Neoliberalism = Economic Colonialism

An interesting development in international trade reported by the Financial Times that further proves that Neoliberalism, or whatever else you want to call trade policy between the world’s wealthiest countries and the poorest is not is really nothing more than multilateral-sanctioned exploitation.

From the FT article, we learn: “Despite public rhetoric that new trade agreements with some of the world’s poorest countries are a development tool, in private the European Union is insisting on excluding aid from the negotiations. Internal documents seen by the Financial Times confirm that the European Commission has rejected attempts to link the two in the so-called economic partnership agreements with 70-plus mostly former colonies.”

Further down in the article, we are informed that: “Another document shows Brussels rejected a review clause proposed by African states to allow them to freeze liberalisation after 10 years if EU promises on aid were not met. “While we are not against well-defined review clauses, we think that they should be limited in their scope and mainly aimed at accelerating or extending liberalisation,” Commission negotiators said, adding that the market opening should not be linked to “undefined development targets. It may void the agreement of its sense.”

And some commentators wonder why the Doha – Development round of the WTO collapsed? Maybe it has something to do with the fact that LDCs (the world’s Least Developed Countries) realize that the wealthy countries that set the rules that govern international trade are in fact practicing thinly-veiled economic colonialism, and they are finally using their limited clout to organize and push back.

Discussing the unsurprising but important implications of the FT’s reporting, David Sirota notes that: “[W]hat you have here is Europe [the EU[ wanting all the benefits of economic exploitation – cheap products from desperately poor workers – but not being willing to guarantee they will live up to any concessions to prevent that exploitation from destroying the target countries.”

Exactly right. The EU, and other wealthy countries that are the de facto leaders of the World Bank, IMF and World Trade Organization are doing what one would expect: using their power to set rules that allow them to have their cake and eat it too. They want developing countries to privatize their natural resources and open up their markets to foreign trade (i.e. unregulated “free” trade without any protections for labor, environmental or human rights abuses), deregulating private industry and radically cut public expenditures for social services.

Of course, such a brutal perscription for restructuring a country’s economy is great for the US, the EU, etc. as it opens up the poor country’s resources to foreign investment (read: exploitation), but has predictably disastrous results for the target country (see, for example, former Chief Economist of the World Bank and Nobel Prize winner Joseph Stiglitz’s essay on the crash of the East Asian “Tiger” economies.

For an excellent backgrounder on the history and practice of Neoliberalism, you must read the transcript of this speech given by Susan George to the Conference on Economic Sovreignty (Bankok, Thailand) back in 1999.