Free Trade Becomes Less Free

Free trade has been the mantra of all major economies for many years. Of course many economies protect their markets subtly, and free trade does not stop governments from adjusting things like environmental and tax laws in order to favour their own businesses, but nevertheless there is less protection of domestic industries now than there has ever been.

Matters are now becoming more complicated and less free. For many years the USA has imposed restrictions, silly and unjustified restrictions, on trade with Cuba. I have always felt that if the USA believed that the government of Cuba was injurious to its population the way to overcome this is not by imposing sanctions but by encouraging trade, which will bring prosperity to Cuba and which in turn would lead to a more democratic and freer nation. The sanctions and embargoes against Cuba serve to isolate it and strengthen its government.

The latest round of sanctions are not being applied to a small island economy like Cuba but are being applied to a large economy – that of Russia. There seems little evidence that Russia has done more than to support people in the Ukraine who want to be closer to Russia, but nevertheless the Western democracies have decided that this is the punishment that Russia should receive. Those that have less to lose by imposing sanctions on Russia are nations that do not do much trade with Russia – such as the United States. Those that have the most to lose are the nations of the European Union, yet nevertheless they support the United States, like good dogs support their master and obey their masters’ voices.

Of course, Russia will want to prevent sanctions from damaging its economy and show those who impose sanctions that two can play at that game. Russia has placed an import embargo on agricultural goods from nations that have imposed sanctions on Russia over the Ukraine crisis. This ban will gravely affect many nations that need to import Russian agricultural produce and raw materials. Finland, Germany, Slovakia, Poland and Estonia will lose valuable markets for their produce and will lose a great deal of money. Russia will look to import agricultural produce from countries further afield, such as Brazil and Argentina, and will increase its influence in those countries and win more friends there, as it buys their produce.

I do not expect the United States to compensate those EU nations that will lose out as a result of the Russian ban.

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