Socialist Worker

The US breaks its own rules

Chris Harman on steel, tariffs and free trade

Issue No. 1791

George Bush's decision to impose tariffs (taxes on imports) on steel entering the US from abroad has shocked many people. The US government is central to 'the Washington consensus' of 'neo-liberalism'-the doctrine that says governments must not interfere with the free flow of trade, capital and profit. Yet it has done precisely that.

It has tied itself in the most amazing knots in attempting to justify its action. US trade representative Robert Zoelick claims, 'In order to promote free trade the US has to manage the home front. 'And on the home front the only way is to use our domestic laws to the fullest.' The US actions are not that surprising. The slogan of 'free trade' has always been used by some capitalist countries to gain an advantage over others-and dropped when conditions change. In the 19th century 'free trade' was the great slogan of Britain's industrialists.

Britain had industrialised before any other country. The British capitalists could drive those from elsewhere into the ground. They did not want barriers to stop them. It was different for those countries that industrialised after Britain. Such countries, including the US and Germany, wanted tariffs to protect their industries by keeping British goods out.

But by the early 1930s British industrialists no longer had a commanding lead over their rivals. They did a U-turn and backed a system of tariffs designed to keep foreign goods out of, not only Britain, but the whole gigantic British Empire. Many British bosses did another U-turn in the 1960s.

It was becoming clear that the biggest profits were to be made by selling to Europe rather than the countries of the former empire. Most capitalists forgot about the glories of Britain's empire and began extolling the wonders of Europe.

The current arguments about the single currency are just the latest stage in this development. US capitalism's calls for free trade are made to help its multinationals undercut the capitalists of other countries and make profits everywhere. It wants other governments to drop controls that prevent US firms buying up local industries. At the same time, however, the US state has continued to follow a policy of backing US businesses.

Its enormous arms procurement contracts do this. Firms that benefit, like Boeing and General Motors, are provided with a head start in the race to compete with aircraft or auto firms elsewhere in the world. A dozen years ago the US Defence Department worried that Japanese firms were beginning to dominate the world computer and software industries. It used lucrative contracts with US firms to reverse this trend.

The Clinton government encouraged Boeing and McDonnell Douglas to merge into a firm that controls 60 percent of global civil aircraft sales. The new company had a turnover in military aircraft production twice as great as the whole of the European industry.

The military connection provides US capitalism with a double bonus. Enormous contracts give it an advantage over overseas rivals. And it can rely on the military power of the Pentagon to deal with anyone who threatens its interests anywhere in the world. So 11 years ago it was able to defeat the Iraqi threat to its domination of the Middle East oilfields-and then to make sure US firms got the most profitable contacts when it came to rebuilding what the US military had destroyed.

The US state has always subsidised its agriculture to the hilt, helping firms like Monsanto to dominate internationally. The focus on the hypocrisy of the US should not make us think that either the British government or the European Union is an innocent party.

They too use the state to benefit their capitalists (hence Tony Blair's helping hand to Mittal to privatise an East European steel industry, mistakenly believing this was a British firm). And they work with the US through institutions like the IMF and the World Trade Organisation to impose neo-liberal policies on Africa, Asia and Latin America. Their only doubt about the US is their fear that US firms, rather than their own, will make the gains as such policies are imposed. The big thief of US capitalism has fallen out with the slightly smaller thief of European capitalism. The EU is talking about retaliatory tariffs against US goods.

Some commentators are warning of an 'economic war' between the two. American behaviour over these questions is heightening doubts about US foreign policy. In France, for example, a powerful current of ruling class opinion believes French interests in Africa and the Middle East are not the same as US interests. That explains why some politicians are grumbling about plans to attack Iraq even though they supported the bombing of Afghanistan.

It is always a good time for honest people when thieves fall out. But we should remember that the EU and the US are still united in trying to impose 'flexibility' on workers in the West and ''structural adjustment programmes' on the people of the Third World.


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Sat 16 Mar 2002, 00:00 GMT
Issue No. 1791
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