Saturday, 2 June 2018

Steel, Brexit and trade agreements

From Pixabay
I raised the connection between Trump's imposition of trade tariffs on steel imports and the pre-referendum rhetoric on Brexit on Paul on Politics yesterday (on KMTV). For anyone with a short memory, we were told repeated by the leave campaign that Brexit would be a prime opportunity to negotiate our own trade agreements and would open up free trade with the rest of the world, especially with the US. The opposite is happening and happening with just 299 days to Brexit.

Now I'm no fan of global free trade, it represents a race to the bottom in terms of workers' and environmental rights, and of course it flies in the face of localism; so much of Trump's new tariff doesn't bother me. The UK is a net exporter of steel and the US is an importer, hence Trump's import tariff is designed to make US steel more competitive and create jobs locally. I've no real problem with that, it makes reasonable sense to ensure that goods that can be produced locally are and if a trade tariff is needed to achieve this then so be it. Remember TTIP? That was designed to increase free trade and harmonise laws with the US to a point where the NHS and our environmental and worker protections would be at risk - free trade has major flaws.

But there are two aspects that are a problem with the tariffs:

Firstly, the tariffs will slowly but surely hurt the UK's steel industry and therefore some steel workers will probably lose their jobs. I say probably as the world steel demands are predicted to continue to grow, driven mostly by China. However, growth demand for steel is broadly in line with GPD growth and as oil prices rise, economic growth is likely to falter again.

As has been said many times, unending economic growth on a finite planet is not possible. Coupled with the environmental impacts that this brings, I am keen to see an end to continued economic growth as soon as possible but the end must be based on greater equality and ensuring access to properly paid work.

So, while there is likely to be a reduction in jobs for steel workers, government needs to ensure that other jobs are created to ensure those workers have opportunities. Of course those jobs need to be in industries that help the UK increase it sustainability.

The second significant problem is the emotional reaction of the neo-liberal governments and politicians, i.e. the trade war. Free trade is so ingrained in the psyche of neo-lib thinking that Trump's tariff must feel like a nasty infection that needs treating, hence the immediate announcements by governments on their own tariffs directly aimed at US exports.

As I said earlier, global free trade is a race to the bottom for the majority, i.e. those of us who do not own hedge funds etc. For the tiny majority of super rich, free global trade makes them richer. They can build factories in places where wages are minimal and environmental protections are non existent, increasing their profits at the expense of people and planet. However these same people are ensuring that the media and government messages continue to drive public opinion that free trade is somehow good for them by keeping prices low.

The opinion that global free trade is good is what we need to change.

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