Free Trade and Whether It Term Paper

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Since this approach is not an option, Sampayo and officials with the Matamoros Water & Sewage Board have sought assistance from BECC. Before any project can receive certification, however, the water utility must prove it is self-sufficient and capable of repaying a NADBank loan, generally through user fees. This will prove difficult, since only half the city's water subscribers pay their bills on time, 20% pay late and 30% pay nothing at all. "

For several years, U.S. companies that have moved their operations overseas have avoided the environmental regulations that have been so costly for them here in the states.

The companies escape paying pollution abatement fees as well as penalties if they pollute beyond the federal government standards.

The companies that choose to move do so to lower costs and are not volunteering to take care of environmental issues once they are in the new country. The companies often choose to move to underdeveloped nations where people will work for pennies on the U.S. dollar, and they are not advanced enough to worry about environmental regulations and other things that the U.S. deals with every day.

For a long time the companies were safe in developed nations as well. America is well-known for being one of the most stringent nations in the world when it comes to things like environmental issues and manufacturing. Any nation a company chose would still be more lenient than the United States is when it comes to polluting the air, water and land.

Recently however, the more developed nations of the world, seeing the shift by U.S. companies to move overseas where they can pollute without scrutiny, have begun to adopt regulations to stop it.

The acceptance of environmental standard ISO 14000 varies throughout the world. This standard is a requirement throughout Germany but only two U.S. companies have received certification. Developing countries are utilizing the measure as a way to implement stronger environmental protection laws. The standard may be used as a way for companies to increase their internal efficiencies.

U.S. companies generally regard the voluntary international environment standard ISO 14000 as they might an alien spaceship, says one federal regulator. Is it friendly? Or will it wreak havoc on those who get too close? Worldwide, however, the degree of acceptance of international environmental standards runs the gamut from a virtual requirement, as in Germany, to a cost-effective tool for bolstering environmental protection laws, as in some developing countries."

The ISO agreement is a voluntary agreement and certification process, by which companies comply with certain environmentally friendly standards and become certified. U.S. companies that are overseas are not lining up to become certified. They moved overseas to escape having to maintain the environment while they continue to manufacture and the idea of pulling back and regulating themselves is not met with open arms.

While environmentalists are staunch in their stand against large manufacturing companies have suffered financially due to the environmental regulations. Early in the 1990's the U.S. census established that for every dollar spent on environmental regulatory mandates, more than three dollars are lost.

By training, economists have a special interest in seeing to it that resources are used effectively, whether the purpose is ecological, political, or economic. While no environmental programs are created with the express mission to depress the economy and raise the unemployment rate, many have that effect. The barriers to economic growth imposed by regulatory agencies are numerous and expanding steadily. In 1993, the Census Bureau -- hardly a citadel of right-wing ideology -- issued a technical report on the effect of environmental regulation on productivity. Their conclusion: a $1 increase in compliance costs reduces productivity by $3-4."

While there are obvious and definite long-term benefits to environmental protections one cannot deny the financial impact that those regulations have on large companies. Paying out for abatement costs can go into the billions of dollars, and the company has to recoup that lost somewhere. The decision becomes whether to pass that cost on to the customer, and if so how much will the customer be willing to pay for that to happen?

Not surprisingly, the business community generally talks more about the costs of regulation than the benefits, while the proponents of regulation stress the benefits and downplay the costs. After all, from the viewpoint of the average company, for each box on its organizational chart, there are one or more government agencies that are counterparts to that box, such as the Environmental Protection Agency (EPA), Occupational and Safety Health Administration (OSHA), and Equal Economic Opportunity Commission (EEOC).

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Each is involved heavily in the company's internal decision-making. "

Experts that side with the companies advise that the governmental rules and regulations make it cost prohibitive and at some times impossible for the companies to perform their duties and allow them to manufacture and produce products. This causes a shortage of American made products and creates an open market for foreign trade to send their products to American store shelves.

The expense of complying with environmental regulations amounted to about $130,000,000,000 in 1993. That is not a static figure. When they reach their stride, the Clean Air Act Amendments of 1990 will add new costs amounting to at least $25,000,000,000 annually. When the expense of meeting the rules promulgated by dozens of other regulatory agencies -- ranging from OSHA to the National Highway Traffic Safety Administration -- are added in, the aggregate hidden tax of regulatory costs comes to $200-300,000,000,000 a year. That is $2-3,000 per household in the form of higher prices for the items purchased. Some analysts come up with even greater numbers."

When one looks past the simple production issues with government regulations one sees other issues, including research and design restrictions and development problems. All of these factors help drive the companies to look across the ocean and decide to move their operation overseas.

Regulation has reduced the flow of innovation and production of new and better goods because so many government regulatory agencies have the power -- which they frequently exercise -- to decide whether or not a new product will go on the market at all."

Exporting a problem: is the U.S. exporting an environmental problem when it ships electronics scrap overseas?

The environment however, cannot take the pollution that was being heaped upon it so the regulations were needed and have begun to slow the destruction of the planet's resources. Companies in this country are looking to avoid shouldering the burden of the environmental issues that occur with manufacturing so the free trade act allows and encourages the companies to look elsewhere. Across the ocean allows them to pay low wages and more importantly not have to go through the federal regulation paperwork when it comes to environmental issues. They can speed their research they can speed their development of new products and they can mass produce, which in turn allows them to stock the nation's shelves with the products.

Inter-Press Service English News Wire; 11/1/1999; STAFF

STAFF Inter-Press Service English News Wire)

United States environmental regulations do not apply to U.S. companies overseas. They are not faced with clean up costs, or preventive costs. The problem first cropped up on the United States military bases overseas.

Pentagon has no overall budget for cleaning up its foreign bases. What little has been spent on the problem overseas -- about $300 million over the past five years -- has come out of individual facilities' operations and maintenance accounts. The problem is staggering, according to Saul Bloom of Arc Ecology, a group works on base clean-ups primarily in the United States. "We are leaving behind an enormous legacy of toxic waste on our bases abroad," he said."

The lessons learned from these experiences have taught the American private sector that they could go overseas and not have to deal with the responsibility of environmental issues.

When the free trade agreements began it opened the doors for companies to close their U.S. doors, pack up and go to areas of the world where they would not have to deal with the regulations at all.

Chevron oil has been moving its drilling operations overseas for quite awhile. Oil companies have a vested interest in escaping environmental regulations because they are among the worst offenders when it comes to pollution. Free trade allows them to move to countries where the environment can be destroyed without penalty to the company.

Overseas oil production is driving the growth of this company," said Chevron Overseas President Richard Matzke. "It's where we're going in the future."

At the San Ramon center, Chevron engineers are using the latest computer modeling techniques to pinpoint underground oil deposits halfway around the world. Procurement experts are negotiating contracts to deliver the latest oil drilling equipment from the central mountains of Papua New Guinea to the wind-swept deserts of Kazakhstan.

Economic analysts keep a close eye on the world price of oil to determine when to pump more oil….....

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