• The Basics
• The World Trade Organization
• Free Trade Agreements
• Trade Jargon

The Basics

What does “free trade” mean? What is a “free trade agreement”?

“Free trade” is a term used by those who want multinational corporations to be allowed to trade goods (and sometimes services) with little or no regulation. The term inaccurately implies that any rules governing the amount of trade or domestic standards that importers have to meet are unfair. Proponents of free trade refer to rules and standards as “barriers” to trade.

The official term for reducing trade barriers between nations is “trade liberalization” and it is executed with free trade agreements between countries or groups of countries. Usually, these free trade agreements are intended to wipe out the rules multinational companies identify as limiting their ability to freely export products around the world.

Most free trade agreements go much further than setting the parameters for the amounts of goods traded between countries. Free trade agreements require countries to eliminate policies (border taxes, caps on quantities traded, subsidies, etc.) that support domestic industries. Additionally, countries may be required to change their laws on food safety or environmental protection, while establishing new rights for corporations to patent ideas, seeds or products, and facilitate financial transactions.


Can a foreign corporation sue the U.S.?

Yes. Free trade agreements often give far-reaching rights for multinational corporations to challenge government regulations, such as environmental laws, by suing that country in an international court. Several Canadian corporations have challenged U.S. laws under parts of the North American Free Trade Agreement (NAFTA).


What is Food Sovereignty?

Often presented as an alternative to the free trade policies of the World Trade Organization’s Agreement on Agriculture, Food Sovereignty is the principle that people have the right to define their own food and agriculture system; to protect and regulate domestic agricultural production and trade in order to achieve sustainable development objectives; to determine the extent to which they want to be self reliant; to restrict the dumping of products in their markets, and; to provide local fisheries-based communities first priority in managing the use of and the rights to aquatic resources.

The World Trade Organization

What is the WTO?

The World Trade Organization (WTO) is a forum in which representatives from national governments determine the rules that govern global trade. Established in 1994, a major goal of the WTO is to increase the flow of goods among countries. WTO rules often benefit multinational corporations at the expense of public health, jobs and the environment. And when WTO rules come into conflict with the laws of individual countries, the WTO tends to win out.
There are approximately 60 WTO agreements; among the most significant are the General Agreement on Tariffs and Trade (GATT), the Agreement on Agriculture, and the General Agreement on Trade in Services (GATS).


What is the Doha Round?

WTO negotiations are often named after the place where the initial negotiation meeting was held; in this case the kick-off meeting was held in Doha, Qatar. The Doha Round is the current round of negotiations to expand WTO rules, including the Agreement on Agriculture, the services agreement, and addressing something called non-agricultural market access.
Originally scheduled for completion in 2005, countries have yet to agree enough to finalize this round of negotiations. In 2003, a group of developing nations lead by Brazil, China, and India refused to negotiate until the world economic leaders, especially the U.S. and the European Union, reduced their own agricultural subsidies. Talks collapsed during the summer of 2006 (see Food & Water Watch Press Release) but pressure must be maintained to ensure that the Doha talks don’t reach completion.


What is NAMA?

NAMA stands for Non-Agricultural Market Access and refers to negotiations to increase trade in products that aren’t already included in the World Trade Organization’s agriculture agreement, such as manufactured products, minerals, and lumber and notably, fish and fish products. Including fisheries in NAMA will pose severe threats to sustainable development by intensifying the exploitation of fisheries that millions of people depend on for survival.


What is the GATS?

GATS stands for the General Agreement on Trade in Services. This WTO Agreement first went into effect in 1995, and negotiations are currently underway to expand its rules. GATS rules cover a broad range of economic activity that the other agreements (which deal with trade in physical goods) do not cover, such as health care, education, sewage treatment and the construction of infrastructure.

Under GATS, the U.S. has agreed to restrict its laws on food from farm to plate, including agricultural work, animal husbandry, fishing, food processing, packaging, food labeling, shipping, storage, food retailing, and serving food at restaurants. For more on efforts to expand GATS, check out “Regulation Degradation.”


What is the Agreement on Agriculture (AoA)?

The Agreement on Agriculture is the section of WTO rules that deal with trade in agricultural goods. The agreement went into effect in 1995, and negotiations are currently trying to expand its rules. The AoA requires WTO members to reduce tariffs and some subsidies and change other government policies on agricultural goods. This agreement has facilitated the domination of markets by multinational agribusiness corporations, to the detriment of small farmers around the planet.

Free Trade Agreements

What "free trade" agreements does the U.S. have with other countries?

The U.S. currently has completed or is negotiating 26 agreements with different countries, heavily focusing on Latin America and the Middle East. Click here to read details on the status of each agreement.

Trade Jargon

What does “fair trade” mean?

Fair trade occurs when producers receive what is considered to be a fair price for their goods; a fair price covers the cost of production of the good and provides a small profit. Fair trade often encourages small-scale, environmentally sustainable production, and allows small producers to continue farming. Coffee, chocolate, and handicrafts are often available as certified fair trade products. In the United States, an organization that certifies products as “fair trade certified” is a nonprofit called Transfair USA. You can check them out at www.transfairusa.org.

What are tariffs?

Tariffs are at-the-border taxes on imports. Many developing countries depend on tariffs to fund infrastructure maintenance, and basic services such as education and health. Tariffs are also used as a tool for protecting local markets from a flood of imports. At WTO and free trade agreement negotiations, developing countries are being pressured to reduce their tariffs.

What are quotas?

A quota is a cap on the quantity of a certain good that one country will import from another country.

What are non-tariff barriers (NTBs)?

Non-tariff barriers are government policies that place restrictions on one country’s ability to export certain goods into another country. Regulations such as food safety, labeling and environmental laws are often considered to be non-tariff barriers, and have been targeted for elimination at the WTO.

What is dumping?

Dumping is when a product is exported to a country at a price that is less than it costs to produce the item. Dumping is often used as a way to drive local producers out of business, in order to ensure demand for imported goods.

What are subsidies?

Subsidies are government payments made to producers. Subsidies can be used to support small-scale farms as well as to help farmers meet animal welfare and environmental standards. Unfortunately, however, farm subsidies in the U.S. are skewed so that large farms receive the bulk of the payments, further driving the corporate consolidation of agriculture in the U.S.

What is often missing from the debate on subsidies is that subsidies really benefit the corporate agribusinesses that pay farmers less than the cost of production for their crops and rely on taxpayer funded subsidies to make up the difference. This allows agribusiness to pay less for the corn, soybeans, and other grains that they use to feed animals and trade around the world, while subsidies give farmers just enough support to prevent the collapse of the farm system in the U.S. when prices are low.

What does it mean to be “protectionist”?

The term “protectionist” has traditionally referred to someone who supports trade barriers that benefit a domestic industry. Free trade proponents use it as a derogatory term for anyone who questions their corporate-driven agenda. We say, what’s wrong with wanting to protect workers, to make sure that there are good, well-paid jobs in your country? What’s wrong with wanting to protect the environment, to ensure a safe, wholesome food supply? Achieving these goals requires regulation and planning – not just unrestricted trade.

What is food security?

According to the UN Food and Agriculture Organization (FAO) “Food security exists when all people, at all times, have access to sufficient, safe and nutritious food to meet their dietary needs and food preferences for an active and healthy life.” The opposite is food insecurity, which leads to hunger and famine.