The International Institute of Monetary Transformation   [ click to return to main site ]   subscribe
Mar
02

The case for frugal trade

Post By gaia1 in Frugal trade

There are at least four good reasons to pursue an international trade policy that includes frugality as one of its major principles. Frugality is a virtue that aims to use resources without waste, even use them sparingly. It is a virtue that is in ascendance given the economic and climatological constraints on the Earth’s resources due to an ever growing human population.

 

Frugal trade for consumers means becoming locavores—eating and drinking locally to reduce food miles. Frugal trade for local authorities and national governments means policies and programs that emphasize local agriculture and manufacture without engaging in financial or commercial protectionism. Frugal trade for transnational corporations, the IMF and WTO means corporate deglobalization and greater public regulatory oversight, fostering accountability and transparency.

 

          The first good reason is the climatic reason. I coined this term, the third F in fair and free trade, to emphasize that trade has to be placed within the context of a carbon-constrained world. By limiting international trade to frugal trade international trade would reduce the greenhouse gas emissions from international shipping and air freighting of exported goods. This obvious impact is the more important given that nations have not yet agreed on a mechanism of accounting for those emissions.

 

A second good reason is the economic one. Frugal trade is part of an economic theory and practice that places emphasis on living well within the Earth’s limits as they exist in a particular bioregion or watershed. This bioregional practice is a counterweight to corporate globalization process and emphasizes the need for deglobalization. What this means for the developing world is the ability to control transnational corporations in finance, insurance and real estate (FIRE), so that policy space is created for sustainable communities development in their own countries where local farmers need not to compete anymore with subsidized agricultural imports.

 

 

A third good reason is the ethical one. The frugal trade principle and policy can be considered to be just for people, species and planet. To a great extent, frugal trade is also fair trade because it places central the wellbeing of people and planet in a particular bioregion. It reinforces the trade action guide in the Earth Charter which declares that all trade is to support “sustainable resource use, environmental protection, and progressive labor standards” and that multinational corporations and international financial organizations are required “to act transparently in the public good, and hold them accountable for the consequences of their actions.”

 

A fourth good reason is the political one. It presents a philosophical counterweight to neo-liberal trade policies decreasing their legitimacy. It places the WTO and its General Agreement on Trade in Services together with the nationally uncontrolled (uncontrollable?) transnational corporations in the FIRE industries on the defensive. It presents an opening to have the UN Conference on Trade and Development regain the dominant international trade institution. The notion of frugal trade can become the fulcrum to highlight the unsustainability of the present international trade structures and of the monetary, financial, economic systems that support them.