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Trade is about politics

January 4, 2011

A spate of cables recently published by WikiLeaks confirms that trade negotiations are often political, and that big countries act in their own commercial interests.

The Guardian has revealed that:

  • In 2006 McDonalds tried to make the US government delay a trade deal with El Salvador in order to influence a lawsuit it was fighting. In a case against a former franchisee, the company wanted the US embassy to push for the appointment of what it perceived to be more neutral judges, using the Central America-Dominican Republic-United States Free Trade Agreement (CAFTA-DR) as leverage.

Any lingering notion that trade negotiations are a meeting of equal partners in pursuit of a free-trade ideal goes straight out the window. Neoclassical economics, with its pretence that nations behave according to what best suits their comparative advantage becomes at best irrelevant; at worst ideological.

The WikiLeaks cables show that over four years the US conducted a systematic diplomatic and political offensive behind the scenes in order to support its own multinationals overseas.

It shouldn’t be a surprise that the US supports its own companies, but the evidence of subterfuge belies the public idea that trade talks are transparent and purely about economic interests. Many negotiations, such as CAFTA-DR, or even WTO talks, are in reality just muscle-flexing exercises in which the weak lose out.

Global trade is about politics. Developing countries are often defenceless against the machinations of the powerful.

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