International trade refers to the exchange of goods
International trade refers to the exchange of goods, services, and capital across international borders or territories. One single country cannot produce enough goods and services to provide for their entire citizenship. Countries rely on trade to gain wealth as well as obtain items they cannot produce themselves. Pevehouse and Goldstein define a free trade area as, “a zone in which there are no tariffs or other restrictions on the movement of goods and services across borders” (306). As of 2015, the United States has participated in 14 free trade areas with 20 countries. In 2003, negotiations began to extend the North American Free Trade Agreement (NAFTA) to the rest of the Western Hemisphere – except for Cuba – encompassing over 800 million people and a total of 34 countries. This is known as the Free Trade Area of the Americas (FTAA). President Bush had a target date of completion by 2005, however, multiple factors pressured the FTAA including, “the 2001 recession and post-September 11 security measures reduced trade and China provided U.S. companies with a better source of cheap labor” (Pevehouse and Goldstein 255). The Free Trade Area of the Americas does have benefits, but it has a lot of consequences and it is a good thing the negotiations for establishment remain in hibernation.
The Free Trade Area of Americas, like NAFTA, would reduce tariffs between countries, making it simpler for companies to invest aboard and relocate production. Many U.S. originated companies took advantage of the lower wages and weaker environmental laws in Mexico and moved their production plants there. “As a result of job flight, and a growing trade deficit with Mexico, the U.S. has lost more than 766,00 jobs due to NAFTA” (“Understanding Free Trade Area of the Americas” C.1). The relocation of these companies caused 766,000 people to lose their jobs and benefits. Companies also, at times, threatened their employees of relocation just to disperse union formation. Unfortunately, under the FTAA, the competition to move jobs where labor is cheapest is most likely to accelerate. Employees in North America will be put in competition against workers from poorer countries like Haiti, “where the minimum daily wage is about $1.35 and more than half of the work force is jobless or underemployed” (“Understanding Free Trade Area of the Americas” B.1). Like NAFTA, the FTAA would not include worker protection rights to prevent abuse and exploitation.
The FTAA could also would lead to the privatization of necessary public services. In the suggested Free Trade Area of the Americas rules, government-ran service programs are susceptible to free trade rules just like private service providers.