Free Trade as Imperialism

Trade and overseas investment are key planks of the Imperial pantheon; the foundation stones of Capitalist accumulation on a world scale. Dominant Imperial countries have always argued that free trade is in the interest of all and, within their powers, have imposed these ideas on more vulnerable economies. My opinion is that these arguments are false, and are known to be false. Yet the most powerful institutions today are putting these arguments forward.

All the major powers today have developed their industrial power base behind tariff walls, without exception. The Japanese cut themselves off from the world of trade and Imperial powers in the 1860s for forty years, the Americans had the advantage of developing their industries at home because of the cost of transport across the Atlantic and did not open their borders to free trade until 1945, the Germans consciously protected themselves after unification in the 1870s, and so on. The Germans and Americans had their own theorists, Frederick List and Daniel Raymond, arguing at the time for protective barriers.

It is really quite simple: major countries start promoting free trade when their own industries are using the most up-to-date technology and weaker countries’ industries cannot compete.

The arguments are openly two-faced. Both the EU and the US have failed to move into free trade on farm goods, while many weaker economies have been forced down this road.

Today the most powerful international organisations, the World Bank, the IMF’ and the WTO, all propound the arguments for free trade. These institutions have power behind them. Once a country gets into difficulties with their balance of payments, their lending policies depend on opening up the weaker countries to free trade.

The evidence is striking. The argument goes like this: if you open your economy to free trade it will grow. In the 1960s and 1970s when most countries still had many forms of protectionism, the world economy grew by 3 per cent, and all the regions of the world grew by 2 to 3 per cent.

By the 1980s and 1990s when the free trade policies began to hit, world growth had dropped overall to 2 per cent and the weaker regions of the world were dropping behind even further. Latin America was growing at 0.6 per cent, the African continent at -0.7 per cent, and the Middle East at -0.2 per cent. Free trade was catastrophic for many of the weaker countries and regions of the world.

The free trade argument will be with us for long years yet to come. The arguments are of worldwide importance. Not surprisingly, over the last three decades the most successful country in terms of regular annual growth has been China. And equally not surprisingly, China has had a positive balance of payments, and therefore has not been pressurised to open its borders and has not followed the maxims of the great Imperial powers of the day.

Finally, let me discuss Trade Related Intellectual Property Rights (TRIPs), quite literally a new form of property. You will notice that at the beginning of this document there is a copyright notice that gives me, the writer, ownership of the document, which I then give permission to others to print and sell or give away. Writers have long been recognised in a patent law worldwide.

Patent laws have now been vastly extended to cover the digital world, protecting the digital industry. You are not supposed to borrow or give away software you have bought. You are certainly not supposed to sell it either. Of course, TRIPs has led large numbers of people to act illegally, and it has been designed to monopolise the production of the digital world. And, just to add insult to injury, the monopoly of the medical world, medicines, is close behind. These industries are mainly American.

Free trade is for the poor; the rich monopolise when they find it is in their interest as TRIPS so obviously illustrates.

Roger van Zwanenberg

Source: Essays on Muslims and the Challenges of Globalisation, Institute of Policy Studies, Islamabad. Republished with permission.