Trade wars & steps in the right direction

Posted on November 18, 2018


(First published in City Press, South Africa, November 18, 2018)

In times of war, there are always businesses that profit while the sons and, increasingly, daughters, of working people do the fighting and dying. Much the same applies in the case of trade wars, although in a less dramatic fashion.

The general definition of a trade war is based on the of fallacy that it arises because the free flow of trade between nation states and regions — claimed to be fair and beneficial to all — has been disrupted. So any country erecting financial barriers to imports — tariffs and other taxes — is said to be engaging in such a war.

But trade wars, at the level of constant skirmishing, are ongoing and have existed throughout modern history. The actions of US President Donald Trump in imposing tariffs on steel and aluminium and the reactions of China, Europe and other countries merely ratcheted up the tension.

In fact, the existence of competing cities, regions, nation states or, in this global economy, transnational corporations, means ongoing war. Because war is merely competition aimed at bettering the opposition.

And trade, for all the regulations and protestations of being free and fair, is neither. And, at times of cutthroat competition it is the workers who suffer. That, unfortunately, this is the reality.

So nation states that can afford it, subsidise their producers to enable them to export to other countries and so undercut domestic producers in the importing countries. There are plenty of examples in South Africa, ranging from the dumping of American and Brazilian poultry to biscuits from the Gulf states, Italian canned tomatoes and canned mealies (corn) from Thailand.

This is where the so-called free market — in fact an anarchic system that ensures increasing wealth going to a tiny minority — can be seen as part of what the labour movement terms the “race to the bottom” for working people; for those who have to sell their labour in order to survive.

I will explain by giving a simple example: major sportswear brands. They own no factories. They have small design facilities and they travel the world offering production contracts to whichever production facilities offer the lowest prices. Ever cheaper production costs are demanded and this means ever lower wages and worse conditions for workers. Or greater automation and mechanisation meaning greater joblessness.

Regulation also seldom works to really change anything. Might is all too often right. You can see that even with the International Criminal Court which the USA refuses to recognise. And international institutions such as the World Trade Organisation and the International Monetary Fund are part and parcel of the same system; they act in the interests of preserving the status quo.

Don’t forget that even “hot” wars have rules and regulation — the Geneva Convention and so on — that can simply be ignored. What is going on in Syria and Yemen are classic current examples.

So what can we, in South Africa do? Well, we could mount the moral high ground and — in line with a long time demand of the labour movement — trade only with those countries that observe at least the wages and working conditions that apply here. And we should block clearly subsidised dumping while, perhaps, giving greater support to local producers.

All of this would create jobs. And we should not forget that, nearly 20 years ago, a proposal was put forward by the Federation of Unions that all government infrastructure projects should be awarded only on a labour intensive basis.

These measures amount to moves away from the clearly dangerous and damaging economic dogma of neo-liberalism. But they would be steps in the right direction.