US will drop trade barriers .. if others do

September 15th, 2005 at 20:18 Björn Hallberg

Gee, there is a catch. Of course.

U.S. President George W. Bush told a U.N. summit on Wednesday that the United States was prepared to drop all trade tariffs, subsidies and other barriers if other nations did the same. Eliminating trade barriers “could lift hundreds of millions of people out of poverty over the next 15 years,” Bush said.

“Today I broaden the challenge by making this pledge: The United States is ready to eliminate all tariffs, subsidies and other barriers to the free flow of goods and services if other nations do the same,” he said.

“This is key to overcoming poverty in the world’s poorest nations. It’s essential we promote prosperity and opportunity for all nations.”

No it isn’t. But conservatives and right-wingers, market liberals and pundits do claim so. In short, it’s a fad that has little if any basis in actual economic history.

First I don’t think the US is honest about this offer. At least no so far as subsidies are concerned. At this very moment, US corporations like Boeing are reimbursed, under the table, via defence contracts and the like. Because large parts of the US academic and corporate sectors are in fact long time defence contractors in varying degrees, and much of the defence budget is off the books or cleverly concealed from scrutiny. That is the very basis for the Airbus vs Boeing conflict whereas once side provides loans and the other slips money under the table.
As for the rest of it, I believe the US just suggested something multilateral, so, a word of advise: The US doesn’t do multilateral. And if it seems to, then there is something fishy going on. For anyone who has read anything about economic history the plot is frighteningly simple. Call it kicking away the ladder as Friedrich List if you will.

“It is a very common clever device that when anyone has attained the summit of greatness, he kicks away the ladder by which he has climbed up, in order to deprive others of the means of climbing up after him. Any nation which, by means of protective duties and restrictions on navigation has raised her manufacturing power and her navigation to such a degree of development that no other nation can sustain free competition with her, can do nothing wiser than to throw away these ladders of her greatness, to preach to other nations the benefits of free trade, and to declare in penitent tones that she has hitherto wandered in the paths of error, and has now for the first time succeeded in discovering the truth.”

I guess most things don’t change much in 150 years or so. But in all honesty this pledge does depend on whether “other nations” in fact means poor as well as rich nations. But judging from previous flashes of US ideology such as the Kyoto brawl, it’s safe to say they actually believe or sell the idea that free trade would aid poorer nations. Free trade is, at best, workable among economic equals but even then it endangers the rights of the working man if not kept in check. For rich nations to lure poor nations into opening free trade is an abomination and can only be construed as a way to profit off of misery. In the real world of course, the problem is so much more far-reaching, as rich nations, spearheaded by the US will make a proposal that amounts to “free trade” or a virtual trade embargo via the WTO in order to force these nations to comply. Not only will this put a great deal of conformity pressure on nations but it will produce a seemingly legitimate case for claiming that failure to adopt “free trade” amounts to economic disaster. Coerced disaster but still.

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