Re: Here is an interesting factoid: Did you know that trade between nations was actually *higher* (as percent of GDP) before WWI than it is now? Most people don't realize it, but WWI was actually more about free trade than anything else. Unfortunately history is taught so poorly in school that most people believe that it had something to do with an Archduke being assasinated for some reason or another. The fact of the matter is that once again rich nations are attempting to use the WTO as a tool to "recolonize" the "developing nations" (an Orwellian term for nations that are basket cases, always will be...).
In fact, I think much of this so called "humanitarian war" on (in) Yugoslavia was more about "Balkanizing" the place and making it safe for "free trade" (ie Marlboro cigarettes, Coca cola, and McDonalds). Funny how some things never change.
I think that the reason why international trade has shrunk since WWI is the exploding FDI (Foreign Direct Investment) of the 1980s and 1990s. Remove all US subsidiaries from Europe and Asia, remove all European subsidiaries from the Americas and Asia, remove all Japanese subsidiaries from outside Japan, and then relocate them back in their home turfs --you'll see then how high will international trade jump!
As for your claim that 'once again rich nations are attempting to use the WTO as a tool to "recolonize" the "developing nations" (an Orwellian term for nations that are basket cases, always will be...)', I'm afraid that, nowadays, the worst-case scenario for most of these so-called developing nations is to be left out of the global economic maelstrom.... I think the key issue for developing nations is not about McDonaldization and the alleged American hegemony threatening their traditional way of life --that's the usual criticism by Western (mostly European) highbrows whose kids enjoy McDonalds burgers and Cokes while watching Hollywood movies at their local multiplex. Most kids from Third World countries would love to abide by such a cultural "hardship"....
The problem is to keep control over one's place in the global "division of labor": as a Chinese scholar put it in an interview with the Far Eastern Economic Review, Latin America has enjoyed a US-enforced free trade for the past 200 years but it's still growing bananas and sugar cane..... Third World leaders such as Malaysia's Mahatir Muhammad have perfectly understood that and are managing their countries accordingly:
(Excerpt from the Far Eastern Economic Review - February 24, 2000 / page 48)
KUALA LUMPUR
Brakes on Proton
More than a year after talks began, Malaysian oil giant Petronas has yet to seal a deal to take control of Perusahaan Otomobil Nasional, or Proton, maker of the much-vaunted national car. The delay is a reflection of the way economic recovery and a buoyant stockmarket have made a nonsense of firesale valuations agreed in less prosperous times.
In August, Petronas agreed to pay listed group Hicom Holdings 1 billion ringgit ($260 million), or 7 ringgit a Proton share, for its 27.2% stake in the car maker. Hicom, with debts of 2.4 billion ringgit, felt it didn't have the resources to make Proton regionally competitive. Moreover, when the talks had begun back in 1998, Malaysia was in recession. Car sales had fallen by half, and cash-rich Petronas seemed a natural choice to help out Proton.
[...]
That, however, was a lifetime ago in Malaysian economic history. Executives close to the deal say Proton originally valued Hicom's stake in Eon [Edaran Otomobil National] at just under 581 million ringgit, or 7.95 ringgit a share. Now, however, Eon's share are trading at more than 19 ringgit each, valuing Hicom's stake at over 1.3 billion ringgit --more than Proton's entire cash hoard. That's now raising questions over whether the deal will proceed at all, or with drastic alterations.
Eon's price has been boosted by a number of factors, including a big rise in car sales in Malaysia over the past year. Sales jumped 76% [no typo here!] to more than 288,000 vehicles in 1999, and the industry estimates they could climb another 21% this year. With a 70% market share, that's good news for Eon. But car distribution isn't the company's only interest.
[...]
The company is profitable only because it's protected from competition. But trade barriers are under pressure from the Asean Free Trade Area --which aims for zero import duties in Southeast Asia from 2002-- and the World Trade Organization.
Stuck for cash, Proton could always buy Hicom's car assets by issuing shares. But the executives close to the deal say Japan's Mitsubishi Corp., a 16% shareholder in Proton, has opposed that idea as it fears dilution of its stake.
[snip]
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What a seachange a couple of years make! Only one and a half year ago, president Mahatir was the bˆte noire of global finance's elites as he boldly implemented exchange controls, regardless of vociferous Free Trade evangelists who hastily doomed Malaysia to remain forever a "basket case".... Even George Soros spouted that Mahatir was the only and most serious threat to his own country! Go figure.... But who said there was a slump in the car industry? Who said there was even overproduction of cars worldwide?? Does a 76% y/y growth rate look like a slump?? But hey, don't jingle GM or Ford about it yet: Malaysia's car market is not some convenient outlet aimed at soaking up European and American excess capacities....
Gus. |
