There was a time when "fair trade" meant something quite different from the way it is being used by the current crop of presidential hopefuls. What used to be a rallying cry for those recognizing that current trade policy puts producers and workers in developing and underdeveloped nations at a severe disadvantage has now become code for protection of American industry at the expense of billions of poor around the world.
Each year, more than 8 million people around the world die from extreme poverty, defined as living on less than $1 per day. One in six people in the world lives in extreme poverty, while about half the world lives on less than $2 per day (moderate poverty). Think about that for a moment. In the United States, the poverty threshold for a single person is about $10,500 per year. This means that an impoverished person in the United States makes almost 15 times more than the 3 billion people living under the global definition of moderate poverty. While these statistics should not detract from the significance of poverty in America, they serve to add a little perspective when discussing who is disadvantaged by trade policies.
For years, the U.S. has built its strong economy upon the backs of the global poor. While American administrations have often pushed so-called "free trade," actual trade policies are not even close to being free. The farm subsidy program is a perfect example, and is directly relevant to trade policy and the plight of impoverished farmers around the world. The farm subsidy program began in the 1930s as a safety net for small family farmers, but has since ballooned to a massive system of entitlements for farmers who don't need the help. When Republicans took control of Congress in 1995, they promised to phase out the farm subsidy program for a free market approach that would force U.S. farmers to compete or fail.
But when agriculture prices dropped two years later, Republicans feared losing the support of the midwestern farm lobby. Lest you think this was simply a case of Republicans caving in to corporate agriculture, midwestern democrats such as Tom Daschle share the blame. Instead of phasing out farm subsidies, they were expanded. Between 1995 and 2005, the federal government provided $172 billion in subsidies to what were mostly already wealthy farmers. These kinds of subsidies aren't just a U.S. practice. Europe has similar policies, and the effect is that large American and European agriculture companies overproduce and then export massive amounts of product at prices below that of production.
The cotton crisis in Mali is an example of the effect agriculture subsidies in wealthy countries have on poor farmers in underdeveloped countries. Mali is Africa's second largest cotton producer, but since 2003 has been, along with other West African nations, battling the World Trade Organization over subsidy policies in industrialized nations that artificially lower global cotton prices. In spite of the fact that cotton producers in Mali would normally have a high comparative advantage over producers in developed countries (production costs are nearly three times higher in the U.S. than they are in West Africa), the high volume of imported U.S. cotton makes the imported cotton artificially cheaper than domestically grown cotton.
None of this information is particularly new. The problem, however, is that the fair trade movement used to be an effort to improve conditions of the global poor by eliminating harmful trade practices that serve the interests of a small number of domestic constituencies. In this sense, fair trade proponents weren't actually offering it as an alternative to free trade. They were simply recognizing that free trade was a farce - a slogan that never actually existed. Fair trade actually was free trade: allowing countries with advantages in certain areas to build up their domestic economies and alleviate the crushing poverty facing their people.
The trade policies advocated by the Democratic candidates are certainly important. We should not allow China to manipulate its currency so as to keep prices of its exports artificially low. However, talk is cheap. The U.S. has engaged in unfair trade practices for decades. People in developing countries literally laugh at us when we talk as though we are being victimized by a cabal of nations getting fabulously wealthy off our backs. Nearly 80% of India lives on half a dollar a day, despite the common belief that Indians are growing fabulously wealthy thanks to the outsourcing of American jobs.
Making trade fair should not mean that the American government should further protect domestic industries at the expense of billions of people living under the crushing weight of extreme poverty. If we want to rest of the world to make trade fair for us, we should be willing to make it fair for them. For once, let's be true internationalists and recognize that trade can be a powerful tool to help those most in need and eliminate poverty once and for all.