1. Free Trade
Food First

2. Comparative Advantage
Major idea of Free Trade:
Comparative Advantage
Each country exports what it produces best
Money used to import what it cannot grow
This could alleviate hunger and poverty
Costa Rica Coffee

3. Problems with Comparative Advantage
Exports have boomed
in Third World countries
Hunger has gotten worse
Those who profit from exports
are not the poor
Wealthy do not use profits to benefit the poor
Export crops displace food crops
Brazil
Bolivia
Chile
Thailand
Soybeans in Brazil

4. Brazil Hunger program in Brazil 1970s: Most soybean production
Soybeans become #1 export
Most soybean production
goes to feed livestock in Europe, Japan
Rice production fell
Staple food
hunger grew
By 1990s:
Brazil ranks third in world in Ag exports
¼ of Brazil’s population
lives below poverty line
Hunger program in Brazil

5. Brazil Food Exports

6. Brazil Ag Frontier Cerrados: 120 million hectares
high plains
Previously uncultivated
Soil acidity, aluminum
2006 World Food Prize
Soil improvement of Cerrados
40 million hectares now cultivated (2006)
Potential for expansion

7. Chile 1990s had become world’s #1 exporter of table grapes
90% of world trade in grapes
Sales mostly to U.S.
Poverty widened dramatically
1970s poor = 20% population
1990s poor = 41% population

8. Free Trade Can be exploited by big corporations
to move farming, factories to where labor cheap
Large corporations get huge subsidies
from governments eager to attract investment
If unions raise production costs
strike for higher wages
company moves on
World Trade Organization Protest

9. Fair Trade
Idea: support fair export prices for small producers in developing countries through co-ops:
Coffee
Tea
Bananas
Cocoa
Mangos
Pineapples
Crafts
5 million growers in 40 countries
$180 million sales in U.S. (2002)

10. Globalization Some companies seek: Lowest wages
Most lenient regulations
Cheapest resources
“Race to the Bottom”
People compete to work for less
Accept part time employment
Forgo health insurance
Forgo occupational safety regulations

11. Slash and Burn Capitalism
Large export farming operations set up in a place for a few years:
Melons in Mexico: 7 years before unprofitable
Overused chemicals
Increased pest resistance
Increased wages
Pullout caused economy to slump
Cheap for another multinational to come in
Cycle leaves economy and ecology in decline

12. NAFTA Resulted in loss of jobs Jobs in Mexico lost
in both US and Mexico
Jobs in Mexico lost
by flooding country with cheap mass produced goods
28,000 local companies
out of business
Unemployment in Mexico
doubled
Number at or below poverty
increased from 32% to 51%
Slums in Mexico City

13. Bubble Up Economics
After WWII, Japan, Taiwan, Korea huge economic growth
No Free Trade
Prohibited food imports, direct foreign investment
Land Redistribution
Government subsidies and tariff protection of domestic manufacturing
Incomes and purchasing power of poor peasants and workers raised:
Workers and peasants became strong domestic market
After market strong, opened borders
Tokyo
Tokyo

14. World Trade Organization
Is it a dictatorial tool of the rich and powerful?
Does it destroy jobs?
Does it ignore concerns?
health
environment
development
WTO says emphatically no!

15. WTO Says
Misunderstanding: The WTO destroys jobs, widens the gap between rich and poor.
Answer: Not true, inaccurate and simplistic.
Trade can be a powerful force for creating jobs and reducing poverty.
Sometimes adjustments are necessary to deal with job losses
The alternative of protectionism is not the solution.
1.5 billion people are still in poverty, but
trade liberalization since World War II has contributed to lifting an estimated 3 billion people out of poverty.