Trump’s trade turn is regressive

Submitted by Matthew on 25 October, 2017 - 10:35 Author: Editorial
NAFTA

“Anyone who thinks [Donald Trump] has dropped his vow to rip up the global trading system has not been paying attention”, wrote Edward Luce in the Financial Times (18 October), after the fourth round of US-Mexican-Canadian talks on Nafta, the North American Free Trade Agreement, closed on 17 October.

The Mexican and Canadian governments were aghast at the US negotiators’ manner, and their push for arbitrary changes which would destabilise the agreement which dates back to 1994. There will now be a lull: a fifth round of talks on 17-21 November, and then another in early 2018. Peter Navarro, Trump’s “Director of Trade”, has twice tried to get Trump to declare unilaterally that the USA is pulling out of the agreement. Trump himself has said he expects to “end up probably terminating” the agreement: “Personally, I don’t think we can make a deal”.

In 1961, Dwight Eisenhower, a former general and a Republican ending his term as US president, warned the people of the USA against “the military-industrial complex” as a “combination” likely to “endanger our liberties or democratic processes”. Today, in Trump’s USA, the “military-industrial complex” people at the top of the administration — McMaster, Mattis, Kelly, Cohn — are the voices of restraint. So far they have blocked Navarro’s push.

Most of US big business, and a large chunk of Republicans in Congress, are also against Navarro’s and Trump’s reckless protectionism. One possibility discussed in the financial press is that Trump will declare the USA is out of Nafta, but Congress will baulk, so that the USA will remain formally within the treaty, but with an administration unwilling to respect it. Meanwhile, Roberto Azevêdo, director-general of the World Trade Organisation, has warned that Trump’s USA threatens to disrupt the tribunal through which the WTO settles disputes between member states.

The USA is blocking the appointment of new judges to the short-staffed tribunal; threatens to continue to do so until, by September 2018, with retirements, the tribunal will become unable to function at all; is saying that tribunal decisions should not be valid if one of the judges involved retires during the case; and threatens simply to refuse to comply with WTO decisions unfavourable to it. (142 out of the 532 disputes which have been brought to WTO panels have been complaints against the USA).

Posing the question, “what is free trade under the present condition of society?”, Karl Marx replied: “It is the freedom which capital has to crush the worker... All the destructive phenomena which unlimited competition gives rise to within one country are reproduced in more gigantic proportions on the world market”. Yet he continued: “Do not imagine, gentlemen, that in criticizing freedom of trade we have the least intention of defending the system of protection. One may declare oneself an enemy of the constitutional regime without declaring oneself a friend of the ancient regime...

“In general, the protective system of our day is conservative, while the free trade system is destructive. It breaks up old nationalities and pushes the antagonism of the proletariat and the bourgeoisie to the extreme point. In a word, the free trade system hastens the social revolution. It is in this revolutionary sense alone, gentlemen, that I vote in favour of free trade”.

Frederick Engels explained further when republishing Marx’s text from 1847: “The question of Free Trade or Protection moves entirely within the bounds of the present system of capitalist production, and has, therefore, no direct interest for us socialists who want to do away with that system. Indirectly, however, it interests us inasmuch as we must desire as the present system of production to develop and expand as freely and as quickly as possible... From this point of view, Marx pronounced, in principle, in favour of Free Trade as the more progressive plan...” A little later, when Lenin in 1902 wanted to cite an easily-understood example of a typical socialist campaign of his day, he chose this: “Take, for example, the struggle the German Social-Democrats are now waging against the corn duties. The theoreticians write research works on tariff policy, with the ‘call’... to struggle for commercial treaties and for Free Trade... The ‘concrete action’ of the masses takes the form of signing petitions ... against raising the corn duties”.

Socialists have no brief for Nafta or the WTO. But we oppose regression. It is a plus that in Britain, now, the call for import controls as a supposedly left-wing economic policy, popular in the 1970s and 80s, has faded. Although much of the left is equivocal on Brexit, no-one on the left complains that Labour’s line of seeking conditions like the Single Market is too pro-trade. In Australia’s Socialist Alliance, which for a couple of years after 2001 was a broad and lively coalition of the activist left there, the call was raised for Australia to “withdraw from the WTO”. Only Workers’ Liberty opposed that vocally.

We got such responses as (from a well-educated, intelligent, and open-minded member of another group, the ISO): “Ah yes, but there’s no chance of withdrawal happening, so I see no real problem with the slogan”. At that time, such regression did look unlikely. It is not unlikely now.

In the USA, hostility to trade deals has risen sharply in recent years, and is widely seen as a “populist” cause which the left can share with Trump. But the economic evidence is that walls, trade barriers, and border posts do not, in general, help to save and improve jobs. They slow down economic development and damage solidarity and unity of workers across borders.

Our response to free trade agreements should be fight, alongside and at a tangent to them, for workers’ solidarity, social levelling-up, and freedom of movement for workers across the borders. And to denounce Trump and his type.

Trump’s tax fibs

Donald Trump is now trying to push ahead with the tax cuts which were part of his presidential election platform. He said then and says now that the tax cuts are to help “the middle class”. In fact, the current Republican plan calls for $473 billion in cuts from Medicare over 10 years and over $1 trillion from Medicaid over the next decade.

Ninety per cent of the top one per cent — those earning about $900,000 and above in 2027 — would get a tax cut, averaging $234,050, while middle-earners would see small tax cuts or even tax increases.