Free trade

Dr Rana Jawad Asghar

Last Friday, we had a seminar at our University about 'Free Trade'. For a purpose of good discussion, our class was divided into two groups for many weeks in advance. We had to read a lot to be prepared for the discussion. I was chosen to lead the group which had to present its arguments in favour of free trade.

Many of the environmental groups in USA are against free trade. They genuinely think that by free trade agreements, the pollution producing factories will simply be transferred to poorer countries and their population will suffer the consequences of environmental damage. They believe that these factories will be relocated in the third world not only because of relaxed environmental laws but also due to poor labour laws. They fear that there would be a lot of sweatshop-type factories and that many will use child labour which will not only cause damage to world's highly fragile environment but will also increase Third world's woes. People who are against free trade firmly believe that it is not going to bring any big economic benefits to the Third world, except to enrich more somebody who is already rich. They think that the multinational companies would be too strong and powerful, that for a smaller countries it would be impossible to contain them or say 'no' to their demands. I believe that people with such ideas are really good people with good intentions. I don't have a single shred of doubt about their good intentions and their fear of environmental pollution if free trade is allowed to flourish.

The group I was leading had some very simple arguments. First, we also had to take in account that the above-mentioned fears are not normally in the forefront in many of the environmental or labour organisations main arguments. Nearly eighty per cent of their arguments are only about American jobs. It was just last year that a big and well-respected environmental group in the USA declared that one way to minimise USA's pollution is to restrict immigration (obviously from the Third world).

I am very doubtful when someone in the North decides what is good or bad for someone in the South. And it is sorry to say but the truth is that all these NGO's (Non governmental Agencies) who once bashed their own governments in the North alleging that they decide about the South or Third world while sitting in Washington, Moscow or Paris, are now doing the same themselves. Today, NGO's in the First world decide in the same way about the 'poor', 'stupid' and 'savage' Third world but with a little different packaging.

North or the First world has always enjoyed free trade with the Third world. Small and poor countries do not have choice when they are forced to sign different agreements. Now, they are getting some chances of getting into the Free World's free economies. If a Pakistani exporter makes good quality textile products and with competitive prices, why can't he export these products freely to the USA without having to go through all the restrictive quota procedures?

Due to strict environmental laws and highly expensive workforce in the developed companies, manufacturers are looking for countries where they can have cheap raw material and skilled and affordable workforce. This gives poor and technically backward countries an edge. Before this, they had no incentive. They could not match the developed countries in technical skill or infrastructure (they can't even do it in near future) and the only attraction they can provide for more investment is to offer affordable and skilled labour and relaxed labour and environmental laws.

True, there would be some increase in pollution but when people are malnourished or are dying with hunger, the most immediate problem is to provide food. The immediate question is how to survive the next day or week and not what is going to happen after twenty years. To tell a family trying to survive in cold not to cut a tree is hypocritical when you see the amount of natural resources being misused by the developed countries. It is also historically true that the industrialised countries have abused natural resources to the limits to increase their wealth and maintain an edge with rest of the world. Now if we impose all the strict laws which are enforced in the developed countries, no new investment will ever come to the poor countries.

I also don't agree with the notion that there would be sweat-shop working environment. We have seen in our part of the world that with foreign companies competing for skilled labour force, there is a definite improvement in working environment not only in international factories but also in the notoriously bad local industry.

The benefits do trickle down but sometimes the speed is more slow than desired and this needs to be rectified. The huge technical industry which may come to the Third world will be spilling over the technical skills to the country they are operating in. We have seen this in our own country. Even though Suzuki like other companies of Japan has dragged its foot in localising its cars but a whole cottage industry has developed from where you could buy nearly every spare part manufactured in Pakistan at the fraction of the original cost.

The computer programmers in India were and are still paid a fraction of pay of their American or European counterparts. But with software industries moving into the India, it has created a huge business for India as it is now a major share-holder in the world's software business.

It has also given it a sound footing in the advanced technological markets of the next millenium. I think, that as economic development will take place in these poor countries, people of these countries will themselves take steps to limit the environmental pollution. In the meantime, the developed countries should also try to change their habit of gross misuse of natural resources.