Full of Sound and Fury

7 July 2006



EU Trade Boss Mandelson Calls for “Grand Bargain” with China

EU Trade Commissioner Peter Mandelson was speaking at a Brussels trade conference earlier this week, and during his remarks, he said that the EU and China could make a “grand bargain” by “respecting” each other’s trade interests. That will require some major changes on both sides, and in the end, may not prove to be worthwhile.

At the heart of Mr. Mandelson’s argument is the changing trade picture. Europe is going to have to accept the economic challenge China poses, and it is going to have to compete more effectively. At the same time, China is now a member of the World Trade Organization and has obligations to other members and rules to follow. The devil, naturally, is in the details.

Broadly speaking, Europe doesn’t compete well. Those inside the EU club like trading with each other well enough, but when EU rules that exist to protect French vintners and Greek shepherds run up against challenges from outside the club, the Eurocrats fall back on “cultural” arguments for their inefficient economic behavior. Mr. Mandelson, as a British politician (having resigned twice from Mr. Blair’s government under the cloud of corruption and using undue influence), should know this about a continental system much like Napoleon used as a weapon.

Meanwhile, he rightly said, “China sometimes talks as if it is at the edge of the WTO system looking in. But China now is the system. Too often Europe’s businesses meet a Chinese wall rather than an open door.” European business isn’t the only bunch that runs up against the folly of doing capitalism in a communist state. The EU has a trade deficit with China of €100 billion a year and is small compared to America’s. Moreover, China runs a surplus in trade with most of Asia's poorer nations: $1.8 billion with Bangladesh, $422 million with Cambodia and $731 million with Myanmar (Burma for those over 25). It is a mercantile system at best.

So, how to solve this to Mr. Mandelson’s satisfaction? Abolish the EU’s subsidies to agriculture, allow business to crush the unions, bring in a 50-hour work week and cut wages and benefits, slashing taxes along the way. Meanwhile, China needs to allow free and open elections, close its prison labor camps, permit free movement of people and capital, and allow unlimited accumulation of private wealth. And then, there’s the systemic theft of intellectual property . . .

That ain’t gonna happen. Minh Pham, manager of the UNDP's Asian regional center in Colombo, Sri Lanka, told USA Today in a phone interview, “Trade policy is like a marriage. You always have to manage it. You cannot just say you hope for the best and expect it to work out.” Walden Bello, executive director of the anti-poverty group Focus on the Global South in Bangkok in the same article said that free trade advocates “assume that freer and freer trade will create greater and greater wealth But experience has shown this is not the case.” Mr. Mandelson should give up on his “great bargain,” and concentrate on Chinese dumping of shoes in the EU. Unfortunately, he’s still New Labour, grand plans that fail the test of reality.

© Copyright 2006 by The Kensington Review, Jeff Myhre, PhD, Editor. No part of this publication may be reproduced without written consent. Produced using Fedora Linux.


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