In one of my recent blog posts I offered an article related to the promotion of a global economic policy that is based on economic justice. A primary element of the global economy is the international trade between nations. For the past decades the United States has pushed for “free trade” negotiations with a variety of nations. These policies have argued that free trade is good for everyone so that as a policy it was a win-win policy. In economic theory this is correct if the nations that engage in trade are on a level playing field. However the United States has had an undisputed economic dominance and so when it engaged with free trade negotiations it almost always did so in a way that would be more in line with its own national interest. As a result many of our trading partners continue to suffer from underdevelopment and poverty.
The reason for this is actually quite simple. In looking for our own national interest our main focus in conducting trade negotiations has not been the social or environmental impact of our trade policies. As the dominant economic actor on the global stage the United States had the leverage and the incentive to negotiate everything from its own political and corporate self-interest without placing much concern over how these negotiations impacted the poor and marginalized people of either this nation or our trading partners. With the shifting global balance of power that I discussed in the last post I suggest that it is now in the interest of the United States to promote an international moral framework for financial and trade policies that would establish by a rule of law an equitable and just global economy.
Since the 1990’s, after the creation of NAFTA and the World Trade Organizations, many organizations and nations have supported fair trade policies that consider social and ecological issues of concern. One of these concerns has been the lack of respect for labor rights. This past fall the Obama administration carefully chose to table the Colombia Free Trade Negotiation on the basis of this concern. The Brookings Institute, a highly reputable think tank, offered a thoughtful analysis suggesting that tabling the Colombian Free Trade Agreement was a lost opportunity for the United States. While I often agree with the policy recommendations of the Brookings Institute in this case I have to respectfully disagree with their findings.
The author, Mauricio Cardenas, recognizes Colombia’s issue with labor and worker rights but he argues that the level of violence has seen a steady decline and he argues that recent legislation has been developed to protect worker rights. These small improvements over the social concerns with Colombia should be capitalized with a trade agreement between the United States and Colombia that builds on further labor and social improvements. A trade agreements should both reduce barriers to trade while also creating incentives for improving social and ecological concerns.
But the core argument for Mr. Cardenas is that this agreement would be a great financial benefit to the United States and its national economy. In fact he says that “signing the proposed FTA would only slightly increase Colombia’s competitiveness in U.S. markets while dramatically increasing U.S. competitiveness in the Colombian market”. This may well be true, but I again believe that with the new global balance of power (the emergence of China) we should no longer opt to base our global financial and trade policies based on our immediate economic self interest. Instead I argue that the time has come to organize our trade and global economic policies through principles of economic justice rather than market fundamentalism.
In developing its social teachings on economic justice the Catholic Church offers a principle that it calls “the universal destination of goods”. This social principle was well articulated in 1991 under the encyclical by Pope John Paul II titled, Centesimus Annus:
The original source of all that is good is the very act of God, who created both the earth and man, and who gave the earth to man so that he might have dominion over it by his work and enjoy its fruits (Gen 1:28). God gave the earth to the whole human race for the sustenance of all its members, without excluding or favouring anyone. This is the foundation of the universal destination of the earth’s goods. The earth, by reason of its fruitfulness and its capacity to satisfy human needs, is God’s first gift for the sustenance of human life. #31
This principle integrates three traditional Catholic social principles: Human Dignity, Common Good, and the Care of the Earth. In the lens of Catholic social teaching this principle trumps other rights and considerations. The Compendium of the Social Doctrine of the Church makes a clear statement to this effect by quoting from the encyclical by Pope Paul VI, Populorum Progressio:
All other rights, whatever they are, including property rights and the right of free trade must be subordinated to this norm [the universal destination of goods]; they must not hinder it but must rather expedite its application. It must be considered a serious and urgent social obligation to refer these rights to their original purpose. – #172 Compendium
This principle calls on nations to engage in a collaborative economic model that promotes this moral definition of natural resources as a gift from God that is meant to be shared by all humanity. To the list of inalienable rights the Church tells us that all people have a right to full and authentic human development and a share of the natural resources that the earth offers. Our ability to possess property can never rob people of the basic and necessary resources that they need to survive.
Prior to the financial crisis most U.S. policy makers would have identified this moral argument as a policy position that would go against the economic interest of the United States. But we are no longer the dominant economic actor and we must prepare for a future where we no longer control the economic engine of the world. In creating a global economic system that is governed by a vision of economic growth that truly lifts all boats slowly but equally we should have our nation engage in “fair trade” negotiations which offer a more collaborative and holistic approach to economic partnership and development. I hope that the United States and Colombia will continue working towards a trade policy in the near future that is both free (eliminating unnecessary barriers to trade) and fair (promoting a positive social and ecological development) for both nations.