Trade Exploitation in the Americas
Why Latin American Countries Keep Signing Faulty Exploitative FTAs
Free trade in the Americas has yet to achieve that grandeur that the policies promised. Yet, the U.S. is still drafting agreements and nations continue to sign.
Peru signed its new free trade agreement (FTA) with the U.S. in December of 2007 with a high majority of Peruvians approving it. The Peru FTA was modeled directly after NAFTA, despite the fact that NAFTA has yet to achieve the goals it set out to accomplish, besides making products cheaper for those in the U.S. Knowing that the Mexican dissatisfaction is so high with NAFTA and that prices in Mexico have risen while wages have stayed the same, why would Peru, and nations like it, sign the FTA?
LDCs and Limited Options
The answer is because they have no other options. For example, If they say no to a FTA then the United States can find other less developed countries (LDCs) to conduct business with. Thus the nation is left to figure out how to survive in this quickly globalizing, economically run world. A smaller LDC has very little power to compete with larger LDCs and economic giants. In order to stay afloat, they have to ally economically with a larger nation. This increases their credibility, increases foreign direct investment and can provide enough money to invest in national issues such as social equality, labor standards and the like. Their job is to choose a nation to ally with that will limit exploitation and increase prosperity. So long as leaders are rational and care about the welfare of their people, there are tools to help them manage their money and invest it in social issues. One such organization that specializes in such programs is the International Labour Organization (ILO), which is a part of the United Nations. Its goal is to create and oversee international labor standards, which are ultimately the responsibility of the nations themselves.
Social Responsibility
It is important to remember that it is not the responsibility of the larger states to impose labor standards on other nations. Larger developed nations draft FTAs to increase their own bank accounts, not those of the LDCs. And while jobs are going to LDCs, the wages are only marginally higher and not at all concurrent with the wages of the larger nation. The larger nation wins big with cheap labor, and the workers are paid a little more than they would have been paid in a domestic job. They are still better off, but they are not well off and this only addresses wages, not labor standards. Free trade can be a great thing for both nations, but it is up to the leaders of the LDCs to protect their own.
