Trading with Vegas

Posted January 2, 2007

Categories: Articles

Gamblers in Las Vegas frequently cling to the illusion that they can win. Some do. Most don’t. The casino owners—usually called “the House”—have rigged the system in their own favor. The flashing lights, free drinks, and oxygen-enriched air in the casino distract the gamblers from this elemental rule. Sure, you might hit 21, score big on Black, or finally get three cherries in a row. But over the long term, the House always wins and you always lose.

I had lunch not long ago with officials from the Korean embassy. When the conversation turned to the U.S.-South Korean Free Trade Agreement (FTA), I felt that I was suddenly in the presence of hopeful gamblers. The promise of U.S. lowered trade barriers for Korean products—particularly for textiles but also cars and shoes—was dazzling. The image of this jackpot blinded them to the reality of all the other desperate gamblers in the house. They’d been taken in by the “win-win” banner that welcomes everyone into the U.S. free-trade casino. Their doubts had been overcome by the clanging of the fruit machines.

The FTA that South Korea and the United States hurriedly signed just before April 1—in order to get it under the wire for Congress to consider the pact before the president’s fast-track authority expires this summer—is not as bad as it could be. For instance, South Korea doesn’t have to further lower tariffs on rice. Oranges are also off the list. South Korea doesn’t have to open up its educational and pharmaceutical services. A committee has been established to look into the possibility of considering goods produced in Kaesong, the manufacturing zone located just north of the Demilitarized Zone in North Korea, as South Korean products and therefore subject to the reduced tariff.

But as every gambler knows, sometimes it’s worse to win a little bit at the casino than not to win at all. The concessions on rice and pharmaceuticals pale in comparison to what the United States gets in the bargain. Cheaper U.S. beef, pork, soybeans, and corn will wipe out many Korean farmers. U.S. cars and other manufactured products will soon flood the South Korean market. U.S. films will increasingly edge out Korean movies in the theaters.

South Korea was in a stronger bargaining position than Mexico and so was able to get a slightly better deal. But the lessons of the North American Free Trade Agreement (NAFTA) will still apply. As Laura Carlsen writes in her FPIF column, Moratorium on Free Trade Agreements, recent studies reveal the enormous and negative impact on Mexico, particularly in the farming sector, “and the huge rise in immigrants to the United States attests to the fact.”

The question, ultimately, is: who wins and who loses? It would be inaccurate to claim that no one benefits from free trade agreements. The CEOs of the companies that can sell more goods certainly do better. The shareholders of the companies often do better. The white-collar employees sometimes do better. The consumers do see some price reductions at the supermarket and the car showrooms.

But as the studies of growing inequality linked to free trade agreements demonstrate, the losers outnumber the winners. Workers in both the United States and South Korea are seeing their jobs outsourced to China (or points further south). The few dollars they save on the week’s grocery bill don’t make up for their lost income.

Then there is the environmental impact of free trade. Lowered tariff barriers encourage unrestrained consumption—of timber, of oil, of beef. Free trade agreements usually “harmonize down” the environmental regulations of the two countries and thus serve as a method by which corporations can dilute stronger regulatory frameworks.

Laura Carlsen calls for a moratorium on FTAs. In addition to the Korean accord, Congress is looking at agreements with Colombia, Peru, and Panama. There’s still time to vote them all down.

“Proponents argue that rejection of FTAs is tantamount to a return to protectionism and isolationism,” Carlsen writes. “But U.S. international trade would not come grinding to a halt if Congress stopped passing unfair free trade agreements. In many cases, tariffs are relatively low before the FTAs and disputes hinge more on non-tariff barriers that are not necessarily resolved in the context of the agreement. Indeed, many of the most controversial provisions of the FTAs, including the imposition of supra-national investment guarantees and intellectual property exclusivity, have little to do with trade.”

Congress has passed each of the last free trade agreements by ever-narrower margins. The Bush administration has been forced to steal the lingo of its critics by referring to FTAs as “fair trade.” Perhaps the gamblers are waking up to the reality that the system is rigged in favor of the rich.

Jorge the Church Janitor

This week we have two features in Fiesta, the FPIF section that explores the intersection between art and foreign policy. Martin Espada has been called the “Pablo Neruda of North American authors.” In his interview with poet E. Ethelbert Miller, Espada discusses the “rainforest” in his head.

“The reference,” Espada says, “comes from an early poem of mine, “Puerto Rican Autopsy: ‘Winter-corpsed/ in East Harlem,/ opened his head/ and found/ a rain forest.’ That poem was written more than 25 years ago. At the time, the only place I knew outside the United States was Puerto Rico. Since then, I have seen much more of the world, and so there are other places in my head, occupying space with that rainforest. There is a plaza in the town of Tepoztlan, Mexico, where I witnessed a Zapatista rally before they marched on Mexico City. There is a shantytown in Managua, Nicaragua where I helped to dig latrines three years after the Sandinista revolution. There is Neruda’s house at Isla Negra in Chile, where I participated in the celebration of his centenary in 2004, reading Whitman aloud in Spanish at the poet’s tomb on a cliff overlooking the Pacific Ocean.”

You can also read his poem Jorge the Church Janitor Finally Quits, which begins so powerfully:

No one asks
where I am from,
I must be
from the country of janitors …

Also in Fiesta this week, read an interview with Aaron Hughes, an Iraq War veteran and artist. Talking to FPIF’s Saif Rahman, Hughes describes his feelings about the war. “I didn’t understand the war,” Hughes explains in The Art of Deconstructing War. “I did not understand the ease of dehumanization or the ambiguous, anxious convoys of nothingness, for nothing. I did not understand the day-in-day-out reality of dust-covered skin, uniform, truck, and children. I wanted to think this American kid from the Midwest could help the oppressed Iraqi people. Then I awake to my weapon pointed at the hungry, and I am the oppressor.”

Tourist Photograph from Iraq” by Aaron Hughes is a striking work of art accompanied by a powerful text.

Don’t Attack Iran

Rep. Peter DeFazio has been trying to prevent the United States from going to war with Iran for some time. In an interview with Michael Shank, DeFazio details the efforts of those in Congress trying to stay the administration’s hand.

“We’re concerned,” DeFazio says, “that there’s an embedded plan, embedded in the minds of the same neo-cons who manufactured the war in Iraq, the same neo-cons who have been so wrong every step of the way about us being welcomed as liberators, about how Iraq could pay for its own reconstruction, about the size of the force necessary. They’ve been wrong about everything, but they still think they’re right.”

World Beat, April 9, 2007


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