Globalisation, hard as the term is to define, is intrinsically connected with free trade. Political forces from right to left all preach the good tidings of free trade, albeit with different emphasis. Those of us raised in the West have been fed an ideological diet of free trade and free markets. Many of us cherish our unfettered access to the seemingly endless variety of imported products, a significant amount of which are made in the developing world and sold in our markets at drop-down prices - we are living the consumer dream. In the developing world, particularly in the ballooning economies of China and India, those who are climbing up the economic ladder are feeling the benefit of free trade. If someone is working in a textile factory in Guangdong (China), his employer's ability to sell factory output freely around the globe, particularly into the affluent markets of the EU and the USA, is his/her hope for the future - the family's standard of living is dependent on the existence of global free trade. Free trade seems like the ultimate win-win situation. This reality, of late, is however being reevaluated at U level. What has changed?

China and India, coined in the un-published lexicon of economic jargon as "Chindia", are presenting the developed world with formidable challenges. China has become a manufacturing powerhouse, supplying the world with products of every sort. Two decades ago China was only exporting shiploads of low value-added/low-tech products; toys and plastic goods were the most conspicuous. Nowadays however China has moved up the technology ladder at alarming speed and can produce automobiles, steel and machinery equally efficiently allowing it to refrain from importing these goods from countries in the developed world. They are exporting more and importing less. The economic statistics coming from China are mind-blowing - growth rates of 8-9% per annum, annual increases in exports of between 12-18%, 350,000 new graduate engineers per annum. India has taken a different, but almost equally successful path to development. The subcontinent has become a global powerhouse in services particularly software engineering and back-office operations such as accounting and call centres. Whilst textile producers in Europe are losing jobs to China, US software companies are moving jobs to India. The West is truly facing a trade war on two fronts!

The developed countries have, metaphorically speaking, truly been caught with their pants down. For decades now we have been complacent about the tide of imports coming from Chindia, believing that whilst these countries can be left to travel the road of economic development on the back of low value-added products and services, we in the developed countries can compete by climbing the value chain and make products with more value-added; the knowledge based economy was the solution. The EU in particular has been happy with this situation because we have assumed (evermore wrongly, as it is turning out to be) that whilst the USA will be flooded with cheap low-tech exports from China, the high-tech export manufacturers in Europe, Germany and France in particular, will be selling to China and the rest of the developing world, high-tech equipment to manufacture these low tech products. The belief has been that the US's trade deficit was directly proportional to the EU’s trade surplus. Economists across Europe have lauded the high-tech/value added drive; unions have endorsed it as the only long-term salvation route for the employment prospects of those they represent. How wrong we all have been! Today the EU runs a trade deficit with China of 75 billion euros; the USA US$ 160 billion annually, and growing exponentially.

The quasi-religious belief in free trade has come under scrutiny in the European Union. I suspect that a good number of you following the debacle on the media, of the massive quantities of textile imports being held in European ports, (apparently being coined as the "bra wars"), are even starting to question your own belief in the “dogma” of free trade. The doubts are coming from a variety of political, social and economic forces. In the corridors of the EU, the political left, right and centre are all questioning whether there exist limits to free trade and, if so, at what point and in what manner should free trade be tamed or (out rightly) blocked. What level of structural unemployment becomes untenable? How many jobs do we lose, before somebody raises a flag? What colour will the flag be?

The Greens have always questioned free trade, as we question every other economic dogma. Our starting point in economic ideology has always been the belief that markets are there to serve people rather than people being subservient to markets. Therefore it is of no surprise that the latest debate on the trade relationship between China and the EU is being spearheaded by a Green MEP, the Britain Dr. Caroline Lucas. The EU has set out a very stringent regulatory regime for companies operating within its boundaries. Maximum working hours, minimum wages, and health and safety regulations, all constitute a wide-reaching regulatory framework that the EU works for to, ensure a good quality of life for its citizens, protect the environment and ecology of our continent, as well as to guarantee reliable and safe products for consumers. Regulation however costs money and impacts competitiveness. Nobody should challenge the spirit behind regulation; the details will remain wide open to discussion. The problem with the EU (and this is my opinion) is that we do not demand similar manufacturing standards on our trading partners. Free trade can only be free if everyone is operating (give or take) on the same level playing field. China is very competitive in textiles. However it has only managed to increase exports of pullovers and jerseys by almost 900% in the first two months of this year, because its market regulations are completely unlike those of the EU. Whilst China has made some improvement to workers' conditions, membership of unions is still not possible. Whilst China has become a world leader in renewable energy technology, its pollution record would not be acceptable in any corner of the EU – 70% of its energy requirement is still met from coal. Every year it is estimated that 100,000 Chinese die in work-related accidents. That would amount to 40 people dying per year in Malta from occupational injuries; unacceptable even in our accident-prone island! In the process China is also damaging the development prospects of poorer countries such as Laos, Bangladesh and Cambodia, whose are even more reliant on the export of textiles than China. This is of particular concern to the Greens who have always insisted of the importance of allowing every country access to sustainable economic development.

What to do? Outright protectionism is not (and I hope will not) be up for discussion. Whilst the (milder) use of non-tariff barriers like quotas is still a possibility within the context of renegotiations with the World Trade Organisation, this should not be seen as a permanent state of affairs. Closing up international trade would be economically catastrophic for both the developed and developing countries. What the EU should be looking at are the "conditions to trade" in relation to social, political and environmental conditions of people in our ex-EU trading partners. Whilst it can make sense to limit overtime worked by EU workers to ensure a better quality of life for our citizens, it is "dumb" to ignore that some of our trading partners are working their populations 60 hours a week at ridiculous wages. Whilst Asian workers are being exploited, European workers are being made redundant. Whose gain is this? We must ensure that, over a definite period, workers in countries with whom we trade come to enjoy good conditions of work, so that our own are not put at a permanent disadvantage. The right to free association of workers has to be granted, whilst minimum environmental and pollution standards must be demanded and enforced. If we choose as a trading block to trade freely, we must ensure that our trading partners do not enjoy any privilege to exploit neither land, nor labour, nor capital. This power we must exploit not only with existing and prospective members of the Union, but indeed with our trading partners. We must use standards to ensure fair trade.

Apart from ensuring fairer “conditions to trade”, the Union has to work at a faster pace to complete the single market. We must be able to compete not as individual countries but as a bloc. No individual country in the EU is able to face up to China on its own. Germany, the world's number one exporter already runs a trade deficit of 8 billion euros with China - tiny Malta's trade deficit in 2004 with China was a whopping 50 million Euros! In order to complete the single market we must work within a decade or two towards common EU-wide transportation, energy and telecommunications infrastructures. More importantly we have to speak with one voice, at least in matters of trade. The failure to ratify the EU constitution in France and the Netherlands has slowed the pace of integration. As the Europeans continue to moan and nag about matters such as the subsidies to EU farmers, the size of the EU budget (a ridiculous and miserly 1.2% of EU GDP) and fishing quotas, the Chinese, Indians and Americans are working to our-compete us in sector after sector.

We are still in time; we still have the leading edge. The European Union can still become the most dynamic and competitive trading block the world has ever known. What’s more is that we can do this whilst preserving our social model and protecting our environment. This however can only be achieved with further political union. The price of achieving lasting competitiveness as a group of 25 nations is a further reduction in our respective national sovereignties, at least on matters of trade. It is a reality Europeans may unfortunately and sometimes selfishly, continue ignoring forever. What we cannot ignore forever is that our loss will inevitably be somebody else's gain. If you still have any doubt, check the label when you put on your new woolies this coming autumn!

Edward Fenech

Spokesperson - Finance, the Economy and Tourism

Alternattiva Demokratika - The Green Party