usher in an intense period of trade liberalization, in search of that Holy Grail of capitalism, free trade. Beginning with the Uruguay Round of negotiations for the General Agreement on Tariffs and Trade (GATT), one trade agreement or treaty after another has come up. From the North American Free Trade Agreement (NAFTA) to the founding of the World Trade Organization (WTO), the framework for free trade is being set in international law.

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In general terms, we arc moving from smaller, national economies, to larger regional or global economies. This poses the gravest threat to the livelihoods of ordinary people in every country.

The Race to the Bottom

Whenever a larger economy is created, new economies of scale come into play. Large transnational companies who use automated mass production technology to produce goods at low per unit costs, flood local markets at prices that smaller, national companies using labor intensive production practices cannot compete with. As witnessed in Mexico under NAFTA, these smaller companies go out of business and hundreds of thousands of people (or even millions) are laid off.