The greasy pole of the global value chain.

An angry article compares liberalisation in international trade to a Ponzi scheme, perpetrated by the West, especially the European Union. According to the EU Trade Commissioner, Cecilia Malmstrom," The fundamental role of EU trade policy must be to create economic opportunity for people, starting with people in Europe." Nothing wrong in that. The European Union is a collection of 28 countries with free travel and free trade between member countries. Within this bloc the Eurozone consists of 19 countries which have a common currency, the Euro, with the European Central Bank setting a common monetary policy, but leaving each member to set its own fiscal policy. No wonder the EU economy is under severe stress. Some think that another crisis is almost inevitable while others point to the 0.6% growth in the first quarter of this year, which would translate to an annual growth rate of 2.2%, as a sign of the economy beginning to recover. Trouble is that unemployment rate is still above 10%, banks are still reluctant to lend despite a negative interest rate and prices fell 0.2% in April, which shows the weakness in consumer demand. Latest figures show a fall in manufacturing, as the boost from the collapse in commodity prices begins to wear off, giving rise to fears of deflation. Germany, as the largest economy in the Eurozone, is blamed for not spending enough, which is shown in its high savings rate and a current account surplus of over 30 billion Euros. No surprise that the EU wants trade deals to be beneficial to itself. The EU wants Global Value Chains to provide " energy, raw materials, or intermediate goods or services ", which is taken to mean that developing countries should provide basic commodities and parts while the EU will manufacture high value end products. To that end the EU wants that " trade must also be about values and principles as much it is about economic principles ". In other words the EU wants to use its 'values' on human rights, labour and environment to gain an upper hand in trade. Countries, which depend on exporting commodities are suffering because of the fall in prices. Whether they are borrowing from future generations is something they have to work out. Saudi Arabia is increasing oil production despite weak prices. We do not know whether it wants to cripple US shale oil production, hit Iran's earnings from oil or to sell off as much as it can before renewable energy makes oil redundant. European countries have been used to looting raw materials from their erstwhile colonies and are unable to adjust to equality in trade. The US was founded on the blood of indigenous Indians and then grew rich on slavery. Now they want to use trade as a weapon. The only solution to grow wealthy through education, innovation and producing high value products. Create our own Ponzi scheme.