The Malta Independent 17 June 2024, Monday
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Free trade

Alfred Sant MEP Thursday, 30 May 2024, 08:00 Last update: about 19 days ago

Globalisation is supposed to have spread world-wide the gospel of free trade. In its name, numerous customs tariffs have been dismantled as well as many other barriers that were meant to keep international trade in check. However more recently this process seems to have slowed down for at least two reasons.

On the one hand the experience of the Covid pandemic and following that,  of the war in Europe have fostered the realization that on a regional basis, the supply of raw materials and certain essential products should as a priority, be kept secure. This has meant that they should be ringfenced by protective measures that would ensure they can be produced within the region and not imported.

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On another front, as policies were developed against climate warming and other environmental degradation, trading became subject to new barriers if products failed to satisfy certain conditions. This is serving to reduce significantly the momentum of “free” trade.

Nor should one discount the radical boycott on whole sectors of trade which were introduced in the wake of the war in the Ukraine, a development which also contradicts the free trade principle.

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MISTAKEN CALCULATIONS

A method by which to study the history of a society, a business and even of a government is to consider what the intentions of the leadership groups were, the action strategies that they adopted to achieve their aims and then the success obtained in what they did. It is clear that to understand how the different aspects of a situation got shaped, one would need to arrive at correct assessments of what the real intentions were. For it frequently happens that what is stated in public is not really and truly what is being aimed at.

The decisions that get taken by a leadership are then premised on calculations regarding what their effect will be... calculations that depend also on the leadership’s ongoing evalution of the circumstances in which initiatives are unfolding. An interesting study on this basis would hardly focus on the incidence of correct calculations, but rather on those which turn out to be mistaken.                   

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BUYING ON THE CHEAP

Germans are realizing (perhaps a bit late) how a rather substantial part of their economic success depended on being able to source their economic inputs on the cheap. The first time this realization emerged was when they had to see aboout cancelling the continued importation of natural gas from Russia after the latter invaded the Ukraine and it was decided to embargo Russian exports.

Germany needed to solve the problem not just of from where to obtain the gas that its industries needed but equally that of  having to absorb the higher prices it would be charged for the alternative supplies.

And now equivalent problems have taken shape due to the efforts being organised by the Americans and others to intensify protection against cars exported from China. Indeed, the push is to ban them altogether. It so happens that the German car industry has a lot to lose with such an approach for it is involved in many Chinese enterprises which produce cars cheaply according to German models.

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