Last week, I was in Nebraska, where I met Doug Palmer. He and his partner, Pat Boeshart, make insulated concrete forms for buildings. The traditional way to insulate concrete with foam is to make the foam and then truck it around the country to building sites to be attached to concrete. Mr. Palmer's company, Lite-Form, found a Korean machine that, when combined with devices added by his firm, can make the foam and concrete together on site, saving big dollars in trucking. Today, Mr. Palmer's South Sioux City company imports these machines from Korea, attaches its devices and exports them to Kuwait. His company has an Arabic brochure that tells Kuwaitis how to use the device. The brochure was produced by a local ad agency owned by the Winnebago Indian tribe of Nebraska. The agency was started by the tribe's economic development corporation. Midwest Indians publishing Arabic brochures for Nebraskans importing from Koreans for customers in Kuwait ...
"Protectionism scares me," said Mr. Palmer, who has 28 employees. "If we put up a moat and keep doing what we're doing, thinking we're the smartest in the world, we're going to die. We have to have that flexibility to barter and trade."
I come from a Labor family. Both of my parents have been strong and active union members. My Mother currently sits on the board of the Minnesota AFL-CIO and is a negotiator for her local union. I say that because, well, I'm feeling a bit defensive making the argument I'm about to make.
Free trade is a good thing. We need more of it. Protectionism will only hurt us in the long run. But the way we've done free trade up til now is wrong.
There are two problems with our current free trade agreements.
1. Our current free trade agreements, including NAFTA, have set up top secret courts to resolve any disputes that arrive under the treaty. The treaty language is horrible. It says that if a business believes it will be harmed by a law in one of the countries that has signed the treaty, that business can sue in super-secret treaty courts and those courts have the power to invalidate the law.
So, for example, California has passed stronger vehicle emission standards than most of the rest of the places covered under NAFTA. A Canadian or Mexican car manufacturer could sue California alleging that the emissions law will cause it financial harm. That suit would be brought in NAFTA treaty court and the court could order the state of California to stop enforcing their emissions law.
But it gets worse, here's the kicker, the only way anyone will ever find out if a lawsuit has been brought or decision made is if the court announces the decision. Prior to the court's announcement of the decision, all proceedings are confidential.
That's just nuts. Those courts shouldn't be secret and they shouldn't have the power to unilaterally overturn laws.
2. We absolutely must include labor, health and environmental standards in our treaties. Now, we don't need to demand that companies in other countries pay American level wages but we should demand that they pay a wage that will keep their employees out of poverty -- a "prevailing wage" if you will -- and that these companies meet strict health and environmental standards.
Free trade is a good thing. It can become a tool to improve the lives of Americans and citizens of the world. Think about Doug Palmer. 25 years ago, very few people in South Souix City, Nebraska, were thinking about Kuwait as a potential market. Today, instead of limiting most entreaupeneurs to starting businesses that serve just their state or community, we now have the ability to think, work and trade globally. And you don't have to be living in Houston, New York or Los Angeles to get it done. You simply need to have a vision that stretches beyond the boundaries of your community.
Growing up, my parents (and my old high school computer teacher, Charlie Weinman) constantly encouraged me to think beyond the boundaries of my small, rural hometown in Minnesota. But the vision presented wasn't global, it was national -- unless I wanted to become a diplomat and work for the State Department. When they said I could be "anything in the world" I wanted to be what that really meant to me was that I could be anything in America I wanted to be. And believe me, it was hard enough for me as a high school student to really see anything beyond Minnesota.
But for my kids, the world really will be open. They really will have a chance to compete, live and think on a global stage. I think that is a very exciting prospect. And it will only happen if we continue to pursue free trade.
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