FREE TRADE STATEMENT

The 8th Day Center for Justice strongly opposes the current method of corporate controlled Globalization specifically
used in trade agreements modeled after the 1994 NAFTA (North American Free Trade Agreement).  The following
statement first outlines the principles that we believe need to be the basis from which free trade agreements should
be guided, followed by a condensed criticism of this model of trade agreements.  We conclude this statement with
benchmarks, which we see as minimal realistic measures that we will be looking for trade agreements to meet in the
near future.

We affirm the following principles as fundamental for any international trade agreement. These principles come
out of numerous sources of wisdom including Catholic Social teachings.  We affirm these basic principles:
We do not agree with the current free trade model for several reasons.

The foundational theories1 of NAFTA (North American Free Trade Agreement) and other free trade agreements are
based upon assumptions that do not take into consideration the complex reality of international trade.2 The theories
fail to acknowledge the reality of free-flowing capital between states or states with varying levels of infrastructure
and technology such as Mexico and United States. The assumptions made by these theories apply only in highly
hypothetical cases and have not accurately predicted the effects of NAFTA or CAFTA (Central American Free
Trade Agreement).  

Economists use the total gain to a nation’s economy (usually expressed as gross domestic product) as the measure
of success, but most of the gains occur only to the wealthiest citizens of the population.3  While the people who are
poor, on all sides of these agreements suffer greatly, there is no mechanism to advocate for them or to allow them to
advocate for themselves. NAFTA style trade agreements further marginalize the fringes of society by promoting
unsustainable economies.4  In the US, NAFTA has caused unemployment or underemployment which contributes to
the growing prison populations.  In Mexico inequality is growing by the year. The richest 10% of the Mexican
population now earns 35.6% of the countries income, while the poorest  10% earn only 1.6% of the income.5 Of the
population of Mexico 40% are below the poverty line.6 Faced with heavily subsidized food imports Mexican
campesino farmers can no longer sustain their livelihood, which has lead to several uprisings in southern Mexico,
including the Zapatistas.

The workers of all countries involved in free trade suffer. Multinational corporations often use threats of relocation
as bargaining chips against organized labor and laws that promote a good standard of living for workers.7 The
NAFTA trade adjustment assistance (NAFTA-TAA) program, which offered aid to U.S. workers whose jobs were
relocated specifically due to NAFTA, calculated 525,094 jobs relocated from the United States between 1994-2002.8
This free flow of capital, in the forms of the corporate entity and foreign investment, puts downward pressure on
labor wages, health standards, environmental protections, and worker rights. As an example in Mexico while
manufacturing exports did increase the average wage of Mexican manufacturing workers declined from $5 per day in
1994 to $4 per day in 2004.9 This is what is commonly known as the ‘race to the bottom’, a rush to the areas with the
lowest standards in order to make the largest profits. 

Beyond the basic economic flaws with trade agreements like NAFTA we are also concerned with the Investor to
State Dispute mechanisms that are part of these trade agreements. Chapter 11 of NAFTA gave rise to secret tribunals
that allow investors and corporations to sue nations for laws that regulates corporate action.10 This anti-democratic
mechanism furthers the race to the bottom by allowing corporations to financially press a participating nation to alter
its environmental and social laws using the argument that these regulations hinder the corporations’ ability to
maximize any potential profit. Many of these cases are directed against local or state laws with the process excluding
local authorities such as the attorney general of the State (these tribunals are held between corporations/investors
and the federal government). This mechanism fully undermines local democratic authority.

Therefore, 8th Day Center for Justice calls for the following minimal benchmarks
in present and upcoming U.S. International Trade Agreements (ITA):

           1.    Human Rights – ITA shall pledge to uphold the rights of the Universal Declaration of
           Human Rights, Geneva Conventions and all other applicable human rights standards. In the
           American continents ITA shall also pledge to uphold the American convention on Human Rights
           with development of a tribunal to resolve disputes with regard to the violation of these rights.
           2.     Labor Standards (Principles and Mechanisms) – ITA shall comply with the 1998 ILO
           (International Labor Organization) Declaration on Fundamental Principles and Rights at Work, with
           inclusion of eight core ILO conventions.11 ITA shall also delegate to the ILO monitoring authority in
           addition to other independent monitoring that will occur in consultation with civil society regarding
           these principles.12
           3.    Community Consultative Process – ITA shall engage in a transparent negotiated process
           that involves the local citizens and civil society organization. This would include providing for full access
           to information and intergovernmental negotiations as well as opportunities for local governmental and
           NGO input. Furthermore ITA shall affirm local indigenous and marginalized communities to full
           autonomy over local decisions.
           4.    Investors - State Dispute Mechanism – ITA shall not have these types of mechanisms
           that allow corporations to directly demand that a state alter its own laws based on “potential
           profits losses.”
           5.    Equal Market Access Strategies – ITA shall take into consideration the market
           inequalities that exist between developed and undeveloped nations in so doing plan a constructive
           strategy for using tariffs and standards that would lead to the development of the industrial,
           technological and infrastructure of undeveloped nations. This should be reflected by the developed
           nations ending subsidies and lowering or eliminating tariffs from the start of the trade agreement.
           6.  Protection of those who are Marginalized - Under no circumstances should the
           trade agreement facilitate or encourage the displacement of, or deprivation of property or rights
           of those who are poor and/or marginalized.      
           7.   Economic Sustainability - Economic instability and market fluctuations are unavoidable
           side effects of free trade agreements. Therefore, we insist that participating governments prepare
           for the instability by strengthening social programs such as welfare, job training, healthcare,
           unemployment protection, and universal education. This may be paid for in part by tariffs on the
           flow of capital across national borders.
           8.   Environmental Protections - The local community, in coalition with the international
           environmentalist community, should have the first and final say over all aspects of the economy
           that have the potential to negatively impact the biodiversity and sustainability of the environment.
           This oversight would extend to infrastructure projects such as dams and airports. Additional taxes
           on foreign corporations and investment capital should be levied to support environmental law
           enforcement and initiatives.

ACTIONS
1. Share this statement with your family, friends, coworkers and your faith community via email.
2. Send a copy to your Senators and Representative and ask them how them how they will employ the
Benchmarks in upcoming International Trade Agreements. For contact info, go to 
http://www.congress.org/congressorg/dbq/officials/
3. Send a copy to your local newspaper or church newspaper with a request that they provide some coverage of the statement.


Endnotes
1. Heckscher Ohlin (HO) Theory is the basis for NAFTA. It is a improvement on the Theory of Comparative Advantage.  
2. HO Theory only takes into account only two countries, two factors of production , and two products being traded.
3. Based on the World Bank’s GINI index, which measures disparity in the distribution of wealth, as well as the UN
Development Program’s figures with the UN Human Development Index. In the US, The richest 1% owns more than the
bottom 95%. A typical US CEO earns 419 times the average employee. The richest 5% of American households own more
than 60% of the nation’s household wealth. Between 1973 and 1997, the average annual incomes of the poorest 20% of
families actually fell by 5%, while the average income of the richest 20% of families grew by 41% . The incomes of the
richest 5% of families grew by 64%. Statistics current in 2000, taken from US Census figures and Congressman Bernard
Sanders report “Working Families in the Global Economy.”
4. In Mexico Between 1993 and 1995 the number of unemployed workers had doubled to 1.7 million. Between 1994 and
1996 real hourly Mexican wages had fallen by 27 %,  and stood at 37 % less than 1980 levels. During the first three
years of NAFTA,  the citizens classed as "extremely poor" had risen from 32 % to 51 %.
5. 2002  estimate from CIA World Fact Book.
6. 2003 estimate from CIA World Fact Book.
7. In Mexico union membership fell from 30% in 1980 to 20% in 2000.- NACLA vol 39 no 1 pg 18
8. A regularly updated, searchable database of NAFTA-TAA and TAA certifications is maintained by Public Citizen’s
Global Trade Watch at http://www.citizen.org/trade/nafta/
9. Public Citizen’s Global Trade Watch, “The Mexican Economy, Agriculture and Environment” Public Citizen’s
NAFTA at Ten Series, http://www.citizen.org/trade/nafta/. Also the North American Congress on Latin America
reports that Mexican workers’ wages fell by 50% between 1980-2000. NACLA vol 39 no 1 pg 18.
10. Ibid., “Undermining Sovereignty and Democracy”
11. ILO conventions (29, 87, 100, 105, 111, 138, and 182)
12. ILO convention (169)