Saturday 30 November 2013

When free trade gets twisted

I speak as a Liberal when I say that nine score and a handful of years ago, our fathers brought forth a great idea into the political firmament.  It was a logical extension of the anti-slavery movement, and it was called 'free trade'.

It framed the debate about business in terms of human liberty, explaining that when businesses get too big, or when they join forces with governments or ally with landed interests, then the prices rise - and those people who have been released from slavery fall victim to a new economic tyranny.

That was the 1830s.  Thirty years later, simultaneously on both sides of the world - the North American slaves and the Russian serfs were declared free (both in 1863).  In both cases, the worst fears of the new free-traders came to pass.  The liberated slaves of the deep south and the newly freed peasants of Russia and Poland were both loaded down with debt which they could never repay - a new form of economic control.

Forty years after that, the American free traders took on the robber barons and monopolists in a series of actions, breaking up Rockefeller's Standard Oil and others.  At the same time, the British Liberals were winning a landslide election on the cause of free trade - which they regarded as the right of small enterprise to challenge the status quo.

Over the following century, something peculiar happened.  'Free trade' became muddled.  The Liberal campaigners turned to other things.  Free trade slowly came to mean the rights of all business, however large.  Later on, it became even more twisted to mean the right of the richest and most powerful to ride roughshod over everyone else, almost the precise opposite of its original intention.

Now, the news emerges that the long-term negotiations to bring about a EU-US trade agreement are back on.

What is in it?  Some sensible stuff about recognising each other's standards and regulations probably.  The issue of GM food and cloned meat will take a bit of unpicking, and probably remains unpicked.

Why worry about it?  Because of what has appeared on Wikileaks about the draft of the new US-Pacific trade agreement, which was to have been 'fast-tracked' through Congress, and which includes a supra-national court system whereby any corporation can sue a government if it felt it was infringing its rights.

There is no way that a package of measures that pits the commercial objectives of the richest above our democratic rights to shape our lives is related to free trade in any sense.  It is a kind of protectionism for the powerful, and for the status quo.  It is the precise opposite of anything Cobden and Bright would have recognised.

For years, we in the political West have comforted ourselves that free trade in China would transform it into a genuine tolerant democracy.  I'm not so sure that this perversion of free trade, monopolistic control bolstered by law - a kind of compulsory trade - will not eventually work the other way, and turn us into China.

But there is a more prosaic reason to worry about this.

The EU has a reputation in some circles for its mind-numbing regulation.  Most of these are, in fact, as a direct result of the single market that the UK pushed through in the 1990s.  Ironic, isn't it.  Regulations about transparent procurement processes, and permission for state aid payments, all stem from the same source.  Probably the US trade agreement, if it happens, will mean more of it.

That is free trade, of a kind.  But in practice, it privileges large foreign competition against homegrown small business competition.  It needn't do, but in practice it does - because only the biggest players can jump through the bureaucratic hoops (and that's before you get to the minimum size thresholds).

Like so much of the rest of the ersatz free trade agenda, it gives power to the powerful and protects them against competition from below.  It is the very opposite of a Liberal free trade policy as recognised by Cobden and Bright all those decades ago.

1 comment:

Gordon said...

I very much agree with your comments about how 'Free trade' has been redefined over the years in an entirely bad way.

I fear the redefinition continues apace. There are few further gains to be had from reducing tariff barriers which are already low so the focus has shifted to making an end run around any form of regulation that impacts predatory capital's ability to make profit.

The mechanism is the 'investor-state' dispute resolution system allows corporations to challenge governments before extrajudicial tribunals that can override domestic courts and even constitutions. It's not exactly "sensible stuff". Just how toxic this is can be gauged from cases brought under existing treaties that already incorporate this measure. A particularly offensive example is Chevron's case against Ecuador but there are many other examples.

For further reading try:


While the latter is about the Transpacific Partnership (TPP) that serves as a model for the proposed 'Atlantic' treaty).