Wednesday, 7 March 2018

If trade isn’t free, it costs money

After a period of time in which countries have worked hard at setting up free trade areas, such as the North America Free Trade Agreement, the ASEAN Free Trade Area, the European Common Market and so on, we are now hearing that the USA has begun to put tariffs onto items such as washing machines, solar panels, steel and aluminium, because of what they see as unfair competition from other countries via government subsidies. Other countries are now talking about retaliatory tariffs. There are widespread fears that this could lead to a new trade war, instead of more trade deals with other countries. Trade wars destroy any existing trade deals, and often lead to a down-turn in the economy in each country involved. If an item suddenly has an extra tariff put onto it, it automatically goes up in price. That almost certainly leads to fewer sales, which can eventually lead to some companies folding and/or people losing their jobs.

Essentially, Bahá’ís believe that the world should be working towards a global Free Trade Area. Bahá’u’lláh stated that, “The earth is but one country.” This has economic implications, as well as implications for transcending racism and prejudice. Tariffs are not applied within a country. The United States of America is (are?) a good example. If something is made in Pennsylvania, they do not slap a tariff on it, in order to deliberately make it more expensive in Ohio! Everybody sees the U.S.A. as one entity, even though the Rockies are completely different from the Plains, and New York is quite unlike Los Angeles. The same applies within any country, and if the world is in principle only one country, as Bahá’u’lláh states, the same concept should apply world-wide. We do not really need armies of professional trade negotiators making – or breaking – “deals”. This is just one planet!

We need to establish some form of world administration, free from national or political bias. From then on, no country can upset the applecart, and single-handedly prevent progress, either by imposing tariffs, or by trading unfairly. In the Bahá’í writings it talks about “a world organically unified in all the essential aspects of its life, its political machinery, its spiritual aspiration, its trade and finance… and yet infinite in the diversity of the national characteristics of its federated units.”

In the meantime, large parts of the world are still relatively untouched by the global prosperity that others enjoy. The introduction of a world currency would prove a real boost to territories whose currencies are considered near-worthless. Even those in the richer countries can suffer from currency fluctuation. For example, the pound sterling has lost some of its value in recent times due to concerns over the effect on trade of the UK leaving the European Union. This change may be good for British companies who export things, but it has been bad for the countries who export to Britain, because every time the price rises, the number of British customers who can afford the new price shrinks. And that is with a currency respected in the currency markets. Poorer countries suffer currency problems on a daily basis.

Furthermore, although the good of the part is best found in the good of the whole, in the short-term things can go wrong for one particular area or another, and everyone is aware of that. An advance in technology in one factory may lead to competitors doing less well, and possibly to factory closures elsewhere. The Bahá’í system recognises that all is not necessarily well everywhere. In the Bahá’í view, the local elected bodies should be working in the interests of the local people.  Through genuine consultation with the local population, they should be considering what social and economic improvements can be made, or what new initiatives can be started up. However, this should never be at the expense of the wider interests of humanity. “Let your vision be world-embracing,” is Bahá’u’lláh’s advice. Elected representatives should regard themselves as “the representatives of all that dwell on earth.” If that happened, then worldwide free and fair trade would be seen as the obvious choice for a better world.

Photo by Danny Cornelissen (