October 12, 2023

Turns out, the ideology propping-up the WTO does not hold when American and European capital interest's are not winning.

The USA and EU are about to put up trade barriers and tariffs specifically targeting China (and other "non-market" economies) when it comes to chips/semiconductors and steel.

Citing dubious claims of China manipulating its currency and deliberately causing trade "imbalances", the Western duo is looking to shift investment of capital to their countries even though it is has been very expensive to make semiconductors and steel there. The way this is being doing is two-fold:

• subsidies
• directed trade barriers

This is "friendshoring". That is, we exclude our non-friends from free trade agreements.

Contrary to what trade narratives have been over the previous 40 years, this is not really a new thing. Trade barriers and subsidies flow into agriculture, defence industries, auto sectors, and transit supports and have done so through the "neoliberal" era of free trade.

The difference now is that the narrative that free trade leads to liberal capitalism has fallen flat on its face. I am not really convinced that anyone really believed it—except maybe Canadian politicians—and the clear and obvious program of the WTO was to support American capital interest and it just happened that they benefited at the time with more USA military-imposed "free" trade.

The justification was always David Ricardo's supposed thesis on balanced trade through the magic of the markets. However, as has been discussed here before, that's not what Ricardo said and the Austrian school of economics that pushed this line has been making-up their analysis since the early 1900s.

So, why are we paying attention to this now?

It has to do with how the world economic narratives are changing and how Canada's governing Mandarins seems to be unable to shift with the times.

The left must be much bolder than it has been proposing and demanding an industrial strategy that meets the needs of Canadians. This is not the American style of shoveling money at the problem, we cannot do that in this country as the Canadian Dollar is not a global currency.

We can invest in solving our unique problems through infrastructure and productive capacity investments. The argument for endemic steel production seems easy to make, but even on semiconductors, Canada must respond with our own production and research.

Semiconductors are in almost everything that we consume these days. If we are going to produce any of those things here, we need to attempt to produce all the components that go into them. It is not about needing to right now, it is about the outcomes and skilled individuals that result from trying to develop and build these technologies.

Part of the global system of supply chains is about security of the supply.

It is incredible how trusting such as system is and the limitations of it exposed in a recent fake parts for airplane engines scandal.

To date, Safran and GE have uncovered more than 90 other certificates that had similarly been falsified. Bogus parts have been found on 126 engines, and all are linked to the same parts distributor in London: AOG Technics Ltd., a little-known outfit started eight years ago by a young entrepreneur named Jose Alejandro Zamora Yrala. (BN)

CFM56 engines are the ones affected and they are made in France and the USA.

The parts have a veneer of sophisticated tracking. But, in the end, the parts distribution industry is self-regulated and highly competitive on price. It is just like most supply chain systems around the world for most goods. It is how slave made goods end up in the supply chain, it is how forced labour continues to operate, all with the support of global capital that is too eager to turn a blind eye in search for higher profits.

The farther away the subcontractor for production of parts, the harder it is to see the violations in the production process. Which suits most businesses just fine.

There has been a recent push in the EU and America to secure some supply chains from forced labour. But, not much is being done to secure those distribution systems from falsified documentation on production.

In Canada, there is a consultation going on about supply chains and forced labour and human trafficking (as they related industries). However, Canada has a long history of not enforcing even the current regulations on this. You essentially have to do all the work for the Canadian agencies proving that there has been some forced labour in a specific good landing on our shores to get any regulatory enforcement. Even then, it usually does not happen.

The current fake engine parts issue has only really come into focus because some investigative journalism focusing on something that keeps planes from falling out of the sky and killing people. However, it is clear that the ease at which this happened even in a supposed "highly regulated" industry means that it is likely happening everywhere.

There are some solutions to this, but we have allowed the system to create a massive network of fraud through the completely unregulated "globalization" of supply chains. All manufacturing has stories about how this doesn't work and I am reminded of the silliness faced by the TTC and the streetcars where parts were sourced from around the world to drive down costs only for the end product to be so expensive that it contributed to the near bankruptcy and then selling of Bombardier.

We can do better, but it takes a regulated supply chain industry along with expectations that production can happen close to assembly.

The whiplash being experienced by the media over the situation in Israel and Gaza is one of self-creation. A situation by a media run by people who have ignored the real situation on the ground there for years.

The story is the same and we have all seen it happen over and over again.

An horrific thing happens, the media respond in a vacuum of their own creation, pretending that there is only the current horrendous actions of the previous week to focus on. Then, as the whole reality of the situation reasserts itself—the shock to find that there are innocent civilians everywhere in a war—does the panic set in of realizing they are part of setting a narrative supporting further atrocities to take place.

This is part of the cycle of violence. It is all too human, but also all too preventable.

We expect over-reaction and visceral signs of grief to overwhelm individuals and communities facing those worst parts of humanity, but we should expect more from our institutions. Our institutions are supposed to be somewhat mechanistic and uncaring in their response, guided by history and informed by past practice of what works to stop the worst instincts from taking hold. The reason for this is that institutions have existed through the history that has lead to the current crisis.

This morning's more sensible liberal media institutions are starting to see what is happening, what they have helped bring by fanning the flames of reaction. Editorials even from centrists who only yesterday were part of the call for "war" now calling for restraint. But, it is too late.

Yes, horrific acts must be condemned, for that is what the word "condemnation" is for. But, we then we must condemn all horrific actions that are planned and announced "in response". There should be no seeking moral equivalency from our institutions in supporting blind, rage-driven calls for vengeance. Laws and constitutions set in peace time are the ones we must follow in times of war.

The alternative is chaos and a cycle of violence all too familiar to those who live and have lived these histories.

The world is long down the road of inhuman chaos and suffering. And, our institutions and leaders are cheering it on as if it is a race to get to the end.

These institutions who make things worse must too be condemned.