4:  Trade Subsidiarity, Seattle Style

Molly Scott Cato

With curious synchronicity the comment that 'when the last fish has been eaten and the last tree has died you will find that you cannot eat money' has been assigned to Chief Seattle, who shares his name with the town where it became obvious that the existing trade game would have to switched.

This is ironic because much of the confusion about trade, and why it might be good for 'poor' nations arises from a misunderstanding of what money is for. According to economics one medium of exchange. But in the global economy money, that is to say hard currency, operates as a political mechanism to permanently fix the terms of trade in the interest of the countries of the North. Since the 'poor' nations are in fact very rich in terms of raw materials, there is no other logical explanation as to why they fail to grow any richer as these resources are extracted and exported.

So what the countries of the South are really being offered is a switch from poker, at which they are being beaten hollow, to pontoon, but without any suggestion of reallocating chips. In fact it is worse than this because the USA, with its control over the dollar as medium of international exchange, has the equivalent of a chip-making factory out the back.

The power of money is the power of a hypnotist's watch. It is sufficient to delude the usually astute and savvy political commentator George Monbiot, who commented recently in the Guardian that 'the poor countries need money and, in particular, hard money'. Chief Seattle was not deluded: he recognised that what you need is food, clothing and housing, not money. Money can be a means of buying these items, but the relationship is not direct. The price is always subject to political pressure. This is the predominant reason why poor nations, and the poor within rich nations, would be better advised to focus on obtaining what they want rather than the money, which is always the ally of the politically powerful.

What happened at Seattle was that the rich nations realised the game was up. The outrageous injustice of the trade system they had been benefiting from on a grand scale since the Second World War was no longer politically tenable. It was, as George correctly identified, legalised theft. But we should be deeply suspicious of the apparently contrite negotiators who now emerge, wolves in sheep's clothing, to present their proposals for a new trade game. It's actually the presence of the pharmaceutical industry amongst their number that puts you on to this. What should we suppose they have spent the past 2 years doing? My money would be on stitching up a new trading system they can dominate just as ruthlessly as they dominated the last one, rather than beating their breasts and weeping for the dead children of the South.

So where does this leave the would-be ethical consumer? The debate is unhelpful and sterile because it has been painted in simplistic and polarised terms. This should not be debate about more trade or less trade, or even about free trade or fair trade. Rather, we should take each item or type of item and make a socially and environmentally informed decision about how and where it should be made.

Let's start with the sorts of items we can easily produce here in the UK. Unless you are a middleman hoping to take your inflated profit in transit there is little sense in importing apples from New Zealand or green beans from Kenya. The Kenyans would similarly be better placed growing maize at home rather than importing food. The burgeoning growth in farmers' markets and local produce distribution schemes suggests that this argument is already won.

We should move this argument forward into new areas where local production would generate employment and help to rebuild a sense of identity through work, so long as that work is organised cooperatively and justly. So local woods could be turned into furniture and local textiles into clothes, rather than picking up characterless items created by nameless, exploited workers in the 21st century global sweatshops.

What about crops that require little processing but will not grow in our climate even after global warming? Greens are not suggesting that we should abandon coffee and cocoa altogether, but once they carry a tax representing the value of the C02 produced during their transportation and once a reasonable price is paid to the producers they will return to being expensive, luxury goods.

Much heat is generated by discussion over the last category of complex, labour-intensive goods, of which the prototype example is the computer. The debate this far has assumed that these sorts of goods cannot be made in the developed world and are the main reason why countries such as Ethiopia need money to buy them. This overlooks the obvious fact that most global production of such items as computers and monitors is carried out in the developing world: no corporation would pay standard Western rates for such unskilled work. What is not shared with the inhabitants of such countries is the design for such goods, which is rigorously controlled through intellectual property laws. Small chance that those rules will be opened up for discussion at Cancun, but they are the real reason why there are more computers thrown away by UK teenagers each year than exist in the whole of the public administration system of a country like Ethiopia.

I call this way of looking at international production and exchange 'trade subsidiarity', by analogy with a political system that begins at the local level and only moves upwards when power would more rationally be exercised there. It is better summed up in the slogan that inspired Roosevelt's New Deal: 'Do what you can, where you are, with what you have'.

Molly Scott Cato is Green Party Economics Speaker and works as a Lecturer in Social Economy at the Welsh Institute for Research into Cooperatives in Cardiff.

She has written a fuller paper on the theme of Trade Subsidiarity which is available by email from: [email protected]. She has a book coming out next year about employment policy in the South Wales Valleys.