Published in FOROYAA of 24-27 May, 1999.

TRADE WAR AND SURVIVAL TECHNIQUES

One of the fundamental goals of the IMF when it was established by the
representatives of 44 countries who met at the United Nations Monetary and
Financial Conference in Bretton Wood, New Hampshire, USA is:

+ACI-To facilitate the expansion and balanced growth of international trade and
to contribute thereby to the promotion and maintenance of high levels of
employment and real income.+ACI-

Countries which had benefitted from being the colonisers and dominators of
the world had all the major banks and industries and could thus dominate the
markets of the world.

For a while the former colonies saw the need to protect their local
industries by establishing import substitution techniques and tariff
barriers.

However, these techniques could only work if there are countries which aimed
at ensuring balanced and proportionate development of countries by mutually
assisting each other to become more and more self reliant. That world where
countries trade by buying what they cannot produce and produce what others
will buy on a proportionate basis is yet to exist.

What exist is not a balanced growth of international trade but a lopsided
one where few mighty companies based in few industrialised countries
dominate the world market and are getting bigger and bigger through mergers
with rival companies to form monopolies such as the Daimler-Chrysler Group.

Of course the rapid development of the Brazilian , Mexican and Asian
economies in the 80s and 90s did give the impression that the whole world
was going to experience a balanced development of international trade. These
countries benefited from rapid inflow of capital which expanded the assets
of banks, growth in their loan portfolio, expansion of enterprises and
services and the generation of employment.

Today, crisis has gripped Asia. There has been a flight of capital as
quickly as it came in because of the realisation that the currencies of the
Asian countries were going to depreciate in value. The states were left in a
state of indebtedness, the foreign exchange scarcity  because of the flight
of capital gave rise to huge balance of payment deficits, the depreciation
of currencies gave rise to inflation, the collapse of businesses led to
unemployment. Economic crises gave rise to social crisis in Indonesia and
other countries. The Tiger States became pussy cats overnight. This shows
how vulnerable the economies of former colonies are  to any form of
international currency speculation and trade war.

Needless to say, as people in the world become too poor to purchase many
luxurious goods, the markets are now saturated with too many goods.
Consequently, a subtle trade war has started where the major industrialised
countries are now pushing the second generation industrialised countries
from their markets. Their aim is to dismantle every mechanism which enables
countries which are recently industrialised from protecting local
industries. They are, therefore, pushing such countries into being service
economies so that they will continue to have monopoly of industrialised
establishments.

Let us take Taiwan as an example. Taiwan's per capita income is supposed to
be +ACQ-26,000 per year which is equal to Germany's. Taiwan is expected to  grow
at a rate of 5.5+ACU- per annum. Investment growth increases 27.3 per cent year
after year.

Taiwan has been able to produce many goods that are sold cheaply in other
parts of the world. The major industrialised countries are spending their
energies studying how to establish trade barriers so that countries like
Taiwan will export less to their countries.

For example, the European Union has imposed heavy taxes on several
manufacturers of bicycles from Taiwan. More than 30 Taiwanese manufacturers
of bicycles are subjected to a penalty tax on their products entering the EU
market. EU bicycle manufacturers are said to have filed a complaint in
October 1997 on the basis that their Taiwanese bicycle manufacturers were
selling products at prices below fair market value. Punitive taxes were
levied against the companies concerned and thus bar them from markets.

Taiwan is also trying to develop its competitive edge by encouraging its
banks to merge into bigger banks. This is the trend everywhere.

It is, therefore, clear that most enterprises are going to collapse leaving
way for the major monopolies of the world to control the whole world economy
in their hands thus  leaving the rest of the world poor. This will trigger a
global crisis of consumption  and general collapse of industries and banks.
The fundamentals of the economy of the world need to be rethought and
redrawn to achieve a balanced international trade relations between
countries.

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