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A World Run by Shareholders

The threat of the American free-trade eagle crossing the Atlantic to ravage Europe’s ill-protected lambs has taken over public debate after the EU election campaign. It’s arresting, but politically dangerous. It ignores the risk that local authorities in the US may soon face under new neoliberal regulations, which will prevent them protecting employment, the environment and health rights. But it also shifts attention away from European companies — such as Veolia in France or Germany’s Siemens — which are just as eager as US multinationals to take legal action against states that dare to threaten their profits (see The injustice industry, page 13). And it overlooks the role of European institutions and governments in the creation of a free trade zone on their own territory.

Opposition to TTIP (the Transatlantic Trade and Investment Partnership) should not target an individual state, not even the US. What is at stake is wider and more ambitious: it concerns new privileges demanded by investors everywhere, perhaps as compensation for the economic crisis they caused. If conducted properly, a worldwide battle could consolidate the international forces of democratic solidarity, currently less well organised than those of capital.

In this scenario, it’s best to mistrust claims that certain pairs are united for eternity — protectionism and progressivism, as well as democracy and free trade. History has proved that trade policies do not have intrinsic political content (1). Napoleon III managed to combine an authoritarian state with free trade about the same time as the US Republican Party was claiming to care about American workers, the better to defend the cause of star-spangled cartels of “robber barons” in the steel industry who were pleading for customs barriers (2). “The Republican Party having its birth in a hatred of slave labor and a desire that all men may be truly free and equal,” declared its 1884 manifesto, “is unalterably opposed to placing our workingmen in competition with any form of servile labor, whether at home or abroad” (3). Even then, China was on their minds, though they were thinking of thousands of navvies from Asia employed by the California-based railway companies to work like convicts for slave wages.

A century later, the US’s international position had changed, and Democrats and Republicans vied with each other in their unctuous espousal of the free trade mantra. On 26 February 1993, barely a month after his investiture, President Bill Clinton set the tone with a keynote speech promoting NAFTA (the North American Free Trade Agreement), which was voted through later that year. He acknowledged that the “global village” had caused unemployment and low salaries in the US, but advocated going faster down the free trade path: “The truth of our age is this and must be this: open and competitive commerce will enrich us as a nation. It spurs us to innovate. It forces us to compete. It connects us with new customers. It promotes global growth without which no rich country can hope to grow wealthier. It enables our producers, who are themselves consumers of services and raw materials, to prosper.”

At that time, successive rounds of international trade liberalisation had already dropped customs duty from an average of 45% in 1947 to 3.7% in 1993. Nonetheless, the demands of peace, prosperity and democracy meant going further. “As philosophers from Thucydides to Adam Smith have noted,” Clinton said, “the habits of commerce run counter to the habits of war. Just as neighbors who raise each other’s barns are less likely to become arsonists, people who raise each other’s living standards through commerce are less likely to become combatants. So if we believe in the bonds of democracy, we must resolve to strengthen the bonds of commerce.” That rule didn’t hold good for all countries, though; in March 1996 Clinton signed a law tightening trade sanctions against Cuba.

Ten years after Clinton, European commissioner Pascal Lamy, a French Socialist who went on to head the World Trade Organization, took up the theme: “I think, for historical, economic and political reasons, that opening up trade is in accordance with the progress of humanity, that fewer misfortunes and conflicts have been caused when trade has been open than when it has been closed. Where there is trade, arms cease: Montesquieu put it better than me.” Montesquieu could not have foreseen in the 18th century that the Chinese market would open up a century later, not in fulfilment of the beliefs of the Encyclopaedists, but as a result of gunboats, the Opium Wars and the sacking of the Summer Palace. Pascal Lamy must have been aware of this.

President Barack Obama, who is less ebullient than his Democrat predecessor, perhaps due to a difference of temperament, now carries the free trade torch for US multinationals (and those from Europe and everywhere else) in defence of TTIP: “An agreement could increase exports by tens of billions of dollars, support hundreds of thousands of additional jobs — both in the United States and the European Union — and promote growth on both sides of the Atlantic” (4). Though scarcely mentioned in his speech, the geopolitical dimension of the agreement is of greater import than its hypothetical benefits in growth, jobs and prosperity. The US is not counting on TTIP to conquer Europe, but views it as a long-term means of fending off any prospect of European closer ties with Russia, and a way of containing China.

On this point, too, European leaders are in complete accord.  “We are witnessing the rise of those emerging nations that pose a danger for European civilisation,” said former French prime minister François Fillon. “And our only response would be to create internal divisions? What madness.” (5). MEP Alain Lamassoure said TTIP could enable Atlantic allies to “agree common regulations which could subsequently be imposed on the Chinese” (6). A Transpacific partnership devised by the US, and to which China is not invited, is aiming for exactly the same objective. It’s probably no accident that TTIP’s most tireless intellectual supporter, Richard Rosecrance, runs a research centre at Harvard on Chinese-US relations. His defence of TTIP, published last year, develops the idea that the simultaneous decline of the two great transatlantic blocs should lead them to close ranks in the face of emerging Asian powers: “Unless these halves of the West can come together, forming an even greater research, development, consumption, and financial whole, they will both lose ground. Eastern nations, led by China and India, will surpass the West in growth, innovation, and income — and ultimately in the capacity to project military power” (7).

Rosecrance’s argument brings to mind the analysis of the phases of growth by the economist Walt Whitman Rostow: after a country’s economy takes off, its growth rate slows because it has already made its easiest productivity gains through improved education and urbanisation. In the present case, the growth rate of western economies, which reached maturity long ago, will never catch up with those of China and India. Closer union between the US and the EU is the trump card. It will allow them to continue to set the rules of the game for newcomers, who are eager but profoundly disunited. And so, as at the end of the second world war, summoning up an external threat — then the political and ideological menace of the USSR, now the capitalist menace of Asia — makes it possible to pen the sheep (who fear a new world order run from Beijing rather than Washington) under the protection of the American shepherd.

This fear is all the more justified, according to Rosecrance, since “historically, ‘hegemonic transitions’ between leading countries have generally involved major conflict.” But there is a way of preventing “a transfer of leadership from an old hegemonic power (America in this case) to a new one” leading to “a war between China and the West”. With little hope of uniting the two major Asian nations with the Atlantic partners disadvantaged by their decline, it will be necessary to exploit the rivalry between the Asian powers and contain them in their region, using support from Japan, since Japan’s fear of China makes it cleave to the West, as “the West’s eastern terminus”.

Even if this grand geopolitical plan invokes culture, progress and democracy, other metaphors reveal less noble inspirations: “The producer facing a disadvantage in sales of a given product,” writes Rosecrance, “will try to broaden or diversify its product offerings. Frequently, this will mean a merger with foreign firms or production arranged to regain market share, as Procter and Gamble did in buying Gillette some years ago. States face similar incentives.”  Given that people do not yet view their nation and territory as just another consumer good, the fight against TTIP may have just begun.

Serge Halimi is president of Le Monde diplomatique.

Notes.

(1) See Le Protectionnisme et ses ennemis(Protectionism and its enemies), Le Monde diplomatique and Les Liens qui Libèrent, Paris, 2012.

(2) See Howard Zinn, “Au temps des ‘barons voleurs’” (In the days of the robber barons), Le Monde diplomatique, September 2002.

(3) Quoted in John Gerring, Party Ideologies in America, 1828-1996, Cambridge University Press, 2001, p 59.

(4) Joint press conference with François Hollande, White House, Washington, DC, 12 February 2014.

(5) RTL, 14 May 2014.

(6) France Inter, 15 May 2014.

(7) Richard Rosecrance, The Resurgence of the West: How a Transatlantic Union Can Prevent War and Restore the United States and Europe, Yale University Press, New Haven, 2013.

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Serge Halimi is president of Le Monde diplomatique

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