What can be learned about international trade</heading> Ruthless Criticism

What can be learned
about international trade from US protective duties on steel imports

[Translated from Gegenargumente Vienna; broadcast August 20, 2002]

At the beginning of March 2002, the American President ordered an elevation of protective duties of up to 30% on steel imports into the USA, leading to white-hot indignation in Europe:

Pascal Lamy, EU trade commissioner, said: “… The world steel market is not the wild west, where people do as they like. There are rules to guarantee the multilateral system.” (Financial Times 3/7/2002)

Business leaders, politicians and the general public united over the fact that this tariff was an unjustified penalty on “our” good, competitive products. The Europeans accused the Americans of a “protectionist sin.” They violated the basic value of “free world trade” simply out of national egoism, which otherwise they always defend in offense against all other states. With this reproach the Europeans act as if this American action is not in harmony with the otherwise-existing aims and customs of world trade. This action by the USA is another didactic drama on how to calculate in international trade; under no circumstances can the American decision be called a protectionist sin, but on the contrary – against all assertions – free world trade does not happen without protectionism.

The American resolution disproves with lightning speed all the beautiful ideologies about the universal increase in prosperity through trade. It obviously does not comfort the USA that through imports they acquire good, inexpensive steel for themselves, that other people surrender the product of their labor to them and only receive dollars for it. Here it can be seen that in capitalism use-values are only a means for acquiring money and are not the purpose of production. For the entrepreneurs, the products of the whole world are an offer to buy – for example, cheap raw materials and intermediate products – so that they obtain as high a surplus as possible with the sale of the commodities made from it. Therefore, for them, each purchase and sale is worthwhile only if it is a means for realizing profit. The matter looks different for states: For them the equilibrated exchange of money and commodities is not so equilibrate – in the perception of states, it is bliss in net terms to sell more in foreign countries than to buy in foreign countries. Because at the end of the year a balance is drawn up -- if the companies of one’s own nation have sold more to the companies abroad than they have bought abroad, then the balance of trade is positive, and this makes the nation rich; the reverse relationship, a negative balance of trade, makes it poor.

Therefore it is also not correct that all free-market economizing communities become richer by each people producing what they can manufacture best and cheapest, and then everyone buys the most inexpensive world market commodity. In the competitive export nations nearly everything is more cheaply manufactured than elsewhere – these countries can then sell ever more than they have to buy, others must buy ever more than they can sell and can therefore do this less and less. Then the balance of all purchases and sales becomes apparent in the balances of trade and payments as a surplus or a deficit. In the balance a state finds out whether in its country the money of the world collects or payment duties do.

However, the USA does not have the problem of negative balances of trade and payments, as one can see from the fact that they can live magnificently for years with a balance of payments deficits. In the dollar they have the only currency that is recognized as currency worldwide and therefore they can adjust their deficits almost limitlessly with their own money. Thus they can allow their deficits to be financed by the rest of the world with an almost irredeemable credit. The other nations are eager for dollar holdings because these are for them the most important foreign exchange reserves.

The so-called “penalty duties” on imported steel can therefore not be explained in the case of the USA by them having emergencies with their international solvency. The reason for the protectionist measure lies rather in the character of the steel sector: With the new tariffs the American superpower defends industrial and military basic industry, which no state of world-political weight can allow to be seduced by low import prices and reduced to dependence on foreign suppliers. Not America, which has just presented a gigantic arms program in the name of the war on terror and tackles a war against the last enemies of its world order that it plans to last for many years.

States calculate, in any case, differently than private exporters and importers whose ambit of business expands beyond the national market exclusively through the increase in profits. States also want the expansion of business, they also want the use of favorably imported goods, if only for the competitive power of their exporters. But national enrichment arising from international trade is one-sided; only one side can have a positive balance. The resoundingly successful use of foreign countries by transnational trade goes at their expense – and in reverse. Therefore the same states that want and promote world trade are always busy prescribing political corrections, i.e. they decree tampering with international prices and productivity comparisons to ensure their one-sided advantage from the shaky use of foreign markets. Hence, world trade is a thoroughly violent political affair and nowhere do states stand by and watch as the private capitals operate. All states of the world want liberalization as much as possible – in other states, so that their businessmen earn as much foreign exchange as possible there. In reverse, all states with a negative commercial balance allow themselves to spoil business for foreign businessmen by enacting tariffs with the help of their political power. States are always free traders and protectionists at the same time.

The so-called “liberalization of world trade” is thus a business wrought with conflict and an imperialistic power affair: on the one hand, each government demands that the other diminish the obstacles that block their entrepreneurs’ successful business on the markets of the other; on the other hand, each trading nation holds as indispensable the tariffs and other barriers which it issues for the protection of its balances and – provisional – protection of its inferior national industries. The truth of trade diplomacy is in the haggling over a state eventually abandoning a protective duty if the partner state withdraws a tariff in another area in which the first calculates its exporters’ superiority. Liberalization demands each of the other; under this slogan they haggle over the protectionism which each state considers necessary for itself – no state is an unconditional follower of uncontrolled open markets.

It is understood, incidentally, that the general economic, political and military weight of a nation enters into the diplomatic contention over tariffs and cutbacks in customs: However, with it the result is not certain from the start, but it lies within the freedom of a state to refuse to go along with extortion, to prefer the breakdown in negotiations rather than be willing to accept other concessions. In this respect it is clear that this “liberalization of world trade,” the mutual “opening” of markets, is a common interest of states, but that at any time in the actual implementation there lurks the transition to uncontrolled blows and counterblows, even very real economic war.

On the occasion of the introduction of tariffs on steel imports into the USA, President of the EU Council of Ministers Martin Bartenstein warned about “an escalation that could lead to a trade war” and Lamy announced recourse to the World Trade Organization on the day after the American resolution:

“The EU itself will insert, according to competitive commissioner Pascal Lamy, a complaint with the WTO in Geneva and is considering sanctions against imports from the USA. In addition, the EU will come to an agreement with other affected countries such as Japan, Korea, China and Brazil about further measures, said Lamy.” (Die Presse, March 7, 2002)

The World Trade Organization is anything but a kind of supra-state arbitration and regulatory authority with the task of watching out for the mutual benefit of the nations involved in international buying and selling and proceeding against the ruinous competitive practices of individual states. The World Trade Organization is just the opposite of this. It is first of all the agency and the stage for the debate between hostile adversaries, which is inherent in trade and the political correction of trade flows for the guarantee of national enrichment. States agree upon certain commercial conditions – and they promise not to change them on one side any more. The need for this warranty comes as a result of the fact that commercial states constantly have reasons to rescind concessions and change conditions. The World Trade Organization raises commercial conditions into multilateral international contracts. For this reason it looks almost as if the member states were no longer free to fix and correct the ins and outs of their trade measures; and as if the right to use foreign markets would be an irrevocable possession of the competitive nations, which take effect and must be followed entirely without consideration for the damages that accrue to the country that is used. The World Trade Organization formulates the ideal that the states would have to subordinate themselves to world trade and no longer pursue their own advantage and discretion by permitting and forbidding transnational commerce as they want. Notice that this is the ideal of the World Trade Organization, not its truth: Because first of all in the World Trade Organization there is more or less equal standing for debate only between the USA, the European Union and Japan – the whole rest of the world must allow themselves to open up to the trade rules that are constituted between these capitalistic centers. And secondly the obligations and rules of the World Trade Organization apply as long as the involved important nations want to allow them to hold.

The USA has emphasized ever since the first days of the WTO that they would only submit to their rules as long as they are useful to them. Now they just break their promise about steel imports. And they do so by not even referring to WTO rules, that they only defend themselves against the “unfair” – i.e. against WTO rules – business practices of its trading partners, for example dumping. Thus the Under Secretary of Commerce for International Trade Grant Aldonas reports as follows:

“Aldonas reiterated the view that the US economy, based on its stronger growth and with it the stable dollar, has the goal of disproportionately high exports.” (Die Presse, March 13, 2002)

Instead of taking care of their own economic growth and opening business opportunities for American capital, the Europeans simply profit from the American economic growth. This may not be.

To that extent, the announcement of new protective duties by the USA is at the same time the announcement that from now on they will make how far they adhere to WTO rules “unilaterally” dependent on their interest. This is what the European public means by the “sin” reproach. The superpower, which just bellicosely arranges the whole world anew and destroys its remaining enemies, makes clear that it cannot be bound by trade agreements, but requires its partners to remain, of course, continually bound by contracts. As in questions of world-political law and armaments, in the fight for the wealth of the world, in trade, the USA also takes an exceptional position in its entitlement – and they require that the competitive nations resign themselves to it, i.e. these competitors are to accept rules that guarantee and cement one-sided economic advantages to the superpower. Surely: European imperialists suffer from this – but if they show off as guardians and true followers of WTO rules and are so “indignant,” they only provide evidence of their subordination. One should not buy this affected “outrage” from them.

And the citizens? Instead of a conclusion!

The citizens of America, Europe and Japan are meanwhile used to regarding transnational buying and selling as without alternative and normal. Even the globalization critics of ATTAC say publicly: They are not enemies of trade because even they like to drink coffee and love tropical fruits. One must clarify that world trade does not have the purpose – and therefore also not the result – that use values arrive from their place of origin to the place of their need. Coffee is not imported because we enjoy drinking it, but because and if money – for their private owners – can be made with it. Our supply of what in former times were called “colonial goods” is the byproduct of profit-making. Where it is not suited for import, it just goes to waste. That is what happens nowadays with AIDS medicines in southern Africa, because the patients do not have money for them. However, it is because of the purpose of capitalistic buying and selling – and not the difference between native in contrast to transnational exchange. The fact that globalized capitalism brings bad things for humans in the north and the south should not entice anybody to plea for a limited, partitioned national capitalism, in which it is exactly the same calculation – only without coffee and tropical fruits. It would be necessary to abolish – domestically and worldwide – the subordination of supply under money accumulation. Then it would also not be difficult to supply humans even in the most distant regions with tropical fruits and medicines.