Table Of ContentTHE POLITICS
OF TRADE
Also by Douglas Evans
DESTINY OR DELUSION: BRITAIN AND THE COMMON
MARKET (editor)
BRITAIN IN THE EEC (editor)
THE POLITICS
OF TRADE
THE EVOLUTION OF THE
SUPERBLOC
Douglas Evans
Palgrave Macmillan
©Douglas Evans 1974
Softcover reprint of the hardcover 1st edition 1974
All rights reserved. No part of this publication may be
reproduced or transmitted, in any form or by any means,
without permission.
First published 1974 by
THE MACMILLAN PRESS LTD
London and Basingstoke
Associated companies in New York
Dublin Melbourne Johannesburg and Madras
Distributed in the United States
by Halstead Press, a Division of
John Wiley & Sons, Inc., New York
SBN 333 16561 6
ISBN 978-1-349-02213-7 ISBN 978-1-349-02211-3 (eBook)
DOI 10.1007/978-1-349-02211-3
Library of Congress Catalog Card No. 74-1183
Typeset in Great Britain by
PREFACE LIMITED
Salisbury, Wiltshire
Contents
Acknowledgements VI
Introduction: The Advent of the Superbloc vu
1 The History of Modern Protectionism 1
2 The Theory of Economic Multipolarity 7
3 The Evolution of Eurafrica 17
4 The Soviet Union as a Eurasian Power 38
5 The United States, Europe and Latin America 49
6 The Re-emergence of Japan as an East Asian and
World Power 64
7 The Outlines of a Chinese Economic Foreign Policy 72
Conclusion: The Shadow of the Superblocs 79
Appendix 1: Monetary Reform 86
Appendix 2: Britain, the EEC and Britain's Overseas
Trade 90
Appendix 3: Britain, Portugal and Southern Africa 112
Postscript: From Affluence to Austerity, 1973 120
Index 125
v
Acknowledgements
It must be said at the outset that in the compilation of this
book the documentation came first, followed by the enuncia
tion of a general theory and conclusions. Without such
detailed evidence there could be neither theory nor con
clusions. Most of the sources for the evidence surveyed have
been official government statistics made available by indivi
dual governments with the help and advice of a large number
of Economic Counsellors without whose willing assistance it
would not have been possible to write this book.
In addition I am indebted to Peter Tulloch of the Overseas
Development Institute for the section on the Commonwealth
Asian group of seven; also to Arturo O'Connell of the
University of Santiago for the section on Latin America and to
Peter Oppenheimer of Oxford University for the appendix on
monetary reform. For the book as a whole I am indebted for his
general advice to Brian Griffiths of the Londo11 School of
Economics and for his general influence on my thinking to
Professor Harry Johnson of the University of Chicago and
London School of Economics. Neither of the latter should be
held responsible for the views expressed in the book. Finally, I
must thank my agent, Andrew Best of Curtis Brown, who
encouraged me to believe that there was a book to be written
and my editor at Macmillan, T. M. Farmiloe, who successfully
nursed the project through to its publication. Also to
Vivienne Asher, who typed the manuscript, and to H. W.
Bawden and the Macmillan Press without whose forebearance
the postscript and at least one appendix would not have been
included.
Vl
Introduction: The Advent
of the Superbloc
Thirty years ago the Bretton Woods monetary conference,
later reinforced by the Marshall Plan, ushered in an era of
prosperity and co-operation between the industrialised
countries of the Western world. The Smithsonian Agreement
of 1971 marked not only the end of the Bretton Woods
monetary system but the end of an era of American
leadership which had remained virtually unchallenged until
that point. In the spring of 1973 Dr Kissinger's creative
attempt to tackle the whole spectrum of trade, monetary and
defence questions in a new Atlantic Charter between the
United States, the European Economic Community and
Japan, almost certainly designed as a tactical move to prod
the Europeans to agreeing on a minimum common policy
statement, was quietly rebuffed. Even though the threads
were soon taken up again the whole affair illustrates the
delicate nature of the multipolar economic system in which
several centres of world power are emerging, namely the
United States, the Soviet Union, the EEC, Japan and China,
of whom the first two are also superpowers. Almost
unnoticed these five centres of power have already staked out
for themselves regions contiguous with themselves where the
countries concerned are likely to behave more and more like
economic satellites. This trend has given rise to a new
phenomenon in world affairs which I have designated the
superbloc- i.e. a unit comprising a great power (not neces
sarily a superpower) and its attendant economic satellites.
After a generation of living under a balance of terror
system in which two superpowers exercised the right of most
major world initiatives as well as shouldering the matching
responsibilities to maintain a form of peace, most observers
have welcomed the prospect of a new 'concert of the world'.
However, the demands which such a system makes on the
Vll
Vlll The Advent of the Superbloc
great powers concerned has not yet been fully assessed.
Certainly in the field of economic relations the degree of
responsibility, not to say cohesion, shown by some of the
prospective great powers has not been of the sort to inspire
confidence in a global concert of nations.
Taking full account of the advent of the superbloc the
underlying aim of this book is to provide an analysis of the
relationship between power politics and the drift to protec
tionism in world trade. Economic regionalism has already
become seriously entrenched and it is all too easy to assume
that the general prosperity which the industrialised world has
enjoyed for the last thirty years will continue automatically.
It is now more than thirty-five years since the world last
experienced a protectionist dominated world economic system
and we have grown accustomed to living under a liberally
orientated world economic order. We should remind ourselves
that historically speaking there have been only relatively short
periods when the world has enjoyed the benefits of a relatively
liberal system. Even a brief survey of modern history confirms
that protectionism in some shape or form is the rule rather than
the exception. Furthermore, we should not be surprised if
protectionism, which we have previously mentally discarded as
a product of the 19 30s, rears its head again in a new guise which
broadly fits the description of modern mercantilism, some
times labelled the new mercantilism. For in spite of the fact
that the need for a liberal system of international trade has
been seen to be universally desirable since the days of the early
classical economists protectionist instincts have always per
sisted like some economic equivalent of original sin.
But if the irrationality of protectionism in trade has been
generally acknowledged by political and economic theorists
for some considerable time the need for a well-functioning
international monetary system was only recognised following
the breakdown of the gold standard system by the First
World War and the economic collapse of the inter-war years.
It is the aim of this book to present evidence to
demonstrate the current interaction between the world
economic system in its trade and monetary aspects and the
political interests of the great powers which has led to the
emergence of the superblocs.
1 The History of Modern
Protectionism*
In the nineteenth century the world economy was centred on
Britain, the unchallenged pioneer of the Industrial Revolu
tion. While Britain had plentiful coal and iron resources to
support her manufacturing, her available agricultural land was
limited. This fact coupled with her manufacturing supremacy
led her quite painlessly to adopt a policy of free trade. Such a
policy was not only ideal for Britain's own economic
development but it also guaranteed that the process of
economic development was transmitted to the rest of the
world. This took place through the investment of British
capital and the migration of British people to develop the
external supplies of foodstuffs and raw materials that Britain's
industrial growth increasingly demanded. This human and
capital migration extended to North and South America,
Australia, New Zealand and South Africa. Britain was at that
moment the world's leading manufacturer, exporter of
manufactures and importer of foodstuffs and materials, not
to mention the principal provider of capital for the finance
of world trade (in effect a sterling standard system).
With the deceleration of British industrial growth after
about 1870, and the industrial development of countries with
considerably richer natural resources, such as the United
States, Germany and France, Britain's central· role in the
world economy began to decline. These changes were
gradually absorbed over the next forty years until it was
shattered by the outbreak and general consequences flowing
from the Great War.
There is a good deal of truth in the claim that war is. the
ultimate experience of protection, certainly the First World
War left a heavy legacy of increased protection. Not only did
protection of industrial products increase - Britain breached
*The first half of this chapter has drawn extensively from The World Economy at
the Crossroads, Harry G.Johnson, Oxford University Press, 1965.
1
