Free Trade versus Fair Trade?

Tuesday, 05/11/2010, we focused on free trade and how it has affected Nicaraguan politics, economics, and daily life for many of the people here. We were prepped for today with a lecture on NAFTA and CAFTA and what these agreement mean (in general) for participating countries. Free trade in general implies that no taxes or tariffs/regulations on trade will be imposed that would in anyway inhibit trade, this makes the policies international by defintion. Narrowing down our focus to NAFTA, we talked about how the corn farming industry had been affected by the agreement once it wa instituted in 1994. Basically, the Mexican corn farmers were forced to leave their fields in search of manufacturing jobs in the city because they could now longer afford to compete with heavily subsidized American corn that was all of a sudden very cheap once the tariffs were lifted from the price tag. The cultural implications of that transition were devastating to Mexico, and the loss of their agricultural business to large scale American agri-corporations meant that Mexico no longer had the luxury of food security either. From there, we moved on to CAFTA, coming back to our focus on Nicaragua. CAFTA had the same sort of effect on Nicaragua that NAFTA had had on Mexico, but instead of corn, rice was the staple product that was lost to United States agri-business. Although it is argued that CAFTA has created jobs for Nicaraguans, most of these jobs are neither secure, nor lucrative enough to feed the average family. Nicaragua did increase its exports (up 19.6% in the first three months of 2007 compared to 2006) but its imports account for more than twice the amount of exports annually. Due to the unavailability of work that pays enough to feed their families, many Nicaraguans are forced to emigrate and now, an estimated 900,000-1.5 million Nicaraguans reside either permanently or seasonally outside of their own country.

To see what physical and social effects these policies have had on the area we are currently in, Managua, Nicaragua, we went to a factory within the Las Mercedes Free Trade Zone to meet with an administrator of the factory and then go on a tour of the factory guided by the human resources manager. The minute we walked into the first meeting with the administrator, things felt wrong. We had walked into an air conditioned, very posh meeting room with reclining, heavily cushioned seats and bottled water waiting for each of us. A few minutes after sitting down, a woman offered us coffee as well. They showed a promotional video that CNZF (National Comission for Free Trade Zones- in english) that had business owners referring to Nicaraguans as quality workers that are very eager to work for low wages. It was almost ridiculous, something we would have made at home as a joke, but never believed could possibly be real. The administrator continued to tell us about the better qualities of inacting free trade policies while pointing out that clearly, the system has flaws. Referencing the working conditions of the factory, he said that the problem was not the lack of labor laws to protect the workers... but the refusal of many factories to implement and follow those laws. Specific problems are the number of hours at a time the worker is allowed to work (it should be eight hours a day but shifts have often extended to 24 hours), overtime pay must be given if extra hours are worked, health care is mandatory but rarely given, harassment (whether it is verbal, physical, emotional, or sexual) is commonplace, and many women suffer from not being allowed anykind of maternity leave. The meeting was ended with the question of why Nicaragua is in the spotlight for these problems when they are occurring elsewhere? China has factories that violate all of the same labor laws/rights, yet Americans do nothing. He said that we are too dependent on them now economically to question it, but that we should if we are going to do so in Central America.On the tour of the factory, bad feelings towards the business became more widely and dramatically felt for the group. It was a huge room filled with hundreds of people all working in 3x3 sq ft spaces on the same menial task over and over and over. They were crammed in so as to fit as many workers into one space as possible. Some workers were wearing face masks. Others were wearing no protective gear, and many even lacked proper shoes... wearing flip flops in an industrial setting. The questions we asked the human resources manager (who was from Taiwan, where the owners of the company are from) were all answered readily, but in a way that not all of us quite believed every time. Walking through the factory lines, we watched as these workers made clothes we see at the University of Portland every day. They were making North Face jackets that cost the same amount of money that the workers make per month, approximately $120.

After the tour of the factory in the Las Mercedes Free Trade Zone, we ventured to another factory that operates in a free trade district. This factory was started by a group of Nicaraguan women who were displaced from work in 1998 and then lost everything to Hurricane Mitch. They modeled their factory after American co-operatives, and initiated a project that would serve as a model for worker run factories. It took them two years to build the factory building (as well as many, many personal sacrifices) and have overcome many obstacles. One of the obstacles the founder told us about was when the Ministry of Labor tried to shut them down for having half the number of workers they needed to legally operate (15 versus 30). A bank in Houston, TX came to their aid and loaned them enough to hire the extra fifteen workers and continue to fill work orders. Today, 40 people work in the factory and their biggest buyer is the Presbyterian church. Although they cannot afford an advertising campaign in the States, they have brochures, a website, and go on many speaking tours to promote their factory. They have spoken in 22 states now. The factory workers are the directors, so they are definitely treated with respect, dignified wages, and have access to healthcare with an on-site clinic, maternity leave, and a work day that averages from 7 am to 5:30 pm. Any overtime is recognized so employees are not cheated out of their deserved earnings. The difference just in atmosphere between the two factories was like the difference between night and day. In one factory, the workers were almost faceless in the sea of products and other people... in the second, they were people who played baseball during their lunch break. At the second factory, instead of feeling guilty about the clothing choices we had made while in Portland, people were excited to buy new clothes and many of us have new tee shirts from the fair trade factory within the free trade zone.