The phony "free trade" lobby: why the so-called "free trade" lobby is pushing a trade agenda that actually reduces free trade and American independence

New American, The, May 16, 2005 by Thomas R. Eddlem

Mention "free trade" in any public discourse today, and one is likely to come up with such topics as NAFTA, the Central American Free Trade Agreement (CAFTA), the Free Trade Area of the Americas (FTAA), the World Trade Organization (WTO), and Fast Track Trade authority for the president.

"Free trade" means simply an absence of any government intervention in business. Government intervention can take the form of tariffs and other taxes, trade sanctions, import quotas, regulations, or subsidies. Each of these--including government subsidies--is equally anathema to a free trader because it detracts from the natural efficiency of the free market that produces wealth.

Most Americans would probably be surprised to find that the above-mentioned "free trade" agreements do not promote free trade. All of these international trade agreements, from the World Trade Organization to the proposed FTAA, embrace forms of government intervention that contradict the philosophy of free trade. All have some form of sanction mechanism to enforce the will of the deciding body at the top; all endorse heavy government regulations on labor and the environment: and all protect forms of corporate welfare for favored domestic industries.

Corporate Players for "Free Trade"

If the trade agreements do not promote free trade, why would individuals who claim the banner of free trade lobby to pass the agreements? The business answer to that question comes down to money and influence. The most fervent lobbyists favoring phony "free trade" treaties in recent years have not been purist armchair libertarian philosophers, but huge Wall Street-linked behemoths--such as Boeing, Archer Daniels Midland, and Monsanto--and establishment organizations such as the Business Roundtable, the Council on Foreign Relations, and the Trilateral Commission.

Consider the case of one "free trade" advocate, the Boeing Company. Boeing heavily lobbies Congress for free trade arrangements, but it does not do so in the interest of true free trade. It lobbies to increase its own sales abroad--often at the expense of both free trade principles and the interests of the U.S. taxpayer.

After pressing Congress to make trade arrangements with China through the WTO, Boeing signed a $3 billion deal with the Chinese government in 1997 for new airplanes. Boeing also got deals with China for $1.6 billion in 2001 and $2 billion in 2002. Then it got another $1.7 billion deal at the end of 2003. How does this hurt the American taxpayer? Payments for the planes were largely guaranteed with U.S. taxpayer dollars through the U.S. Export-Import Bank (Eximbank). If the Communist Chinese government reneges on payment, the U.S. taxpayer will be forced to cough up the cash.

The November 2002 Boeing-Pakistan airline deal presents an extreme example of how the game is played. Boeing inked a deal to sell its Boeing model 777 passenger jets to the Pakistani state airline for $1.5 billion from the years 2004 through 2008, backed by loan guarantees from the Export-Import Bank. (The Eximbank's stated mission is "to assist in financing the export of U.S. goods and services to international markets.") Several months after the Eximbank extended the new loan guarantees, the federal government concluded a long debt rescheduling negotiation (begun before the Boeing deal) and wrote off $1 billion in bad Pakistani government debt. As the jets began rolling off the assembly lines for Pakistan in 2004, the federal government signed a deal to cancel another $495 million in Pakistani debt to the United States.

In today's world of international business, this arrangement could be said to be a "free trade" deal where everyone won. Boeing got the contracts and the $1.5 billion in cash, the Pakistani government got the jets and $1.5 billion in loan cancellations, and bureaucrats at the U.S. Eximbank got to brag in a press release about how they helped to "create jobs" in the United States. In George Bush's new fiscal 2006 budget proposal, the Eximbank would be fully funded at nearly $260 million, perhaps as a result of this "success story" where everyone won.

Yes, everyone won--except the U.S. taxpayer, who was left paying the bill.

To corporate tycoons like Philip Condit, the former Boeing CEO who pushed Congress for the necessary trade agreements to sell taxpayer-subsidized goods abroad, free trade ideology is not a set of principles to hold in the heart, but a tactical maneuver to be deployed--or withdrawn--as the circumstances require for the particular ends sought. And if their hypocrisy is brought to their attention, they can console themselves by laughing all the way to the bank.

Business Roundtable

While the corporate executives at companies like Boeing hype the monetary benefits of free trade to get so-called free trade agreements passed--so that they can dig inside the federal trough of government subsidies--other groups, masked as business organizations, push "free trade" under the guise of acting in the public interest. One group that supposedly acts in the "public interest" is the Business Roundtable (BRT). The BRT is an exclusive organization of 150 CEOs from some of the largest corporations in the United States, and its motivations are far from establishing pure laissez-faire.