The Ideology of Free Trade – Unions For Trade Justice

The Ideology of Free Trade

The belief that free global trade fosters growth and wealth for everyone is as old as capitalism itself. In fact, economists can show how wonderfully this works in their model worlds. The reality of the matter looks very different, however. As a rule, the economically more powerful are the major benefactors of largely deregulated trade. This is also the reason why, above all, major companies and their associations advocate the dismantling of so-called trade barriers.

That these barriers also often serve to protect workers and employees, the welfare state and the environment fails to be mentioned. Specific individual interests are sold as being of general interest. Unregulated free trade, above all, benefits the strong and powerful.

Unregulated free trade, above all, benefits the strong and powerful.

In the past, phases of free trade have alternated with more or less heavy state interventions aimed at controlling foreign trade (protectionism). After the global economic crisis of 1929 had put an end to the liberal phase of world trade, the majority of nations responded by in-troducing a policy of national protectionism.

In the aftermath of World War II, a system of fixed exchange rates was established as part of the Bretton Woods negotiations, with the US dollar becoming the anchor currency. The aim here was to restore Europe as a centre of commerce and a major trading partner for the USA.

A gradual liberalisation of world trade,along with regional economic communities such as the European Economic Community, above all nurtured growth in Europe and the USA. During this process, the former colonies and/or economies of countries in Asia, Latin America and Africa remained dependent on the Western-dominated global economy for a long time. Trade relations were dictated by unilateral regulations that were detrimental to these economies.

Following the end of the Cold War and the opening of the countries of the “Eastern Bloc” and China to the capitalist market economy, the free and unrestricted trading of capital, goods and services worldwide was supposed to be implemented by the World Trade Organization (WTO). However, the countries involved in the negotiations blocked each other for a long time and the WTO threatened to plunge into insignificance.

A first breakthrough was achieved at the end of 2013, however, when, during the Doha Round, a series of talks which have been ongoing since 2001, an agreement was reached and adopted by almost 160 countries in Bali to liberalise trade in goods and services. The so-called Bali Package contains trade facilitation, the lowering of agricultural subsidies as well as aid for developing countries.

The International Chamber of Commerce (ICC) lauds the agreement as being “historical”, whilst Attac Deutschland, for example, perceives it as “a disaster for a just world trade order”. This judgement is linked to the fact that the WTO has, for a long time, sought to eliminate agricultural subsidies identified as “trade distortive”.

Numerous developing countries plough subsidies into staple foods as a means of securing food for their populace. A proposed abolishment within a period of four years was rejected by the G 33. Failure once again loomed over the agreement. Ultimately, a consensus was reached to continue to allow subsidies, but only for as long as it took to lastingly adapt the Agreement on Agriculture. The issue is therefore still on the WTO’s agenda.

The WTO is unilaterally geared towards free trade. There is a risk of
people’s rights getting a raw deal.

In contrast, major industrial nations have no issue with continuing to use extensive subsidies to safeguard their own exports, even though these are especially problematical in terms of development and trade policy.

The EU and USA also blocked an attempt in Bali to at least lower the maximum thresholds. For this reason, in particular the economically powerful nations and economic areas (USA, EU, Japan) benefit from this agreement, whilst the interests of the emerging countries of Latin America, Africa and Asia are barely afforded any attention and their policies are repeatedly called into question as being “trade distortive”.

Social rights, as established in the standards of the International Labour Organization (ILO), have yet to be anchored in the WTO Agreement and, like environmental standards, also rank below trading interests. These rights include a ban on child labour and forced labour but also the right to free trade union activity.

The persistent blocking of WTO negotiations has, in the past, led to countries like the USA, but also the EU, concluding free trade agreements with individual nations and economic regions – e.g. the North American Free Trade Agreement (Nafta) between the USA, Canada and Mexico.

Economically advanced nations above all are pushing for a liberalisation of trade in goods and services but also the opening of the respective public procurement systems to suppliers from other countries. In the process, binding agreements on social and ecological standards are scarcely agreed on or, if at all, only to an insufficient degree.

This article is an extract from the report ‘Wages, social affairs and the environment under attack. What lurks behind the Transatlantic Trade and Investment Partnership (TTIP)?’

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