Food First - Trade Principles

Principles to Be Met by Any Trade Bill, Treaty, or Policy

Food First, Fall 1999

1. Unconditional Debt Cancellation

External debt is the number one obstacle to offering decent social services and fostering broad-based development in every Third World country. The principle reason many governments in Southern developing countries are capital-starved is because of the unsustainable burden placed on them by debt service. Total annual debt payments are currently higher than the sum of all foreign investment, plus all foreign aid. Sub-Saharan Africa spends more on servicing its $200 billion debt than on health and education for its 306 million children P

While free trade is often promoted as a way to get foreign investment capital into poor economies, debt cancellation is actually the single most important short-term way to inject needed capital into developing country economies.

A centerpiece of any trade-related (or aid-related) bill or policy relating to the Third World must be unconditional debt cancellation, with strong language and legal mechanisms to insure it happens. Debt cancellation must not be made conditional upon poorer countries modifying any of their own economic policies or laws, including making them accept structural adjustment or market-opening requirements; in the past onerous conditions have undercut positive benefits of debt relief.

2. True Participatory Process

Many trade bills before the U.S. Congress have been drafted by corporate lobbyists-representatives of those with the most to gain for the present international trade regime. On the international scene, a lobbyist from Cargill helped negotiate the agricultural portion of GATT. Time and again trade policies are developed and implemented without the participation of those who stand to be most affected in a negative sense: farmers and small businesses in developing countries who must compete with a flood of cheap imports, and workers here in America who may lose their jobs as factories move to countries with cheap labor.

In the future the development of any bill or policy must occur through a participatory process with broad representation of "affected" civil society in the U.S. and abroad. Key groups who should participate are unions, farmers' organizations, consumers' groups, environmentalists, and community organizations.

3. No Job Loss

While NAFTA has created jobs in the U.S., Canada, and Mexico, it has led to the elimination of far more. In the U.S., an estimated 400,000 jobs have been lost In Mexico, some 28,000 small businesses have been driven out of business, and unemployment has doubled Corporations benefited at the expense of working people in all three countries, who have experienced downward pressure on wages and working conditions. There should be no likely net job loss either in U.S. or other countries as a result of any new policy or bill.

4. No Corporate Welfare

There should be no direct or indirect subsidies, or favored status for transnational corporations (TNCs) included in the bill or policy. That means no export credits or guarantees may be included that help TNCs penetrate Southern/developing country economies to the detriment of local businesses. Unfortunately many trade bills provide subsidies to TNCs that allow them to market their products in other countries at prices that undercut local producers.

5. No Coercion

Poorer countries should not be coerced through conditions or threatened by exclusion into removing their own tariff and nontariff trade barriers, nor weaken the fiscal, trade-related, and other policy instruments at their disposal for guiding domestic economic development.

6. Sovereignty Over Basic Economic Policy

All countries must retain the right to establish currency and import controls, set the conditions of trade and investment to meet the needs of their people, and control flows of capital and resources into/out of the country as a Iegitimate means to achieve domestic economic stability.

7. No Arms

There should be no subsidies or easing of restrictions for arms sales, nor should military or police training be included.

8. No Food Dumping

There should be no dumping of foodstuffs (either disguised as 'aid' or 'trade liberalization'). Each country has a right to protect basic food production as it sees fit. Cheap imports undercut the ability of local farmers to stay in business, often driving them off the land and into cities; this undercuts long-term national food security and creates dependence on imports. Self-reliance in basic necessities gives countries and communities a stronger bargaining position in the global economy.

9. Only Small and Medium Businesses

Favored trade status should only be granted to: a) 100 percent domestically owned small and medium size enterprises abroad, and b) small and medium size enterprises (especially 100 percent minority owned) in the U.S.

10. Close Loopholes

Provision must be made to close 'sub-contracting' loopholes and transfer pricing by which TNCs use locally-owned sub-contractors to intentionally evade taxes and national ownership, minimum wage, workplace safety, and trade regulations.

12. Mandatory Impact Assessments

There must be an independent and objective social/economic/cultural/ environmental impact assessment prepared with full participation and partnership with the public and civil society organizations (with on-going monitoring thereafter), and strong provisions for canceling part or all of the proposed bill/policy if negative impacts are likely or occur during implementation

13. Subordinate to Human Rights and National Constitutions There must be clear and binding language that gives legal precedence over trade agreements to each country's domestic constitutions, as well as to international conventions and treaties on human rights and the environment.

14. No Sweatshops

Trade agreements may not be based on 'drawback' or maquila- style provisions that favor sweatshops and allow TNCs to rapidly shift production around the world seeking the cheapest labor and weakest environmental and occupational safety regulations.

15. Large Compensation Fund

A substantial fund should be created to compensate regions and peoples negatively affected by changes in trade and development patterns brought about by the bill or policy An example is how some regions in Europe that were hurt by integration into the European Economic Community (EEC) received special subsidies from the European Union.

16. Human Beings Have More Rights than Goods and Capital When a common market or free trade zone is created (like the EEC or NAFTA), labor must be given the same mobility as capital and goods (as it was in the EEC, but was not in NAFTA). Otherwise excessive downward pressure is exerted on wages (as in NAFTA). Money and goods should not be favored over people.

17. Controls on Capital Flows

Controls over international speculative capital flows must be implemented to create a stable environment in which any positive potential of trade can be realized. Rapid capital movements can trigger national economic collapse, as in the Asian crisis, canceling any positive benefit from trade.

18. No Divide and Conquer

One country or region should never be "played off against another" (i.e. do not take import quotas from Asia to give to Africa). This was an unfortunate feature of a recent Africa trade bill.

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