The Defraying Costs for free trade are Costly

This past weekend, I watched on C-Span discussions of the new free trade agreement with EU, TTIP, and the proposals for a NAFTA-2 agreement.  Particularly, I found instructive the discussion at the Center for Strategic and International Studies in Washington.

During negotiations for NAFTA-1, I had a tiny window of input; and overall, I was encouraging of the developing treaty for the North American Continent.  Currently, there's a plethora of free trade agreements in effect or in circulation, including Mexico's outreach market ploy to corral South American countries into its free trade pact.

Support for these free trade agreements has never been enthusiastic.  I think the public is aware that there are costs to it; and these don't seem part of the agreement!  I describe these costs, viz., what I regard as opportunity costs, as defrayed, usually paid for by the people of the countries through their governments' participation in some free trade agreement.

Key to understanding these defrayed costs is to start with a transaction between two corporations (i.e., a memo of understanding) that establish a free trade agreement for some product, one ordering the product to be produced, the other agreeing to manufacture the product (or, in some way produce it) for a set sum of money; and each corporation head-quartered in a country other than the other.

What are these opportunity costs which are being defrayed?  In the country where the product is produced, these  involve use of natural resources--water and land--which, if polluted are not satisfactorily cleaned up.  In the country losing sites of production and manufacturing, these involve workers who are displaced and have lost income; and in many cases must be subsequently re-trained, perhaps, even re-located.  In that the governments, acting on behalf of the businesses involved, have provided the opportunity for international trade, they must be compensated for the incursion of demands upon their workforce and resources because of the free trade transaction.        

Accordingly, I argue for an export tariff tax:  when the value is added to the product being produced within the boundaries of a country, that country should tax the value that was added to the product in goods and services provided within its borders.  Secondly, while companies bear no responsibility to workers who migrate into their country to become part of its labor force so as to benefit possibly from an additional call for skilled workers, they should discourage worker migration cross borders. For one thing, migration drains the indigenous worker pool (witness what happened in Mexico and Central America, when migrants drifted north to the US).  For another, it places undue and uncompensated demand on social services in the producing country. 

What principle I appeal to for backing to these shifts toward paying for the free trade opportunity is the recognition that for the transaction to benefit each participating corporation, all parties must assume responsibilities as operating businesses in partnership in the production process.

A related point to make: Internet Point of Sale

It is true that the Internet spans many, many countries; and there's a tremendous surge in sales of companies doing selling over the Internet.  Typically, these are "mom-and-pop" or "husband-and-wife" operations, but their costs are minimal--amounting to cost to produce the product or engage in the service; and shipping charges via Fed-Ex; and costs to meet relatively minimal regulatory standards within one country or another where the transaction and sale is recorded. 

Obviously, many Internet companies are thriving, capable of meeting the responsibilities of business to pay their share to government.  Accordingly, there should be a sales tax instituted, possibly by the federal government or certainly by the province or state government where the point of sale is recorded.  Failing to impose this responsibility upon small businesses, primarily, is to my mind providing undue advantage to those involved in Internet selling over the more usual customer selling.