The deceptive promise of free trade | DW Documentary

free trade millions of tons of goods in motion across the planet it brings prosperity or so we're told protectionism and isolationism are evils from the past or they were until Donald Trump called for duties on steel imports to the US Europe and China threatened reprisals are we on the brink of a full-scale trade war first I'm signing an executive order to ensure that we fully collect all duties imposed foreign importers that cheap cheers how are we being deceived when it comes to global trade and what role do we ourselves play in that deception lord sub-commission Germany can't expect the rest of the world to buy its goods while remaining reluctant to buy goods from abroad the arguments made for and against free trade are full of contradictions Germans are proud of the countries ranked at the top of the list of exporting nations seemingly unaware that free trade destroys livelihoods at home and abroad David and Goliath situation the choice that in this case it's really a twist because bogi I think the polls show who are the real winners and is free trade really as free as it sounds [Music] the port of Hamburg from here German products are shipped to countries all over the world in return around nine million containers arrive here every year most of them from China the city in northern Germany is a gateway to Europe for goods from Asia and when they enter the EU many products are subject to import duties cars from Asia and the US are taxed at 10% clothing at 12% smartphones are taxed at all customs duties are complex there are thousands of different types of terrorists in countless variations agents Gabi Anson and Ava Hoffmann from the ports central customs office chick imports every day it's their job to ensure that goods are declared properly there are a vast number of loopholes yes it says it's a microfiber coat for a pet that's right made of knitted polyester exactly from the size I'd say it's supposed to be for a dog made in China and they're different sizes this one's apparently for a medium-sized dog do the dog coats have leather parts as well in that case they'd be charged at a lower rate 100% polyester so at the moment that means that 12% import tax if these were saddles that would only be 2.7% they have no idea what's behind that difference it's a decision taken at the EU level all they do is check the contents of containers I've been working here for a long time and working here you feel like Germany isn't the world's top exporter but that most of the stuff is coming from China the Chinese make pretty much everything the question is do import tariffs bring benefits outside of government coffers I guess they protect a country's domestic economy is that true what role does protecting domestic industries play in an era of global free trade we've come to the town of Huber cowson in the German state of tearing in home to volcán Renner's company Morita and Centurion the former top cyclocross cyclist was the man who brought mountain biking to Germany in a big way today he's a successful entrepreneur [Music] the company offers a range of models and business is booming so where do the bikes come from this bike it's made in Germany no it's not made in Germany but it's a German brand yeah it's a German brand so where does the frame come from Tom like so many things the frame comes from China it's painted and assembled in Taiwan Quality Control all happens here of cobalt and here complete control yet a bike designed in Germany assembled in Taiwan from components manufactured in China made in this way a bike like this pays a 15 percent import duty when it arrives in the EU but if it was shipped directly to Germany from a factory in China the importer would have to pay almost 50% in punitive tariffs why because a Chinese company can make bikes much more cheaply than a German firm ever could twenty years growth become the world's largest bicycle manufacturing leading enterprises in this promotional video Chinese bicycle manufacturer of foucha dirt flames it has the largest bike Factory in the world first-class production technology and more than 100 robots welding machine companies like these are subsidized by the Chinese government but that's just one reason Chinese products are so cheap there's also scale creating miracles with a production capacity of a hundred million bicycles a year China could quickly swamp the world with its products companies like full gung Renner's would go under so he sees the import tariffs as protecting Europe's bicycle manufacturing industry protect Johnny smooth sometimes you have to have protectionism it's unavoidable the point is that in business you need a fair playing field you can see it in other areas too where government subsidies keep other manufacturers from competing because the market is distorted so it's about jobs in Europe sure it's about jobs and fairness the import duty ensures that Chinese bikes are more expensive when purchased in Europe punitive tariffs a form of pure protectionism but there are ways around them for instance having the bike frames that are produced in China finished in Taiwan then punitive tariffs don't apply the final assembly of bicycles made with Chinese frames then takes place in Europe it's an industry that provides 100,000 jobs on the continent [Music] Raynor is glad that protectionist tariffs keep Chinese competitors out of Europe's markets but the international trade in bicycles is a hotly fought segment and the companies trying to grab a slice of the pie will go to great lengths to do so not long after the EU implemented punitive tariffs on bikes from China they began to arrive from Cambodia Malaysia Indonesia and other places when it grew clear that the bikes were actually being made by Chinese firms punitive tariffs against those countries were put in place then Tunisia began exporting them and was soon slept with tariffs today components for the bikes are still mostly made in China but the frames are finished elsewhere like Taiwan because that's where the rules say value was added the bikes are then no longer subject to punitive tariffs when they're imported into the EU [Music] so what happens when the market for bicycles isn't protected by high import duties in the US city of Philadelphia bike store owner Brian Catholic used to sell exclusively American brands that had been produced domestically but that changed a few years ago there are still American brand names but the bikes all originate in the same place mainshine and doesn't matter which the manufacturer is whether it's Trek whether it's Cannondale whether it's specialized all their bikes at some price point or at some level are made are made in China without protectionist policies like those in Europe he says Chinese bikes have flooded the market in the US and that has in turn destroyed a lot of jobs in the country especially in his home state of Pennsylvania where the bike manufacturing industry once flourished [Music] the store owner says it's not a good feeling to promote the sellout of the domestic sector by selling cheap imports but what choice does he have keeps my family fed you know I own two different bicycle shops to be able to offer that offer my consumer a bike for under $400 that has gears to be able to offer a bike for under $300 that's like a single speed ride around the city it's nice to be able to do that president Trump has threatened many sectors with punitive tariffs but not the bike industry in general Catholic is critical of protectionist measures but he would have made an exception for bicycles it depends on what perspective you're looking from you know people who have lost their jobs because it's been farmed out to China or Taiwan they'll probably have a very different view than somebody who's never been affected by that but isn't free trade supposed to bring more prosperity for everyone American woes in many areas of trade can't just be traced back to China but also to Germany says professor herebut dieter he teaches his university students in free duce - that being an export giant also has a dark side German products sell well internationally not just because they're high quality but also because wages in the country have only climbed moderately in recent years while the Euro has remained relatively weak Trump is angry about the trade imbalance and dieter says he has a point deutsche uber sure surpluses in Germany means deficits in other countries Germany expects the rest of the world to go into debt with Germany but also likes to criticize the rest of the world for being too deeply in debt it wants to have its cake and eat it in these two some Germany really does profit immensely from global trade in 2017 it exported goods worth over 1.2 trillion euros like China that makes the EU a big net exporter Germany has a whopping 250 billion euros trade surplus the US has a deficit of around 500 billion with many more goods and services flowing in than flowing out ongoing debt has long-term consequences for America [Music] one country's loss is another's gain we head next form of area on the rivers Iowa here manfred schmidt works for Schaeffler a company making products that are often exported to the US he earns a good salary and can afford to buy the things he wants that includes many products made available by free global trade just like most households all over the world the Schmitz home is full of things made in other countries is anything here in their living room actually made in Germany mainly very little if we got rid of everything that wasn't made in Germany there'd be nothing left in Malaya with one exception the antique sewing machine proudly on display what about clothing we take a look in the family closet [Music] they made in Turkey made in Bangladesh designed in Germany made in China even [Music] their pantry is full of food from all over the world the Schmidt's have had personal experience with how quickly you can lose in the free trade game manfred schmidt nearly lost his job when Schaeffler wanted to move his plant to a cheaper location abroad the employees fight to keep the plant drew national attention Schmidt and his colleagues came to an agreement with the company it worked for a while for ten years we put in five unpaid hours a week and then they came overnight and said we're closing the plant that was a shock for all of us who worked there because we were all thinking we do five hours a week for free so that's a pretty sum the company is getting for nothing the shadow side of globalization Manfred Schmidt was lucky he was able to stay with the company but he had to move to another plant everything's all sweetness and light now and they act like we're the winners because we make good money in the industry but that's down to relocations and plant closures we were lucky to get positions enshrined for but in another company they might just let everyone go and those people will be the loser schemer villian manufacturers usually go where it's cheapest we take a look at the Schmidt family bicycles the brands are all German but we know where they were all made at least the frames cheap production in China that cost hundreds of thousands of jobs especially in the u.s. back to Philadelphia the city is a dynamic growing urban center but in the surrounding region the factories and jobs have disappeared like in many parts of the US Sarah Parker and her neighbor Susan Schweickart don't count themselves as losers in the globalization era and they don't like Donald Trump but they're on a mission by American Sarah has a popular website and by American is its clarion call in her USA love list she gives thousands of fans advice on how to replace products made in other parts of the world she says it's about their jobs you wouldn't believe how often American flags are not even made in the United States this is mainly United States is it yeah oh yeah oh good I like it when they when they put the label Indian states on the front because people really do care about that this was made in a small town somewhere I'm sure I don't know where but by looking for them made in USA label I'm supporting that small town and the people who made it Parker says she herself experienced how jobs moved south of the border to Mexico and depopulated whole areas as the factories died she decided to do something about it my first job after college was selling Chevrolet I went back a few years ago and that dealership just closed weeds growing completely abandoned it's sad to see and the pride that people have when they build something and then are able to purchase it I think that we've lost that it's often hard to determine the origin of global products that's the new norm the two Americans say that should bother us more you know they don't have to tell you where things are made I think it's only food things and cars so we're actually lucky they give us as much information as they do Parker admits that she made an exception when she bought a Volvo the Swedish car maker now belongs to a Chinese multinational in her household she says she's trying to buy only american-made products with at times limited success so there's some things that I'm not sure but I know the KitchenAid is assembled in Ohio I think I read that the bowl is made in Korea I know that is not you cannot buy an american-made toasters her initiative sounds like it has a nationalist agenda Parker says it all boils down to a matter of choice I think it's only nationalistic if you are saying we're only going to buy american-made products we make a lot of choices as consumers we choose things because they have recycled content in them or we choose things because they reflect a particular lifestyle that we want choosing something that's made either in your own community or your own country is just another consumer choice I'm glad that we have those choices which is why for me at least it's not a nationalistic effort so what would happen if we all followed her advice and tried to buy only products made domestically if borders closed and protectionism reigned it's happened before at the beginning of the 20th century world trade and globalization really took off but it soon hit major speed bumps the u.s. slid into the Great Depression Germany faced a huge economic crisis of its own and protectionism suddenly reared its head voices calling for isolationist policies grew loud during the 1930s the US began to adopt an increasingly aggressive protectionist stance raising tariffs drastically to protect American industries and jobs Germany also put up barriers to international trade the mixture of protectionism and nationalism ended in the horrors of the Second World War [Music] your hardness mid there were disastrous developments in world trade in terms of volume it fell by two-thirds within four years by today's standards that's unimaginable if we saw a five percent fall in trade people would call it a major crisis back then it fell drastically and dramatically and that development can be traced back to protectionist policies put in place by the United States of America defining from start for American solutions to prevent other major conflicts the body that would eventually become the World Trade Organization was set up headquartered in Geneva its fundamental principle that free trade brings prosperity for all has never really been accepted on the contrary the WTO has come under heavy fire in recent years and the u.s. led by Donald Trump largely ignores it [Music] is protectionism set to send the world into a new economic and political tailspin or our dire predictions just half the story in the town of Malacca in the German state of Baden württemberg the Styla group makes tiles business is brisk the construction industry is healthy but the business is facing stiff competition from China tiles from there are unbeatably cheap so the EU has put punitive tariffs in place tiles imported from China now have an import duty of 26.3% protecting jobs here from Asian competitors if they didn't exist says Wilson baths and kitchens in Germany would soon all be tiled with Chinese products I think it's justified in the current climate because the competitive situation is unbalanced we know that Chinese manufacturers are selling their over capacities internationally at very very low prices and that puts us in a situation where we can no longer be competitive we can't keep our people we have to play by those rules [Applause] punitive tariffs on tiles is also a protectionist measure but it keeps people in jobs in Germany and helps push for better production and environmental standards [Applause] we're pretty and we produce here in Germany we're expected to comply with laws that are relevant in Germany and we do so we exercise control over things like environmental aspects of course we don't have that for products coming from abroad then there's the issue of weight versus value because it really makes sense to transport these products over such long distances without punitive tariffs European tile makers wouldn't hold out long under the pressure exerted by their Chinese counterparts if the EU hadn't instituted protectionist measures the industry would soon disappear and not just the tile industry in all the block has put punitive tariffs in place for fifty three types of imports from China among them steel porcelain and even ironing boards the anti-dumping measures have been accepted by the WTO protectionism is alive well and apparently protecting jobs but although the EU has taken measures to protect its businesses it frowns on other countries trying to do the same Cameroon mommm Bali is on her way to her plantation the path takes her through the jungle she's the head of a village cooperative located in the rainforests north of yonder the walk takes about an hour in each direction there's no street the cooperative members harvested over two tons of onions here last year and sold the crop at a market in the distant capital the proceeds fed the entire village we use onions as a remedy for example when you have digestive complaints we use it as an antiseptic and we make our sauces with onions Cameroonians wouldn't know what to do without onions now the women from the village are planting cassava instead not because they want to but because it no longer makes sense to plant onions onions imported from Europe have destroyed the market to protect farmers like these Cameroon would have to raise import duties even more but it can't because a new free trade agreement with the EU called EPA prohibits that onion fields stretched from here down to the river and over there but then we stop being able to sell all of them because of the huge number of imports that's why we had to stop growing them onions are a staple here the African country consumes hundreds of thousands of tons a year until now they were all grown domestically just as they do everyday the women in the co-operative prepare dinner for now they still have their own onions produce that not only feeds them and their families but also helps them survive [Music] 50 kilometers south at a market in yaoundé is growing harder and harder to find onions grown domestically every morning trucks arrive here filled with onions most of them have been imported from Holland they're the ones packaged in red Nets my man Bali has dressed up for the trip to Yan day to talk about the onion issue she's meeting up with Yvonne Hawking who heads up an office that examines the effect free trade is having on everyday consumers here the two discovered that Dutch onions cost around 1/3 less than homegrown varieties but how can that be when there's already a 30% punitive import tariff on the vegetable and as though the cheap onions weren't bad enough for the farmers other agricultural products like garlic from China are also flooding markets in the fruitful country and build our economies before thinking of opening our markets to the world European overproduction is undercutting Africa's agriculture sector my man ballet doesn't know what to do next what happened with onions could happen just as easily with other farm products and the new free trade agreements with the EU don't allow Cameroon to raise punitive tariffs any further to protect the industry time to understand that they should leave African countries to build your own markets just as the EU took time to build its own markets it's time to let us build our markets and then we can see partnership agreements with the EU in other words Europeans are denying Africans what they need most the right to institute measures to protect their still vulnerable agriculture sector all industrialized countries including Germany we're only able to grow into economic heavyweights because they initially threw up big barriers to foreign competition but that fact is conveniently forgotten nowadays without protectionism in other words Germany never would have turned into the industrial powerhouse it later became back in the 19th century the iron Chancellor Otto von Bismarck closed borders to keep out imports of wood and grain from Russia and Britain also protected itself by coming up with the made in Germany label at the time it was meant to identify cheap mass-produced knives only later did the description grow to have positive connotations Linda pleading in dumb countries preach free-trade principles when they themselves are especially competitive and they preach it for the sector's where there is specially competitive but in areas where they're less competitive they allow protectionism like in agriculture in Europe for example in Switzerland we've come to the canton of Sankt Gallen not long ago the swiss decided in a referendum to support more food security and quality in their country and this is one of the people behind the movement the president of the Swiss Farmers Union Marcus Ritter he owns a typical family farm in the area and he firmly believes that unlimited free trade can be a dangerous thing bang-bang-bang huh bring the handle if all trade were free if every border was open then for economic reasons food production here in Switzerland would make no sense at all it would have to be relocated to places where production is cheapest some where labor costs next to nothing but then it wouldn't be here in Switzerland Swiss pay rates are on average 50% higher than even in wealthy neighbor Germany richer could never produce food here in Switzerland as cheaply as he could anywhere else in Europe but it's about more than price it's also about having a domestic industry and saving jobs that's why the country has imposed import duties on a range of products the amount of those duties makes a big difference here in whether a business can today be run profitably where the duties are very low as is the case with milk for example it makes things very tough where they're higher as they are with things like fruit and vege in those markets they work very well [Music] here's how the Swiss do it strawberries are a good example most of the year they're charged three Swiss francs of import duty per 100 kilograms but during the harvest season in Switzerland that climbs to five hundred and ten francs which basically amounts to a ban on strawberry imports with onions importers usually pay just under three francs per hundred kilos but while Swiss onions are being harvested it's 126 francs with veal importers pay 109 francs in duties within a fixed limit if you want to import more though you'll have to dig deep 2,900 francs on duties for just 100 kilograms of meat so what about bicycles no matter where they're from they cost just 12 francs apiece in tariffs the farmers union president likes the flexible import duty system it keeps chief competitors out of the market when it counts most the Swiss farmers say it's not just about protecting their livelihoods they insist it's also about conservation and animal welfare only with protectionism they say can those and other values be enforced cattle breeder Marcus Ritter doesn't believe free-trade principles are compatible with production standards the Swiss would accept what's very important is that here in Switzerland we also believe we have an ethical responsibility to produce the food here that we can and not just seek to use our purchasing power to get things on the world market as cheaply as possible so price plays a role but ethical responsibility also plays an important one of course the Swiss pay a high price for supporting domestic production of food but it's the only way to make farmers in the country competitive in a cheaper world that's protectionism and Germans do it too Germany subsidizes every hectare of farmland in the country to the tune of 280 euros annually in all countries in Europe invest around 60 billion euros every year in agriculture but that encourages the overproduction of milk and pork which are dumped cheap on the Chinese market that's the other hidden side of European protectionism and the Americans do it as well farmers there also receive huge subsidies while giant agribusiness multinationals export produce all over the world the biggest losers in that equation are small farmers in poor countries which brings us back to Cameroon for years European firms exported poultry parts here that no one in Europe wanted that destroyed agnus KOA's breeding business no one bought her Cameroonian chickens anymore at least until the country decided to be more protectionist and barred imports of chicken parts since then business has slowly picked up people in her village are slowly beginning to raise birds for sale again koa is a well-known figure in the area she's happy to show us her small farm she hopes that things now will get a little better these coops remained empty for years because European chicken especially parts from Germany simply made it too cheap for her to compete but now the ban on imports has given her a fresh start it's going well again I love my business I'm so happy you can earn money again with chicken farming a chicken market in yaoundé the birds on offer here are domestic varieties they had grown scarce while cheap European imports dominated sales Francisco Mari from the NGO bread for the world has come on an inspection tour 15 years ago he was one of the first to raise a public outcry about how europe's poultry waste was destroying livelihoods in africa he's glad to see the Cameroon's ban on the import of frozen poultry parts has restarted domestic production closing the border helped in this case but Cameroon has to lift the ban because according to an agreement signed with the EU tariffs and non-tariff barriers have to go but mari believes that if this critical juncture in its development cameroon more than ever needs to protect its industries of course markets should be protected as long as their products can't compete with ours that's justified many countries have only now begun to wrap up their own production with these kinds of systems why shouldn't Africa be allowed to do that Mary knows all about the price of chicken and he's also acquainted with the desperate situation people face here and in other African countries the free trade agreements that the EU is forcing on them he says are one-sided and outdated they give these countries no advantages that they didn't already have namely market access and they had to open up their own markets step by step to get it Cameroon has little chance to protect itself other industries and trades also need protecting says Maori because they're still in a critical phase companies in Cameroon for instance could begin building powerful motorcycles today they all come from China free trade does bring prosperity to some people but it also widens the gap between rich and poor the richest 10% of humanity now owns 90% of the wealth on the planet the poorest 50 percent of the world's population has to make do with almost nothing just 0.2 percent of the wealth the winners are those who can afford to invest in global concerns Google parent company alphabet has quintupled in value in the last few years Apple's value has risen by a factor of 10 during the same period the world economy has only grown by about a third but capital flows across borders wherever money can be made so the finance sector also profits at a vast scale from free trade [Music] the problem is there are no global rules for taxation that allows big companies to park billions in offshore tax havens like the Cayman Islands or Panama [Music] there are no global controls in the areas where they have the potential to make a difference to the world's poorest that's why protests are growing louder like this one at a WTO meeting in Buenos Aires critics say the organization is little more than a cartel there to protect the interests of the powerful industrialized nations and global concerns people like mama and ballet have few chances in a world like that because without protectionism trade can never be fair food production in particular has to be shielded from cheap competition whether in developing countries or industrialized ones if we want to continue producing food products in the region rather than in the cheapest place in the world and if the products only follow the highest purchasing power then the only way to sustain that is with protectionism but a positive protectionism based on sustainability Africa doesn't need fetters it needs protection while its industries grow and only when that happens will the flood of migrants to Europe searching for a better life finally slow Francisco Mari says the current model is fundamentally flawed the rules of world trade are actually made to allow big countries to invest in small ones and gain access to their resources there's a lot of hypocrisy there especially in agriculture everyone bangs on about how we need free trade but is busy protecting themselves in a huge way with subsidies to their own farmers so it's a two-faced deception crying out for free trade internationally while practicing protectionism at home that won't work it's unfair and I believe there's no future in it [Music] the global exchange of goods is always a fight for prosperity and in the end there are winners and losers trade that is truly free is a myth and will always remain one [Music] [Music] you

Channel: DW Documentary

Views: 2,347,733

Rating: 4.6094441 out of 5

Keywords: documentary, free trade, social inequality, EU, US, China, Africa, Donald Trump, USA, global trade, European Union, arguments against free trade, arguments for free trade, free trade agreement, America, DW, G7, G7 meeting, G7 meeting canada, tariffs, WTO, G7 summit

Id: DnW9ZQtI1_E

Length: 42min 26sec (2546 seconds)

Published: Wed Jun 06 2018

Reddit Comments

[u/hashtagpls]

Because the guiding principle of western nations is actually white supremacy; germans are happy not being on top so long as they can lord over and spit on other non whites.

[u/[deleted]]

Because they don't want China to develop and be competitive to the US

[u/pppmbs]

One of the agreed concessions for China joining the WTO is to allow China protect their nascent industries, just like the west did in the early years.

[u/killingzoo]

We need to stop calling it "protectionist policies". That's a propaganda term made up by the West.

China has "Make China Great Policies"!!

[u/zsXie10]

Tariff autonomy=Sovereignty. We are on our own.