|Photo Credit: wikipedia.org/Steve Hopson|
Neoliberal ideology claims that international trade is an important factor for the development of poor countries and their integration into the global economy. Rich governments' promotion of these ideals has led them to develop an array of new trade agreements such as the FTAA and CAFTA. These bilateral, multilateral, and regional accords strongly affect people at all levels of the economy--from growers and workers, to processors and consumers --by regulating pricing, tariffs, export levels, and methods of production. Though supporters claim that trade agreements bring sustainable development and economic integration, this is not the case. Rich countries maintain protections of their own exports, while their competitors in poor countries agree to open their markets. Beneficial norms, such as human rights or environmental standards, are set aside. This leads to a "race to the bottom," in which the only priority is cost effective production, at the expense of workers, resources, and sustainability. Due to these failings, the agreements tend to harm development and pull poor countries deeper into poverty.
Talks for establishing a new trans-Atlantic trade deal between the US and the European Union was recently announced. The deal would reduce the trade barriers for over half a trillion Euros worth of goods and services that already flows between the two regions. Proponents of the free trade agreement argue that it will help strengthen both economies by making it easier for EU companies to bid on US public contracts and free up investment capital for medium-sized companies. Some fear, however, that interest in multi-lateral negotiations through the WTO will diminish further since a third of global trade will be determined by the agreement. Meanwhile, agricultural trade continues to be a contentious area as the two regions are unlikely to agree to change their policies. It remains to be seen whether the potential “tens of thousands of new jobs” will aid both economies in their recovery or widen the existing gap in inequality (Deutsche Welle).
Profiting from Injustice: How Law Firms, Arbitrators and Financiers are Fuelling an Investment Arbitration Boom (November, 2012)
This report by the Corporate Europe Observatory and the Transnational Institute looks at how law firms, arbitrators and financiers are fuelling and investment arbitration boom. The International investment regime has locked countries into agreements that impose a high cost on governments if they implement policy changes that affect the profits of powerful companies. Even if the policy change, such as environmental regulation, would have a positive effect on the citizens of the country, the huge legal costs incurred by states could nullify the benefits. This is not to mention that the litigation cost is borne by the tax payers of these countries. The legal industry is particularly benefiting from this litigation boom, by seeking every opportunity to sue governments using various tactics listed out in the report. (Corporate Europe Observatory and the Transnational Institute)