Jason Hickel
Jason Hickel

‘Free trade’ and the death of democracy

“Free trade”. The term itself is a trap — a brilliant framing device that neatly neutralises opposition. If you take a stand against free trade you appear to be taking a stand against freedom itself, which is clearly not a tenable position. In fact, in recent decades the term “free trade” has become very closely associated with “democracy”, owing in no small part to the efforts of right-wing think tanks like the Heritage Foundation, the Business Roundtable, and the Cato Institute, which have built up a powerful PR campaign to establish this spurious connection in the minds of the public.

But what does freedom really mean in this context? It turns out that it has very little to do with meaningful human freedom, and rather a lot to do with corporate freedom — the freedom of corporations to extract and exploit without hindrance. “Free trade” is an obvious propaganda term, a form of Orwellian doublethink that means exactly the opposite of what it claims.

If we take a look at existing free-trade agreements, such as Nafta, we see that they focus primarily on battering down import barriers, curbing labour unions, reducing restrictions on pollution, legalising capital flight, cutting corporate taxes, eliminating state subsidies for local industries, privatising public assets, and extending foreign patent protections. None of these measures have to do with enhancing human freedom. Rather, they are designed in the interests of multinational corporations, who through them gain access to new export markets and investment opportunities, and cheaper labour and raw materials.

The disturbing thing about the rhetorical strategy of “free trade” is that the very things that do promote real human freedoms — such as the rights of workers to organise, equal access to decent public services, and safeguards for a healthy environment — are cast as somehow anti-democratic, or even totalitarian. These freedoms are reframed as “red tape”, as “market interventions”, or as “barriers to investment”, even when, as is almost always the case, they have been won by popular grassroots movements exercising democratic franchise.

In this paradigm, democracy itself begins to appear as anti-democratic, inasmuch as it grants voters control over the economic policies that affect their lives. As this absurd logic moves steadily toward its ultimate conclusion, democracy becomes an obstacle that needs to be circumvented in the interests of “free” trade and investment.

This may sound extreme, but it is exactly what is happening today. We can see it very clearly in two new “free trade” deals that are about to come into effect: the Transatlantic Trade and Investment Partnership (TTIP), which will govern trade between the US and the European Union, and the Trans-Pacific Partnership (TPP), which will govern trade between the US and a number of Pacific nations. We hear very little about these deals because they are shrouded in secrecy, and because six of the corporations leading the negotiations happen to control 90% of our media. Yet we need to pay attention, because these deals are set to form the blueprint for a new global order.

The TTIP and the TPP go far beyond earlier trade deals like Nafta, which seem almost quaint by comparison. In addition to battering down import tariffs and privatising public services, they grant corporations the power to strike down the laws of sovereign nations. You read that right. If these deals come into effect, multinational corporations will be empowered to regulate democratic states, rather than the other way around. This is the most far-reaching assault on the ideas of sovereignty and democracy that has ever been attempted in history. And it is being conducted under the banner of “freedom”.

We only know about this because of a few intrepid whistle-blowers who have leaked draft chapters of the TTIP and TPP to the public. The leaked chapters show that corporations will seize the power to sue governments for implementing policies that threaten to reduce their potential profits. The mechanism that facilitates this is known as “investor-state dispute settlement”, which sets up private tribunals to adjudicate between corporations and states. The hearings of these tribunals will be held in secret, the judges will be corporate lawyers, and there will be no right of appeal.

Let’s imagine that Malaysian voters elect politicians who promise to roll out new worker safety standards for garment sweatshops, or new limits on the toxic chemical dyes that sweatshops dump into local rivers. Let’s imagine that these new rules are ratified by the national parliament with unanimous support. If the multinational corporations that run those sweatshops — say, Nike or Primark — believe that their profits will be negatively affected, they will have the power to sue the government to stop the implementation of the new rules, subverting the will of the people and overriding the power of their elected representatives.

Investor-state dispute settlement tribunals are already in use, so we know how they work. In El Salvador, citizens recently voted to ban a gold mine planned by Pacific Rim, a Canadian corporation, because it threatened to destroy part of the national river system. Pacific Rim is now suing El Salvador for $315 million worth of lost potential profits. In Canada, Dow Agrosciences, a US corporation, is suing the government for banning the use of its pesticides on the basis that they may cause cancer in humans. In Britain, presuming the TTIP goes ahead, US healthcare corporations are set to sue the government if it tries to prevent them from buying up the NHS, something British voters are overwhelmingly against.

In addition to allowing corporations to sue states, these new trade deals will pre-emptively prevent states from making certain laws. For example, they will make it illegal for governments to stop commercial banks from engaging in securities trading, which was one of the main causes of the global financial crisis. The deals will also prevent governments from limiting the size of too-big-to-fail banks, and will prohibit the proposed Robin Hood Tax on financial transactions. And, perhaps most worryingly of all, they will restrict governments from limiting the extraction and consumption of fossil fuels.

In other words, elected politicians around the world will find themselves stripped of power to defend the interests of their people and the planet against disasters such as economic crisis and climate change.

This unprecedented corporate power-grab amounts to something like an international coup d’état. It dispenses with the idea of national sovereignty, and pours scorn on the notion of elected government. The ideology of “free trade” has now overplayed its hand; it has exposed itself as farce. With democracy about to be sacrificed on the altar of free trade, it has become abundantly clear that free trade was never meant to be about freedom in the first place.

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  • It’s time for a global minimum wage
    • Marleen

      Like the new DEIC almost? Thanks so much for this, so glad I discovered your blog. Important stuff.

    • Matt

      Alarmist drivel.
      You clearly haven’t researched the Pacific Rim case in El Salvador. It has nothing to do with threatening sovereignty or democracy.
      And the Dow Agrosciences suit was filed on the basis of Canada’s expropriation. The ban on their product was achieved despite no scientific evidence of any harmful effects. (And Dow won, the government of Quebec had to officially state that the product did not pose an unacceptable risk to human health. In exchange for this statement, Dow waived all other legal claims)
      This article is pseudo-socialist, alarmist propaganda at best.

    • manquat

      Thought leader is not a mainstream website. An article like yours would never be published in the mainstream media.
      All we are fed is that big business is good.
      But here we hear a different story.
      Our management books tell us FDI (Foreign Direct Investment) is good!!
      It creates jobs, livelihoods for people.
      Some people have even said that SA needs more FDI to create jobs for our unemployed….. but as you’ve pointed out, the big boys are in it for themselves rather than for the communities and citizens of the countries they pour FDI into.

    • pongoland

      @ Matt: You said alarmist twice!


      Why don’t you address the issue of these trade agreements then?

    • http://nicholasjakari.com blogroid

      What you have presented here is intriguing and may or may not represent a blow by corporate power against the people: i shall investigate.

      However you have yourself bought into the myth implicitly, for believing that any of what you wrote against was: “Free Trade”. Corporate power, maybe, monopoly capitalism, maybe, market capitalism?Certainly. Like ‘Communism’, Free Trade is a myth and only by default.

      You are describing a world in which the price of money is controlled everywhere by an interlocking network of Central Banks. Currently money is cheaper than it has been in about 500 years… and while that sounds “free”, try explain to pensioners [for instance] why the [low risk] interest rate they get on their savings is lower than the rate of inflation? Which is why they are getting poorer.

      Basically when the price of the key instrument determining prices is controlled and the supply of that instrument may be arbitrarily increased without commensurate productivity [as it has been to the tune of some US$400 Trillion since 2007 then the result will be, and is more appropriately, termed: the era of financial repression, rather than “Free Trade”.

      If you want to evaluate the real world of “Free Trade” perhaps you should evaluate the evolution of a phenomenon called “Bitcoin” … a phenomenon that could be about to change the world, as the most devastating instrument for “freedom” and “Free Trade” since file sharing disintermediation…. or not.

    • http://www.thoughtleader.co.za/jasonhickel/2013/12/19/free-trade-and-the-death-of-democracy/ proactive

      …….very uncomfortable matters: fracking and wrecking, climate change denials, extreme corporate graft, greed & perverted free trade-ism, the too big to fail propaganda, corporate fascist state democracies. Reckless, corrupted politicians, bankers & big business. Live for today- for there is no tomorrow? Voters think they still have any real power to intervene? A blinded democratic society drugged by entitlement, welfare & more demands. Accounts payable by the next generations? Kicking the ‘can’ down the road? Balance? Solutions?- what?- how?

      Perceived alarmist drivel by the 10% getting richer or serious matters for the 90% getting poorer? Well done Jason, at least somebody keeps on highlighting and writing about it!

    • http://necrofiles.blogspot.com Garg Unzola

      Absolutely correct. That’s because most mainstream websites would not be able to risk such a poorly research article as it could have devastating effects on their reputations. But over here on fraughtleader, anything goes since there’s no downside in store for those who would like to disseminate their ideologically loaded confirmation bias.

      I wonder how people in Cuba and China feel and why their governments are trying more and more of this free trade thing? Or let me guess – that’s just what the military industrial complex want us to believe. Ha!

      At best, this is a criticism of ‘free trade’, which is to say it’s just a straw man. Seriously lacking and extremely worrying that it appears so convincing to many. Suffice to say that the impact of our Matric results is beginning to show.

    • Ted Jenkins

      I’ll support fighting the power of corporations; but not abandoning free trade. The danger is the institutionalization of inefficient use of resources, labor and capital – and the victimization of all consumers.

    • http://hismastersvoice.wordpress.com The Creator

      Interesting that an ultra-right-wing racist leaps to the defense of the corrupt global plutocracy by declaring that two Communist oligarchies support its policies.

      One might almost assume from this point, that Communist oligarchies, being opposed to democracy, have much in common with ultra-right-wing racists.

      Meanwhile, the only thing wrong with this article is that it was bland and lacked substance. One has only to look at the collapse of South African industrialisation after 1980 (when globalisation, neoliberalism and “free trade” really got going in South Africa) to see the catastrophic and murderous consequences. And, of course, then one can look at the NDP and see where we are headed.

      Garg, of course, not being human but instead a very simple computer subprogramme devoted to abusing anything sane and humane which appears on this website, is not capable of comprehending such things.

      And a Merry Christmas to all my readers. (Bah!)

    • http://necrofiles.blogspot.com Garg Unzola

      @The Creator:
      Can you please name all the formerly state owned enterprises that were privatised in South Africa since the 80s? Because that’s a pre-requisite for Neoliberalism.

    • Rory Short

      Healthy economies exist to serve in equal measure those who make up the economy. In order to ensure the continuance of this situation it is vital that democratically elected parliaments remain the overlords of the rules that govern how their economies function. To accord more power to so called market forces than to sovereign parliaments is to hand the community over to exploitation by the robber barons who determine these market forces.

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