The prevalence of free trade principles ensured the hegemony of Great Britain at world level during the 19th and the mid-20th centuries. The conquest of world trade by the USA in the second half of the 20th century, and until to date, it has been achieved by fully implementing the policy of “Open Doors” in the sea, achieving their maritime and commercial leadership at a global level.
In this policy of “Open Door” the economies of the countries and mainly the world consumer markets were considered as the basis for the sale and export of the Western products and investments (mainly of USA and not only).
This photo by Author: Abraham Storck licensed public domain
Source: https://commons.wikimedia.org/wiki/File:Storck_Harbour_scene.jpg
Only the full implementation of the “Open Door” policy could have secured such markets in the West products, services and investments equally, in which policy would always prevail the principles of free trade.
by Thanos S. Chonthrogiannis-https://www.liberalglobe.com
The current implementation of Open Doors policy worldwide
Over the past three decades (commencing from the starts of 90’) there has been full liberalization of the movement of capital globally (investments and not only).
The free movement of capital globally was mainly based on the following policies:
1) The laissez-faire,
2) The policy of the “Open Door”
3) The prevalence of free market principles,
and was this policy of free capital movement at world level that established the liberal democracy as the only political system of governance in the world that promotes the well-being of the peoples and consist the most important world heritage of the Western civilization to the humanity.
The full implementation of the “Open Door” policy is the only one that guarantees the full and unhindered liberalization of world trade. For this reason, this policy will must always be embedded within an international framework for capital.
The depositors of this international framework must be international institutions like GATT (General Agreement on Tariffs and Trade), NAFTA (North American Free Trade Agreement), TTIP (Transatlantic Trade and Investment Partnership), JEFTA (Japan-EU Free Trade Agreement), IMF (International Monetary Fund), WB (World Bank), TPP (Trans-Pacific Partnership), UN (United Nations) etc.
Only within this framework will exist freedom and security in the movement of capital globally. Only within such a framework-net of such types of international institutions (current and future), the constitution of Liberal Democracy-as governance system-can be adopted globally from the total of the countries and the economies of the planet against any type of autocratic regimes which govern capitalistic economies.
Guarantying globally at the same time as much the specific economic order of things which is based in the full liberalism of trade as the growth-well being of economies and countries within peaceful frames.
The enemies of trade liberalization in the world
The “enemies” of the implementation of “Open Door” policy and the liberalism of trade are the any kind physical obstacles-dikes which a country-economy can impose as much in the imports of products, services and capitals equally (tariffs, duties, high taxation in the foreign capitals in relation with the lower taxation of internal capitals etc.) as in the free access of businesses in the world consumer markets.
The announcement of the President of USA Mr. Donald Trump (March 2018) for the implementation of tariffs-in a first phase-in the US imports of steel (25%) and aluminum (10%) correspondingly as a first measure of protectionism of the internal steel and aluminum US market felt like a thunderbolt in the blue sky as the policymaker of the “Open Door” policy globally in at least the last three decades is the stronghold of Liberal Democracy, the USA.
In addition, on 17th September 2018, the US imposed customs duties on imports of Chinese products of €200bn and for these duties to increase by 1st January 2019 to 25%, surpassing a total of €517bn per year and naturally exceeding the total of the annual value of Chinese imports of the previous year.
Given the expected retaliation (equivalent value measures) that will be imposed by the other directly and indirectly affected countries and economies to a corresponding economic size US products in their countries, all together these barriers- put in danger the existent global security frame for the free movement of capital globally.
By propelling proportionately the affected countries with the dynamics of self-sufficiency and state control in each of these countries, on expense not only in the free movement of capital but also in the system of free entrepreneurship that prevails mainly in the last decades in the West world and not only.
If, these barriers (tariffs, etc.) prevail as to the full access of products, services and investments in foreign markets and world consumer markets, the system of free entrepreneurship will start to be in danger.
The world consumer markets are necessary for the businesses and generally for the sector of production and labor of Western world and not only, given that the goal of full employment and work for citizens, can not be achieved without the existence of open consumer markets.
With the prevalence of all these artificial barriers in the imports of products and more generally in the access of businesses to the world consumer markets, the form of free trade will cease to exist as we know it in practice and behind the title of free trade will be hidden all kinds of state subsidies to the businesses of each country.
Next, these countries either alone or together will turn to the state and in particular, some form of governmental directed economic system with goal the abolition of the free entrepreneurship system which consists the foundation stone of Liberal Democracy and economy equally-in favor of authoritarian and state-directed (capitalistic) economies.
The consequences of a global trade war
The imposition of all sorts of duties, tariffs etc. on products which are sold in a market, rise barriers, creates mistrusts and hidden alliances-lyrics between countries, leading in trade wars but also in monetary wars.
This happens because the trade wars which their severity, duration and their results cannot be originally projected, leading to division countries and people.
Since these trade wars have long been held, together with the emergence of geopolitical developments, they can create divisions and gaps in the Western world that advocates liberal democracy as governmental system that will then be difficult to heal.
A trade war between USA & EU, in connection with developments like Brexit (I wish the people in UK to be reasoned and not implemented the Brexit) will create unpredictable geopolitical developments and new alliances in controlling world trade.
If for example the EU (European Union) approaches Russia (where Russia although is a capitalistic economy but not liberal as are counted the economies of the West countries) and succeed next to control the world trade with China (where although the communistic China enjoys the benefits of free trade through its own capitalist model without being liberal) will create together an important trade surplus on expense of USA.
Next USA will have to find ways to absorb it, skyrocketing in the future their current gigantic borrowing needs for the financing of their trade deficit.
On the other hand, the simultaneous acceptance and recognition of the euro currency (€) from both of Russia and China as the main world reserve currency of the planet, will create tremendous inflationary pressures in the US economy, since the majority of the planet will try to exchange the ($) USA with the euro (€), with the ECB (European Central Bank) to print continuously euros to cover the global demand and the FED (Federal Reserve System) to buy continuously ($) US to cover the global supply.
Given that the US tariffs imposed on the affected countries will react by imposing equivalent value tariffs on US products which then they will drastically limit the expansion and worldwide establishment of US capital (and not only US capital but also the rest of the Western countries capital and not only).
It is the US capital that has learned to move rapidly worldwide by opening up local markets and transforming any closed markets into fully consumer markets by laying the foundations for free trade.
In this case, the imposed duties will be a barrier and a limitation for US capital (it will seem like trying to close a bull in a canary cage) which then US capital will react within the US, choosing to push for political and administrative changes in the US political landscape to remove all tariffs imposed by the US in other countries.
On the other hand, if these tariffs remain for a long time, inflationary pressures in the US will begin to create discomfort for US citizens with a possible change in the US political map.
The fact that these US duties on imported steel and aluminum were initially excluded the Canada and Mexico but not the EU and Japan, shows that the USA are adopting a variation of the system of this imperial preference of Great Britain. In this imperial preference system of Great Britain, made the Great Britain to chose the mutual reduction or increase or the decision of not to pay customs between the Great Britain and the countries it held as colonies.
We hope that the logic will prevail in favor of the overall good and that the announcements of tariffs will recall back from the country-lighthouse and stronghold of Liberal democracy, the USA, avoiding a blow to the existing global economic order which is based on free trade.
There are other types of policies that need to be implemented to reduce the US trade deficit and, of course, the corresponding reductions in the gigantic borrowing for the funding of this.
Thanos S. Chonthrogiannis
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