Jennifer A. Gritt
The New American, January 12, 2004
Though some believe the EU is in decline, actually it is fast becoming a global force strong enough to enforce WTO rulings and influence America’s economic policies.
In November, the World Trade Organization (WTO) ruled that the 30 percent tariff President Bush imposed on imported steel in March 2002 violated international trade rules and was therefore illegal. The WTO, however, had no way of enforcing its ruling by itself. So the European Union (EU), acting on behalf of the WTO, rose up to enforce that organization’s ruling against the U.S. for the supposed purpose of leveling the economic playing field for Europe.
Soon after the WTO ruling, the EU began mobilizing against the U.S., threatening to implement $2.2 billion worth of retaliatory tariffs if the Bush administration failed to abide by the trade body’s wishes. It worked. On December 3, President Bush announced that he would repeal the steel tariff. “It’s a great sign for the EU that it can make the US sit up and take notice,” Digby Jones, director-general of the Confederation of British Industry, told the December 2 London Guardian. “America can be a force for good in trade and the world economy but not when it is indulging in a bout of protectionism.”
But the issue here is not free trade vs. protectionism. Rather, it’s the ongoing effort by internationalists in the WTO, the EU — and even our own federal government — to destroy America’s ability to determine its own trade policies.
Protecting Global Trade, Not Steel
As foreign steel imports have surged during the past several years, the steel industry in America began showing signs of decay. Numerous bankruptcies and the loss of thousands of American jobs offered a dire warning that something had to be done if the U.S. was going to save the nation’s steel industry. Unlike foreign steel companies, the American steel industry is not generously subsidized. Laboring under the yoke of heavy federal regulation and not having the benefit of government handouts to offset production costs, the American steel industry simply could not compete. The future looked grim, so the Bush administration made a feeble attempt to try to protect American steel manufacturers by imposing a 30 percent tariff on steel.
Not long after the tariff went into effect, the WTO began reviewing complaints over the supposed illegality of the Bush administration’s decision, eventually ruling that the tariff did indeed violate international trade rules. But it was the EU’s threat of retaliation that supposedly forced Bush’s hand. As reported by the December 2 New York Times, “The Europeans have made targets of products whose pummeling would hurt his [Bush’s] re-election chances: American exports of not only steel but also textiles, important to the South, and citrus fruits, important to Florida and California.”
The Times went on to stress that “officials say most of Mr. Bush’s leading economic and trade advisors have told him that he has little choice but to accede to the W.T.O.’s ruling.” But it is exactly this precedent — that America has no other choice but to obey the WTO — that the internationalists controlling Washington have been working to establish for decades.
“This blackmail, this intimidation by Europe, is just further weakening our manufacturing base,” Thomas J. Usher, chief executive of the United States Steel Corporation, told the Times. Yet while it’s true Bush’s tariff was apparently designed to help the steel industry stay competitive in the international market, a closer examination reveals that the tariff itself has caused economic damage to America’s steel-using industries.
According to a press release by the Association of Home Appliance Manufacturers (AHAM) — a global trade association — its members “experienced increased costs of steel products and often times difficulties in obtaining quality steel from domestic steel producers,” as a result of the tariff. The release went on to stress that “independent studies of the tariff’s effects highlight the significant numbers of jobs lost as a result of the tariffs.” It cited a study by the Consuming Industries Trade Action Coalition which estimated that over 200,000 Americans lost their jobs.
Tariff or no tariff, the disintegration of the American manufacturing sector was set in motion the moment international socialism took root in Washington and the U.S. became party to international organizations such as the UN and the WTO. Artfully misnamed free-trade agreements, such as NAFTA and the proposed FTAA, are designed to accelerate the process.
According to a recent study by the National Association of Manufacturers (NAM), “the position of U.S. manufacturers in global trade has shown a marked deterioration in the last five years.” America, the report continues, now has a “trade deficit in the goods sector equal to one-quarter of all output of the domestic manufacturing sector. At the same time, the U.S. share of global export markets has fallen from a high of nearly 14 percent in the 1990s to about 10.7 percent in 2002.” NAM also points out that the fact that “the U.S. manufacturing sector … now finds itself mired in a slow recovery leads to the inescapable conclusion that cost pressures outside manufacturers’ direct control have conspired to threaten the U.S. manufacturing leadership.”
Yet the neoconservative Bush administration is doing nothing to try and offset or reverse this trend. Why? Because President Bush and his internationalist administration don’t want to slow down the process of U.S. integration into the global economy — integration that can only happen if America’s economic strength is weakened and brought to the level of European industries. In other words, America’s economy must be socialized on a global scale.
A case in point would be the Bush administration’s vow — in lieu of keeping the steel tariff — to continue to monitor steel imports in order to detect any flooding of imported steel into American markets. According to a December 3 ABC news report, Alan Wolff, a Washington-based attorney representing U.S. steel companies, stated: “The White House knows the U.S. industry still confronts serious issues including massive global over-capacity and a whole variety of foreign subsidies that encourage this over-capacity.” The report went on to state that “steel officials said the [Bush] administration likely would pledge to continue international talks for reducing excess global steel capacity and reining in subsidies that foreign governments provide for their domestic steel companies.”
While this sounds like President Bush is making an effort to protect the steel industry, in reality the administration is doing little more than paying lip service to American interests as it works to build a WTO-headed system of global managed trade.
They’ve Only Just Begun
In addition to the WTO ruling on Bush’s steel tariff, other economic decisions made by the Bush administration are coming under international scrutiny as well. For example, the American practice of offering a tax break for American companies if they set up subsidiaries abroad was put on the WTO’s docket. As reported by CNSNEWS.com on December 5, “The WTO also ruled against the U.S. in that case last month, and Europe has planned retaliation worth hundreds of millions of dollars starting next March.” Steven Everts of the London-based Center for European Reform, drawing a comparison to the tariff ruling, stressed: “There’s certainly a similar pattern. At some point in time, the U.S. will have to amend its legislation to resolve the issue.”
Another area where the U.S. might run into trouble with the EU is the recent decision to bar countries which did not support the Bush administration’s invasion of Iraq from being allowed to submit contract bids for reconstruction efforts. According to a December 12 Reuters report, EU leaders appear to be split on whether the international body should retaliate, not committing either way to whether or not they would move forward with counter measures.
Why — with all the U.S. efforts to homogenize the global economy over the past several years — would the WTO and EU need to further degrade America’s manufacturing base? Because the socialized economies of Europe are still unable to match the manufacturing might of the U.S., which — despite decades of socialist impositions by Washington — remains vigorous because of its free market foundations.
According to a December 10 PRNewswire report, the European Commission recently released a study documenting the widespread productivity slowdown throughout Europe’s industrial sectors. The study’s findings “suggest that strong productivity growth — a powerful sign of economic growth, health and efficiency — is underway in the U.S. not only among information and communication technology (ICT) manufacturers, but also for major users of this technology, especially services. In the EU, only producers or intensive users of ICT have experienced an improvement in productivity growth, and the acceleration is far less than achieved in the US.”
So in order for the EU to equalize the American and European economies, the U.S. manufacturing base must be further eroded in order to give European and other foreign nations the chance to catch up. In addition to taking measures to stunt economic growth in America, the EU recently approved an $80 billion investment plan for public works projects throughout Europe that is reminiscent of Franklin D. Roosevelt’s socialist New Deal. In a joint statement made by 25 current and soon-to-be EU members, the economic package “is an important step … to improve competitiveness, employment and the enlarged union’s growth potential.”
Don’t Be Fooled
For some, the breakdown of the recent EU summit in Brussels and the failure to adopt a formal constitution were signs that the power of the European body is in decline. But a closer look into the supposed summit failure reveals that the EU is only haggling over just how centralized its power should initially be. In May 2004, EU membership will increase from 15 to 25, with the majority of the former Soviet satellite states in Eastern Europe joining the European government. The major point of contention at the recent summit was the unwillingness of Spain and Poland to give up their generous voting rights. According to a December 13 EU press release: “The draft text proposes a new ‘double majority’ system, under which decisions would require backing from a majority of member states representing 60 percent of the EU’s population — a formula that boosts the EU heavyweights’ voting power.”
While Spain and Poland were unwilling to compromise on the proposed voting system, both Germany and France were not deterred in the drive toward unifying Europe under a single constitution. According to a December 14 Associated Press account, “[French President Jacques] Chirac and German Chancellor Gerhard Schroeder spoke of the need for a core group of countries to press ahead with closer integration,” which they acknowledged has a tendency to raise “fears over the cohesion of the EU.”
And not every dispute ended in failure. As reported by the December 14 New York Times, “The meeting was not without successes. On Friday, the leaders took a first important step toward striking a deal on the constitution’s draft text … when they agreed unanimously to a common defense policy that included planning abilities independent of NATO,” a measure that would diminish American influence over European defense. “Europe is not in crisis,” Chirac insisted in response to the failed summit. “Europe has institutions, Europe will expand. Europe works.”
Despite its intramural squabbles, the EU appears to be fast becoming a global force capable of enforcing WTO resolutions and dictating the economic policies of the U.S. But it should be remembered that the EU — like the WTO and the UN — only has the power Washington is willing to surrender to it. And in the most recent trade dispute, President Bush took a dive in order to set an important precedent on the road to creating a socialist global trade system.
It is going to be up to informed U.S. citizens to reverse the dangerous international drive toward global socialism by restoring the power of Congress to rein in the out-of-control Executive Branch that has been predominantly responsible for building the internationalist foundation for America’s political and economic destruction.