World Trade


An easy-to-understand account of how world trade works.



Despite what we are told by Western governments (if the issue is discussed at all), world trade is aranged in such a way as to benefit the richer countries.

The richer countries (also called the developed countries or Western countries) are mainly located in North America and Europe but also include Australia and Japan. These countries have the highest standards of living (at least for some of the population) and have strong currencies.

The poorer countries (also called the developing countries or third world countries) are essentially treated as sources of raw materials. These materials are sold cheaply to the richer countries where they are processed into goods that are sold around the world (including back to the poorer countries which supplied the materials). Poorer countries are often unable to process their own raw materials into goods. If they do and attempt to sell these products, the richer countries put charges (called tariffs) onto these goods to make them more expensive.

Some processing of raw materials does occur in the poorer countries. But this is usually controlled by companies owned by the richer countries. The reason they locate their processing plants in poorer countries is to benefit from cheap labour, lax safety laws, and a lenient tax regime. Some examples below.

Year Details
1996 UK imported $12 million worth of sporting goods from India where they are manufactured by bonded child labour.
1996 USA leisure and sporting companies use cheap labour and lax labour laws in Haiti.

People in the poorer countries struggle to live on the megre profits made by selling their raw materials. They also pay the price in terms of pollution and bad work conditions. People in the richer countries pay far more than they should for goods. The beneficiaries of this system are the large companies owned by the richer countries and the people that run them.

This essay attempts to illustrate these points including a look at the language used to obscure what is actually happening.

These are some of the euphamisms that are used to obscure what is actually happening in the world of economics:

Free Trade should be the exchange of goods for money between equal partners in a fair market place. The world, however, is divided into the richer countries (that control the trade of the world and make the rules) and the poorer countries that trade on terms that they have no, or little, say in. Most trade rules are set up under the control of the large multinational companies (which are owned by more than one country) or transnational companies (that trade in many countries).

There are many methods of controlling trade and these are described in turn.

Tariffs and Subsides

Tariffs are charges on processed goods. Western countries use these to keep out products from the poorer countries. Poorer countries are thus excluded from trading on equal terms. The only course open to many of these countries is to sell their raw materials to the richer countries.

If poorer countries impose tariffs on goods from the West, they are demonised. They are often forced to remove their tariffs by threats of sanctions (boycotts) or worse. The world trade rules as enforced by international bodies (controlled by the richer countries) insist on poorer countries removing their tariffs.

A Subsidy is money given by a population to large companies to help them stay in business or produce goods at a low cost. Subsidies are given names to obscure what they really are:

Subsidies make the cost of goods artificially low. In many cases the cost becomes lower than the cost to produce the same goods in the poorer countries. Inefficient produces in the rich countries are paid to rpoduce goods that could be produced more efficiently in the poorer countries.

Surplusses of these goods can then be used politically. They are often sold cheaply to the poorer countries. This has the effect of putting the local produces or growers of these goods out of business. This is called dumping.

A poor country could resist dumping either by putting on a tarriff or subsidising its own industry. If they attempt this, however, they are accused by the West of having closed markets or hindering free trade. Poor countries have been forced by the West to remove their own tariffs and subsidies by threats of sanctions or suspension of aid.

No Western country is ever accused of "hindering free trade" in the Western media even though they impose tariffs on goods from poorer countries and subsidise their own industries.

Examples of these unfair trading practices are shown below.

Year Country Event Perpetrator Reason
1950 Colombia Dumping subsidised food. USATo destroy the country's agricultural industry. The country would become dependent on growing cash crops (to be sold to the USA).
1998 South Korea Dumping subsidised food. USATo destroy the country's agricultural industry and make it dependent on imported food (from the USA).
2000 Africa
Threats of economic sanctions. USA
To force countries to import (and advertise) USA and UK tobacco products. At the same time the UK and USA are running programs to stop their own citizens smoking.
2002 China Computer companies using poorer countries with lax pollution laws to dispose of waste products. USAUSA wants to rid itself of waste.
2002 West Africa High technology fishing. Europe
Access to fish and seafood.
2002 Europe Trade tariffs. USAProtect its own markets.
2002 Uganda Unfair trade. USA
Large transnational companies make huge profits from coffee.
2003 Africa Effects of subsidies and tariffs on several countries in Africa. Rich Countries Richer countries benefitting from unfair trade.
2003 Poor Countries Effects of subsidies and tariffs on world trade. Rich Countries Richer countries benefitting from unfair trade.

Coercive Economic Diplomacy

The richer and more powerful countries use Coercive Economic Diplomacy to force weaker and poorer countries to play by trade rules that do not suit them. The main tools used are Sanctions, Economic Sabotage and Dependent Aid.

Sanctions are essentially a boycott of a country so that it cannot trade. Sanctions can be legally approved by the United Nations in cases where a rogue country is defying the world community.

More often, sanctions are imposed unilaterally by the richer countries on poorer nations and states. These sanctions are used for political or economic coersion. If sanctions do not work, some nations use economic sabotage (actions that affect the country's produce, infrastructure or economy - sometimes very violently) or offers of aid dependent on compliance (better known as bribes) to achieve their ends.

Examples can be seen from the table below.

Year Country Event Perpetrator Reason
1956 Egypt Economic sanctions and invasion. UK
Egypt under Adbul Nasser had nationalised (taken ownership of) the Suez Canal. The canal had been built by Western powers in Egypt while the country was a colony.
1959 Cuba Sanctions against sugar. USAPrevious pro-USA dictatorship of Fulgencio Batista had been removed by a popular uprising lead by Fidel Castro. The USA continues its boycott of Cuba (to 2006), encouraging or threatening other nations to comply. A 1993 report describes the economic effects.
1960 Cuba Trade embargo. Threats to other countries trading with Cuba. USAUSA wanted a pro-West government and economic influence in Cuba.
1962 Cuba Undercover operations against sugar and turkeys. Industrial sabotage. USAUSA wanted a pro-West government and economic influence in Cuba.
1963 Indonesia Suspension of aid. UKGovernment controlled access of UK companies to the country.
1971 Cuba Sabotage of pig industry. USAUSA wanted a pro-West government and economic influence in Cuba.
1974 Vietnam Trade embargo. USATo weaken the country.
1975 Vietnam Suspension of aid by World Bank. $70 million assets frozen. USAVietnam had defeated the USA. Vietnam is eventually forced to repay South Vietnam's debt (incurred while it was a USA puppet).
1979 Vietnam Suspention of aid for children by European Community. Continuation of trade boycott. UK
Vietnam had defeated the USA.
1980 Cambodia Economic aid to the Khmer Rouge. USAThis brutal ex-government opposed the new government in Cambodia that was supported by Vietnam.
1981 Tanzania Campaign to force the country to change its economic policies. USAUSA companies wanted access to raw materials and markets of the country.
1981 Mozambique
Economic sabotage. South AfricaSouth Africa wanted to crush independence and democracy movements in the region. The USA and UK ignore UN approved sanctions against South Africa.
1981 Laos
Denial of aid to help with seed storage and bee keeping. USAThe USA disapproved of the three governments.
1982 Mozambique Economic sabotage. Destruction of oil pipelines. South AfricaSouth Africa wanted to crush independence and democracy movements in the region. The USA and UK ignore UN approved sanctions against South Africa and secretly trade. The USA secures a $1,1000 million IMF loan for South Africa.
1983 Nicaragua Economic sabotage. Destruction of agricultural collectives. Mining of ports. Blocking of previously agreed loans from the World Bank. USAA popular uprising had removed the previous government, a USA backed dictatorship.
1984 Mozambique Holding back of food aid during a famine. USAThe USA wanted the country to sign a treaty with South Africa.
1985 New Zealand Withdrawal of concessions for military equipment. USANew Zealand had supported the declaration of the Pacific Ocean as a Nuclear Free Zone.
1986 Nicaragua Refusal to pay $17 million when ordered by the World Court. USAThe USA had been found guilty in the World Court for economic sabotage.
1988 Iran Bombing of oil facilities; shooting down commercial airliner. USAUSA companies had been expelled from Iran. These companies had been allowed into Iran by the previous, unelected and USA backed dictatorship.
1989 Cambodia Arms and training to Khmer Rouge. USA
Cambodia's government supported by Vietnam.
1990 Nicaragua Promise of aid and an end to the (USA-backed) insurgency if the presidential candidate preferred by the USA wins election. $9 million in election funds for preferred party. USATo gain a favourable environment for USA companies.
1991 Iraq Severe sanctions imposed until leadership acceptible to the West is in place. USA
Former favourite of the USA and UK, Saddam Hussein is out of favour after invading Kuwait. The sanctions would kill 1000 children a month for the next 12 years.
1992 Albania Albanians are promised aid if the Communist Party does not win the elections it had won previously. USATo gain a favourable environment for USA companies.
1992 Angola Insurgents financed and armed. USAGovernment refuses to allow access to country's oil and diamonds.
1994 Palestinian Territories Economic blockade. IsraelTo crush resistance to occupation.
1994 Jordan Promise of aid if Jordan will deny the right of Palestinians to return to lands they were expelled from by Israel. USATo protect the existance of Israel.
1994 Argentina $10 million bribe to stop the investigation into the bombing of a Jewish centre in Buenos Aires. IranUnknown.
1994 Burma USA oil company (Unocal) pays ruling military for its security. USAThe military forceably relocate people living in the path of a pipeline being constructed.
1995 Mexico Aid to suppress popular revolt by indigenous people. USAUSA companies want land inhabited by indigenous people for cash crops and access to oil and minerals.
1995 Iran Oil and trade embargo imposed. USAIran's government does not allow USA companies access to its oil.
1996 Iraq Millions of dollars to the Iraqi National Accord, a group that uses terror tactics to distabilase the government of Saddam Hussein. USAUSA would like a compliant governmnet for guaranteed access to oil.
1996 Cuba Agricultural sabotage. USAUSA wanted a pro-West government and economic influence in Cuba.
1997 Iraq The United Nations (under USA and UK pressure) continue sanctions that have killed over 1,200,000 people. UK
Control of oil.
1998 Sudan Missile attack on a pharmaceutical factory. USA"An error" according to USA.
1998 World Heath Organisation Threatened with withdrawal of funding if the organisation examines the effects of trade conditions on world health. USAThe USA wants to continues its business practices regardless of their human effects.
1999 Cuba For the eighth year running, the United Nations fails to pass a resolution condemning the USA economic embargo. USACuba is outside the USA economic sphere.
2001 Turkey
Aid, trade and arms sales in return for support of USA attack on Afghanistan. USATo install a pro-West government in Afghanistan that will facilitate access to Central Asian oil.
2002 Palestine Destruction of economic facilities supplied by Europe. IsraelTo break resistance to the Israeli occupation.
2002 China Airline company places bugs in government minister's air craft. USAUnknown.
2002 Angola Former USA backed rebel, Jonas Savimbi, killed once concessions received. USAThe USA had used Savimbi to destabilise Angola until they received concessions on the country's oil and diamonds.
2002 Lebanon Threats to attack a water pipleine. IsraelUnknown.
2003 Turkey
Economic threats and inducements in return for supporting an invasion of Iraq. USAAccess to miltary bases and oil once a pro-West regime is installed.
2003 Palestine Destruction of 62 shops and a vegetable market. IsraelTo break resistance to the Israeli occupation.
2003 78 Countries Threats to stop aid, trade and military support unless the USA is excempt from being prosecuted under the International Criminal Court. USAUSA does not want international laws to apply to itself.
2003 171 Countries Excemption forced from a treaty to curtail tobacco advertising. USAUSA wants to sell tobacco products to other countries as anti-smoking laws affect profits in the USA.
2003 Europe Attempt to force testing of potentially toxic chemicals to be abandoned. USAUSA wants to protect its exports from from regulations.
2004 Syria Economic sanctions. USAUSA disagrees with Syria's support of Palestinians.
2006 Palestine Economic sanctions. USA
Palestinians had elected a government not to the West's liking.

International Bodies, Front Organisations

A number of international bodies have been set up to regulate trade and finance projects around the world. These bodies are controlled by the richer countries. Their main function seems to be to over-ride democratic control of trade. Some examples of these activities are below.

Year Body Details
1995 The World Trade Organisation Founded by 134 countries.
1997 International Monetary Fund Privatisation of schools.
1998 The World Trade Organisation Canada forced to accept a dangerous petrol additive.
1998 The World Trade Organisation Activities to help USA companies in India, Bangladesh, South Africa and Europe.
1999 The World Trade Organisation Activities to help USA banana companies in Europe.
1999 International Monetary Fund Effects on the environment and AIDS in Brazil.
2001 The World Trade Organisation Attempts to over-ride local laws of Colombia, Brunei, Pakistan, Brazil, Venezuela, UK and France.
2001 International Monetary Fund Countries are forced to remove trade barriers, sell national assets to foreign investors, slash social spending.

Large transnational companies set up front organisations to further their interests and discredit information about unfair trade, exploitation of workers (including children in some countries), excessive pollution and other human rights violations. An example is The Global Climate Coalition. In 1996 they campaigned to discredit global warming scientists.

Support for Authoritarian Governments

Authoritarian governments (which are often unelected or military dictatorships) usually make trade agreements with the West. These agreements suit the West and enrich the government. The oppressed and unrepresented popuations gain very little and are used as sources of cheap labour when laws that protect them are removed.

Unelected governments are loaned money by Western banks for projects that often do not benefit the population. Most of the money disappears into secret bank accounts. Even if the country later becomes democratic, the people of these countries still have to repay the debt even though it was taken out without their consent by an unrepresentitive government.

The West has often removed governments that were not helpful to Western business interests. These were usually replaced with more compliant regimes, many with dreadful human rights records. Economically compliant regimes are normally referred to by many names that obscure their relationship with the West or their own people:

Non-compliant regimes are demonised.

The West also has a long history of supporting repressive regimes if its business interests are served.

Examples are shown in the table below.

Year Country Event Perpetrators Reasons / Benefits
1953 Iran Replacement of democratic leader, Mohammed Mossadeq with dictatoirship of the Shah, Reza Pahlavi. USA
The new regime gave access to oil for Anglo-American companies. The USA trained the Iranian secret police to oppress dissidents.
1953 British Guyana Removal of democratic leader, Cheddi Jagan and preventing him from taking power after being re-elected. UK
UK companies gained access to sugar and bauxite (an ore of aluminium).
1954 Guatemala Removal of democratic leader, Juan José Arévalo by a military coup. USAUSA companies gained access to banana plantations, cheap labour and lax labour laws. The USA financed the military which brutally crushed all dissent and union activity.
1954 Paraguay Removal of the Ache people from their land under a newly established dictatorship. USA
Access forests and mines.
1960 Congo Assassination of popular leader, Patrice Lumumba and the placement of brutal dictator, Moise Tshombe, in his place. Belgium
Western companies gained access to minerals like uranium. The exesses of the dictator were used as propaganda against black rule in Africa.
1960 Iraq Attempted assassination of Abdul Karim Kassem. Destabilisation of country by funding minority Kurdish population. USAKarim had helped found OPEC to control oil prices and production for the benefit of the producers.
1963 Dominican Republic Military intervention to protect newly installed military government. USATo protect USA business interests and set up an economic system suitable for the USA. A 1989 report describes the economic results.
1963 Honduras Aid to the military after they take power in a coup. USAUSA companies gained access to raw materials and plantations.
1963 Iraq Overthrow and execution of Abdul Karim Kassem by the Ba'ath Party. USA
Karim had wanted to nationalise Iraq's oil whicxh was controlled by USA and UK companies.
1964 Brazil Economic and political support for new military government. USAThe previous government had passed laws helping workers and limiting the profits that could be taken out of Brazil by trans-national companies. The new government reversed these changes. A 1989 report describes the economic results.
1965 Dominican Republic Military intervention to prevent previously elected Juan Bosch from taking power and keep the military in power. USATo protect USA business interests.
1965 Indonesia Political and undercover support for coup. USA
To gain UK and USA access to the country's resources.
1965 Congo (Zaire) Support for Mobutu Sese Seko who had taken power in a coup. USATo gain USA access to cobalt, copper, and diamonds.
1966 Central Africa Political and economic support for Bokassa who had come to power in a military coup. France
South Africa
To keep Western concessions on uranium mining.
1966 Ghana Removal of Kwame Nkrumah from power. USANkrumah had wanted to lessen his country's economic and political dependece on the West.
1969 West Papua Annexation by Indonesia. Indonesia
The West wanted control by a friendly government of the copper mining industry which was worth $1,400 million and partly owned by a UK company.
1970 Bolivia Military coup to remove Juan Jose Torres. USATorres had nationalised oil and the tin mines.
1973 Chile Military coup to remove Salvador Allende. USAUSA did not like socialist economic policies of the elected government. The USA had attempted to sabotage Allende's election campaign in 1964 (successfully) and 1970 (unsuccessfully). A 1989 report describes the economic results.
1975 East Timor Invasion by Indonesia. Australia
The West wanted access to oil in the region and preferred a friendly dictator ruling the area rather than an independent state.
1976 Jamaica Attempted assassination of Michael Manley. USAManley had established ties with Cuba and wanted more control of the island's aluminium.
1980 Liberia Economic and political support for Samuel Doe who took power in a military coup. USAUSA companies gain access to rubber.
1983 Grenada Removal of Maurice Bishop and replacing him with a pro-West government. USAThe island became a tax and off-shore banking haven.
1983 Guatemala Loans by the World Bank to build the Chixoy Dam even though the government (which is unelected) is forceably removing and killing indigenous people who live on the site of the dam. World BankThis increases the country's debt.
1988 Iraq Secretly selling machine parts and propellant to oppressive dictatorship that had just used poison gas on its Kurdish population. UKIraq was fighting Iran with Western backing. The USA also increased its trade with the regime.
1988 Burma Oil companies involved with the military government to remove opposition to oil exploration and to procure cheap labour. USA
For access to the country's oil.
1988 Colombia Subsidised arms sales to a brutal regime that crushes opponents and human rights activists. USAFor access to the country's oil and coffee.
1989 El Salvador $1 million per day in aid to a military regime. USAFor access to the country's coffee.
1989 China $300 million business contracts approved with regime that had massacred thousands of students at Tienanmen Sqaure. USAFor access to the country's huge markets.
1993 Nigeria Support for military coup. UKRegime promises to honour oil concessions to UK companies.
1994 Haiti Military action to keep elected leader, Jean-Bertrand Aristide, from taking power. USATo gain access to agricultural land and a dispossessed population that will provide cheap labour for USA companies.
1994 Nigeria Providing wealth to a military regime by processing its oil. UK
Regime facilitates extraction of oil by oppressing the inhabitants of the Ogoni region.
1995 Afghanistan Offering the authoritarian Taliban 15%. on all oil and gas transported through a proposed pipeleine from Central Asia to Pakistan. USASince the collapse of the Soviet Union, the USA has wanted access to the oil and gas reserves in Central Asia.
1996 Turkey Supply of weapons used in oppression of the Kurdish population. NATOTurkey has a pro-West government and houses USA military bases. Arms providers are USA, Germany, Italy, France, Netherlands, UK, Spain, Canada and Belgium
1996 Burma Support for tourist industry. UKMilitary government uses slave labour to build tourist infrastructure for luxury tours run by UK companies.
1996 East Timor Trade treaty with Indonesia, the occupying power that had killed 200,000 people. AustraliaTo exploit oil and fishing. Western countries continue to arm Indonesia during this period.
1997 Indonesia Trading and arming a brutal dictatorship. Companies collude with military to surpress dissent. USA
To build a paper mill and access to oil and minerals.
1997 Colombia
South Africa
Trading with brutal dictatorship. Companies collude with military to surpress dissent. UKAccess to oil, minerals.
1998 Afghanistan Financing and supporting theocratic government. USA
Saudi Arabia
The West hopes to get an oil pipeline across the country to link Central Asia with the Persian Gulf.
1998 Turkey Military aid to a country that oppresses its Kurdish population. USAThe USA has military bases in (Kurdish) eastern Turkey.
1998 Burma Trading with a brutal military regime that uses slave labour. France
For the region's oil and minerals.
1999 East Timor Military aid to Indonesia while it continues oppressing East Timor. UKUK has oil interests.
1999 Guatemala Military aid to brutal regime that keeps workers in virtual slavery. USAUSA owned coffee plantations.
2000 Kyrgyzstan Finance to a country that oppresses oponents. USATo gain political influence in Central Asia and its oil.
2000 Turkey Selling arms which are used to oppress the Kurdish population. UKTo maintain arms industry.
2001 Afghanistan Funding opposing warlords, each with dreadful human rights records. Pakistan
To gain influence in a strategic region.
2001 Colombia Funding the military government which oppresses its own people. USAProtecting USA oil interests.
2001 Israel / Palestine $1,800 million annually in aid to a country that has been occupying Palestinian land since 1967. USASupport for an ally in the Middle East.
2001 Sudan Oil companies helping military to depopulate areas wanted for oil exploration. Canada
Access to the country's oil.
2001 Indonesia
Suppying arms to regimes with bad human rights records. UKSupport for arms industry.
2001 Chad Finance for a pipeline to a government that had won fraudulent elections. USA
Access to the country's oil.
2001 Burma
Oil and mining activities that adversly affect local people and the environment. Canada
World Bank
Access to the countries' oil and minerals.
2002 Botswana Diamond mining on Bushman land after they were encoraged to leave by the government cutting off their water supply. South Africa
Access to the country's diamonds.
2002 Brazil
Companies trading with countries that violate human rights. USA
Access to markets and raw materials.
2002 Africa Effects of unfair trade on Africa. Rich CountriesAccess to markets and raw materials.
2002 Turkey
Banks finance dam that will displace people and affect water supplies. UK
2002 Africa
Banks finance various projects that will adversly affect local people. UKBanking.
2002 Burma Tobacco factory (partly owned by ruling Burmese military) pays less than poverty wages. UK
Tobacco processing.
2002 Sudan Depopulation in areas being explored for oil. UK
2002 Israel
Sri Lanka
Saudi Arabia
Selling arms to undemocratic, authoritarian or oppressive regimes. UKArms trade.
2003 Algeria Selling arms and trading with an undemocratic oppressive regime. USA
2003 Congo Selling arms and financing countries with troops in the Congo war. UKTrade and arms sales to Rwanda, Uganda, Angola, Namibia and Burundi.
2003 Indonesia Selling arms to a country that is brutally repressing the Aceh region. UKThe arms trade.
2004 Haiti Replacement of democratically elected leader (Jean-Bertrand Aristide) who would not privatise all the country's resources. USA
Mainly plantations and cheap labour.

USA, UK and French oil companies have long traded with unelected or authoritarian governments, like Saudi Arabia (an absolute monarchy), Iran (under the Shah between 1953 and 1979), Iraq (before 1989). Oil is sold at a cheap rate to run the economies of the richer countries. When the oil producing countries attempted to set up a cartel to get a better price, this was opposed by the Western countries, often with violence.

Western Banks invested heavilly in apartheid South Africa (before 1991) and loaned money to military dictatorships in South America. These loans are expected to be repaid by the populations of these countries who had no say in the taking out of the loans in the first place.

Aid And Debt

Aid is often described in the Western media as financial help given by richer countries to poorer countries.

This is rarely true when governments are involved.

Most Western aid comes from "government money". This is really money from the people of the Western country involved. This money is used to allow a poorer country to buy goods or a service that are provided by a company from a Western country. Often it is a condition of the aid that the doner country can nominate the company that provides the goods or service.

The majority of the aid money often goes from a government bank account to the company's bank account without going anywhere the country receiving the aid. There will be some benefit (called a commission or a consultancy fee) to the company officials who have brokered the deal which may include politicians from the two countries.

The people of the Western country pay the monetary cost of the "aid". The majority of the people of the poorer country get very little. These types of government aid projects are for dams, military goods, airports and other high profile items. Much aid has a political purpose as it is to countries with a strategic value rather than the poorest countries that might need aid.

Many poorer countries have amassed an enormous debt which they are struggling to pay. Many are even struggling to pay the interest on the debt. Social services and infrastructure are sacrificed to service the debt.

In a large number of cases, it is unelected governments that were loaned money by Western banks. Often the money is used for projects that fail to benefit the population. Much of the money disappears into secret bank accounts, enriching members of the government and their families. Even if the country later becomes democratic, the people of these countries still have to repay the debt even though it was taken out without their consent by an unrepresentitive government.

Year Country Notes
1989 Poor Countries 11 million children die every year from easily preventable deseases.
1994 Poor Countries 500,000 children die every year due to debt repayments.
1994 Malaysia A UK company (Balfour Beatty) to build a dam at Pergau in return for Malaysia buying arms worth $1,000 million from UK companies.
1996 Indonesia
All countries that recieve a large amount of UK aid even though they are not the poorest in their regions. They are also important purchasers of UK arms.

© 2004 KryssTal

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