Volume 1 – How the US Became Rich
© Larry Romanoff, October, 2021
by Larry Romanoff — FREE PDF
Contents Part 6
State-Sponsored Commercial Espionage
- Shamrock and Echelon
- Some ECHELON Examples
Protecting One’s Way to Prosperity
Keep Your Wretched Refuse at Home
Control and Riches Through Cartels
State-Sponsored Commercial Espionage
Shamrock and Echelon
After digesting its massive theft of ideas, things and people from Paperclip following the end of World War II, the US wasted no time in designing and implementing the world’s largest network of commercial espionage that has ever existed, and one which still exists in vastly expanded form today – as we saw from the revelations by Edward Snowden. Today, an astonishingly high percentage of the world’s internet traffic passes through the US on its way to Europe or Asia; a similar situation existed with telegraphy and telephone at the end of World War II, a situation the US government immediately exploited to the full. With the full cooperation of RCA, ITT and Western Union – who transmitted almost all of the US telegraphic traffic – the NSA was provided with daily microfilm copies of every telegraph entering, leaving and passing through the United States. (1) (2) (3) (4) (5) (6) (7) (8) (9)
This was Project Shamrock, initiated in 1945 to access every telegraph message in a search for commercial intelligence that could help American firms be more “competitive” in international markets. The first intended target was of course Germany since that country had already demonstrated its vast superiority in science and development, but naturally the entire world quickly became a target, and Shamrock evolved into Echelon, doing the same things but on an almost infinitely larger and global scale. (10) (11) (12) (13) (14) (15) (16) (17) (18)
Echelon began with the UK spying on Russia and Eastern Europe, which plan eventually involved the US and then evolved into something called the “Five Eyes” network, which has been described as the most powerful espionage club in the world, a clandestine commercial intelligence collection and analysis network of astonishing proportion, engineered by the US, and involving Australia, Canada, New Zealand and the United Kingdom. The system is designed to intercept and inspect communication from commercial satellite transmissions as well as global telephone calls, faxes, e-mail, public switched telephone networks, most Internet traffic, microwave links, undersea cables, and other civilian telecommunications traffic. The purpose is to obtain access to commercially beneficial information that could create competitive advantages to large firms – mostly American, since Echelon’s other members are not active in most industrial areas that concern the US.
The system is so sophisticated that it utilizes voice-print recognition to identify the speech patterns of targeted individuals making international telephone calls, and automatically decides which conversations to monitor. Its existence was at first hotly denied by the US but is no longer in doubt, nor is there any doubt that the continued purpose of the system is to intercept and monitor private and commercial communications, and not military traffic. In fact, Echelon’s Management Committee recommended to the European Parliament that European citizens encrypt their communications because US intelligence agencies were conducting economic espionage with the system.
Today, Echelon attempts to intercept and monitor every communications transaction transmitted by satellite, undersea cables, fiber optic, telephone lines, microwave and more, spying on every nation and, if possible, on every person, on earth. Moreover, it sorts and stores all this information in perpetuity, in the world’s largest database located in the American desert, in Bluffdale, Utah. This is state-sponsored commercial espionage on a global scale, intended primarily to benefit US multinational corporations in their quest for global dominance.
Echelon was initially revealed to the world in 1988 by a British journalist named Duncan Campbell, but the mainstream media refused to give him the microphone and his discovery came to naught. About ten years later, a New Zealand journalist named Nicky Hager wrote a book that should have caused an enormous international outrage but again he too failed to get control of the microphone. It was only the more recent and detailed revelations by Edward Snowden that finally lifted the lid on this international cockroach nest. In all three cases, the commercial aspects of Echelon were clearly outlined yet the US government managed to sabotage the publicity by claiming all espionage was to prevent terrorism.
Shamrock and Echelon programs were designed more than 50 years ago for the sole purpose of industrial espionage, and Echelon continues today in vastly expanded form. When Shamrock first morphed into Echelon, communications technology was more primitive than today but the Americans nevertheless accomplished quite a lot with the few tools in their possession – and with the large numbers of German scientists in their captivity. There are literally hundreds of documented reports going back to the 1970s and 1980s when most of the telecom equipment was made in the US and was designed to accommodate American espionage efforts. In addition to finding ways to tap into all transatlantic cables and copying every telegram, the Americans finally displayed some of their renowned native innovation and creativity. For one, all fax machines and most large office copiers (at least those made by Xerox) came out of the factory “espionage-ready”, with back doors and instructions to forward all content to an Echelon receiving site. (19) (20) (21) There are also hundreds of documented reports of the CIA installing “spy-ready” Xerox printers in all the foreign embassies in the US, and of Motorola producing telecom networks with back doors into the US Echelon system, and installing them worldwide. When the US government claims to collect only data related to terrorism, that is a lie of enormous magnitude.
These processes have never abated but instead have become more clever and difficult to detect. It should be noted that Europe, and specifically Germany, is not a part of this network but is instead a victim. The reason we have the “Five Eyes” is that none of the other four (excepting the US) is a manufacturing nation and therefore (1) present no commercial threats to the US, (2) serve as useful puppet gathering posts with no benefit to themselves and, (3) serve as a very clever law-breaking mechanism by sharing the collected information with each other in order to circumvent restrictive domestic regulations on surveillance of citizens. If that isn’t clear, by law I cannot spy on my own countrymen so I instead spy on yours and share the information with you. You reciprocate, and neither of us have violated domestic law. (22) (23) (24) (25) (26)
Ever since the end of World War II, the US government has used the CIA, the FBI and the NSA to conduct commercial espionage on a world-wide basis, intended to aid the competitiveness of US industry, and done so with a great deal more imagination than was reflected in the revelations by Edward Snowden. As time passed and the Cold War appeared to be ending, the US intelligence agencies needed a new purpose, and so the US government redirected them to state-sponsored commercial espionage as an offensive measure designed to perpetuate the then-existing US commercial supremacy by ensuring the potential theft of every new commercial idea from anywhere in the world. Gerald Burke, who served as Executive Director of President Nixon’s Foreign Intelligence Advisory Board, claims that commercial espionage was endorsed by the US Government as early as 1970. He is quoted as saying: “By and large, we recommended that, henceforth, economic intelligence be considered a function of US national security, (with) a priority equivalent to diplomatic, military and technological intelligence.” Immediately after coming to office in January 1993, President Clinton added to the corporate espionage machine by creating the National Economic Council, which feeds stolen commercial intelligence to selected companies to enhance US “competitiveness”.
Another official said, “US intelligence collection is not tasked by US corporations. It’s tasked by the government. However, communications intelligence is passed through channels to agencies, including the Department of Commerce and the White House, among others. There is a formal channel for passing communications intelligence data to companies.” He stated that “evidence of economic intelligence funneling can be found in public reports, including a 1996 Baltimore Sun article that reported that the Commerce Department routinely passed such information to select American corporate executives”. We can therefore safely put aside disclaimers from the US government that it does only “good” spying related to terrorism while countries like China do “bad” spying to steal commercial secrets.
When Edward Snowden revealed the extent of the NSA worldwide intelligence collection network, many US officials tried their best to deflect criticism by claiming they collected only information related to terrorism, whereas China, unlike the saintly US, was collecting commercial intelligence. But then several countries including Germany and Brazil, went public with the information that the NSA had in fact penetrated many of their commercial establishments and had been stealing industrial technology and secrets. Having been slapped so hard and so publicly, the Americans finally went silent, but there was no indication of shame or embarrassment, just a thief’s normal regret at having been caught.
The US is not the only nation engaging in this activity. According to Robert Gates, a former CIA Director, there are about 20 countries that engage in state-sponsored economic espionage in the US. The worst offender is Israel, followed by France, Russia and Britain. China is not high on this list. One of the more famous cases involving France was the discovery that France’s spy agency, the DGSE, had placed bugs in all the first-class cabins of Air France aircraft, for the purpose of recording conversations between travelling businessmen. Just so it doesn’t go unsaid, that 20-country list was prepared by the Americans, so it’s not a surprise they don’t appear at the top.
I would note here that there are also a great many American so-called “research” and other companies in China, some of which are primarily active in lobbying for US government interests, but many others are in fact intelligence operations, used to collect useful military and commercial information. Many of these are US multinationals like Coca-Cola, whose executives collect anything from market to political information and whose drivers appear adept at collecting militarily-useful GPS coordinates. American news reporters are another source. Almost all are heavily dependent on the US government or the CIA for funding, to the extent of billions of dollars in total. More later.
Some ECHELON Examples
There are many cases of industrial espionage and/or competitive intelligence which have been reported in various media. Often, the CIA, the NSA, the US Department of Commerce, the US State Department, American embassies, and other US agencies act as a coordinated team.
The US has for years regretted the fact that its wind and solar energy technologies were far behind those of China and Germany, so when the German firm Enercon produced a new wind turbine with compellingly attractive technical and competitive features the CIA and NSA went into combined action. The CIA illegally acquired all the technical information on this new product, while the NSA hacked into the systems and acquired the codes needed to enter and shut down Enercon wind generators so the technology and software could be copied. (27) (28) (29) (30) The two agencies then patriotically delivered all the collected information to an American firm, Kenetech, who then filed for US patents on the product, software and systems. Enercon, the German firm that invented this technology, was then prohibited from exporting its own wind turbines to the US, and was sued in US courts by the US company Kenentech for breach of patent rights (on its own products!) on the grounds that Enercon (the German company) had obtained commercial secrets illegally! (31) (32) (33) As President Obama has so frequently told us, “If the playing field is level, America will always win”.
Then, to complete the leveling of the playing field which the Americans so much admire, the US government arranged to have a federal grand jury charged China-based Sinovel and two of its senior executives for allegedly stealing wind turbine software source code from a US engineering firm. (34) (35) In fact, the Chinese firm had a clear contractual right to use and amend the source code in question, but the US Commerce Department strongly supported the charade since the legal intimidation of a grand jury is powerful, and raising an adequate defense even in conditions of clear innocence requires an enormous expense in funds and management time, sufficient to slow China down.
Volkswagen accidentally discovered a large array of microphones and infrared cameras on its property, hidden in places from board rooms to lawn grass, that were transmitting images, technical specifications and information about new VW autos. Volkswagen discovered that their executive videoconferences had been recorded, including conversations on new products, price lists, secret plans for new auto plants, and plans for an especially attractive new small car. All of this information was tracked to the NSA, who had already forwarded all of it to General Motors and its Opel subsidiary in Germany. Volkswagen claimed this one act of espionage and the passing of information to its American competitors had caused losses of hundreds of millions of dollars. And Volkswagen can do nothing, still subject to the forced agreement that “Germany shall in the future raise no objections against the measures which have been, or will be, carried out with regard to German assets …”. “If the playing field is level, America will always win”.
Japanese auto makers fared no better. At the request of the US president, the CIA spied on Japanese auto manufacturers, intercepting and recording information on their design plans for zero-emission cars, forwarding that information to US car manufacturers Ford, General Motors and Chrysler. The New York Times reported that the NSA and the CIA’s Tokyo station were involved in providing detailed information to US Trade negotiators in Geneva, facing Japanese car companies in a trade dispute. The Japanese accused the NSA of continuing to monitor the communications of Japanese companies on behalf of American companies. The CIA also hacked into the computer system of the Japanese Trade Ministry while that country was negotiating with the US on import limitations for Japanese cars. Having learned the Japanese position, the US was able to demand much lower auto import quotas than it had anticipated.
With the ECHELON program still in full force, spying on, and hacking into, foreign government departments is a specialty of the NSA and CIA, whether those governments are friends or enemies. (36) (37) Some years ago, the NSA intercepted faxes and telephone calls concerning purchase negotiations between Airbus and the Saudi Arabian national airline. After forwarding this information to Airbus’s US competitors, Boeing and McDonnell-Douglas, the Americans won the $6 billion contract.
The Brazilian government awarded the French firm Thomson-Alcatel a major multi-billion-dollar contract for the satellite monitoring of the Amazon Basin. After the CIA and NSA intercepted government communications relating to the contract, the US had enough information to exert extreme pressure on Brazil to renege on the agreement, and the contract was then awarded to the US firm Raytheon. (38) (39) (40) (41) (42) (43) (44) In a similar case, the NSA intercepted messages about an impending $200 million deal between Indonesia and the Japanese satellite manufacturer NEC Corp. After US intervention on behalf of American manufacturers, the contract was split between NEC and AT&T.
In another major case, the US President ordered the NSA and FBI to mount a massive surveillance operation at an Asia-Pacific Economic Cooperation (APEC) conference, to be held in Seattle. One intelligence source for the story related that over 300 hotel rooms had been bugged for the event. The effort was designed to obtain information regarding Asian oil and hydro-electric deals, with all information then passed on to high-level US government officials connected to American companies competing for the contracts.
Bribery is related to this category of acquiring wealth by stealth. The US is famous for its hypocrisy in condemning any foreign nation or corporation clumsy enough to be caught offering bribes, but it has a long history of paying bribes to obtain commercial contracts for its multinationals. Commercial and military aircraft constitute one area where the US has been especially active, having for one example paid substantial bribes to at least Italy, Belgium and Germany to purchase the US-based Lockheed F-104 aircraft, and bribes on behalf of Boeing are no longer news. Also, we have been told of many claims of US state-sponsored bribery in the cause of US firms. Often a nation is promised political or diplomatic benefits if it supports the free rampaging of US multinationals such as banks, in a domestic market. Much of this falls into the category of state-sponsored extortion, a category in which the US excels.
Protecting One’s Way to Prosperity
This is yet another major factor contributing to US economic domination, a process it still heavily indulges in today while condemning other nations for sins that are infinitely smaller. Protectionism is the policy of using the power of government regulations to discourage imports and prevent foreign take-overs of domestic markets and companies, using duties and taxes on imported goods, import quotas, as well as clever trade policies, bureaucracy, political pressure and a host of other methods. It is true there are occasions when a nation may have good and valid reasons to protect its industries and markets from predatory behavior by foreign governments and corporations, but it is primarily the predator nations, most notably the US, who are also the most protectionist. When the fox goes out to steal your chickens, it is careful to protect those chickens it already has, from being stolen by someone else. Protectionism is a talent with which America appears to have been unfairly and exceptionally well-endowed and for more than 200 years these commercial policies have been rampant in America, initiated by the US government to provide every advantage to its domestic industries.
Protectionism in its native state consists of little more than corporate welfare programs, classic examples of special interest groups using the force of government to obtain private benefits at the expense of the population. US industry groups like steel, auto manufacturing, textile and electronics, agriculture, gain hugely from the help of their government in restricting foreign competition. This is almost always damaging and expensive to domestic consumers who inevitably lose from these measures. But in the US, with the media on the same page as the government and the large multinationals, American consumers are usually unaware of what is being done to them. A typical example would be a tariff on foreign garments, which not only makes foreign goods more expensive but also permits domestic companies to substantially raise their prices now that they are free from competition. With high tariffs to protect domestic manufacturers from lower-cost Chinese imports, 300 million Americans were paying $20 more for a pair of blue jeans so that two or three influential domestic companies could earn an extra billion dollars in profits.
In recent decades the US government maintained a constant media assault on China with complaints about low wages, an undervalued currency, product dumping, accusations of unfair subsidisation and other unspecified “cheating” by the Chinese, that produced China’s low costs and which necessitated protectionist retaliation by the US. But magically, when American multinationals moved their production to China to take direct advantage of those same low costs, the US government immediately dropped its textile tariffs and began to praise low costs. The obvious conclusion is that when Chinese firms export inexpensive blue jeans from China to the US, they do it because they are cheating and their currency is undervalued, but when American firms export inexpensive blue jeans from China into the US, the credit is due to American efficiency and ingenuity and the greatness of democracy. It should be apparent to readers that the costs and currency are the same in both cases.
According to Patrick Buchanan,
“Behind a tariff wall . . . the United States had gone from an agrarian coastal republic to become the greatest industrial power the world had ever seen – in a single century. Such was the success of the policy called protectionism that is so disparaged today.” (45)
Buchanan is at least partly correct in his statement. Certainly, US industrial success has been assisted immeasurably from the constant and pervasive protectionist measures the US government has inflicted on foreign goods from the very beginning of the Republic. Once industrialization started, the US quickly learned the benefits of protectionism and experimented with various forms and rationales, including the necessity to “protect US manufacturers from the low wages of Europe”. Does that sound familiar? By the early 1800s, US import duties averaged more than 50%, and by 1900 trade tariffs had reached gigantic proportions and the US more or less abandoned any pretense that tariffs were to protect infant industries.
Perhaps in no other place were American protectionist measures so obviously predatory as in their military colonisation and plundering of undeveloped nations. When US firms extracted resources or raw materials from poorer countries, these products always entered the US duty-free. However, if any domestic companies of those nations attempted to export either raw materials or finished goods to the US, tariffs would be set at levels to preclude market entry, often reaching 50% to 80% and sometimes several hundred percent. However, the US used these colonies not only as a raw materials source but as finished goods markets, in which case no country was permitted to levy import duties of more than perhaps 5% against American goods, the countries being forced to sign treaties to this effect. Once again, the American version of fair play and a level playing field. All US Administrations have followed the predatory philosophy best stated by President Wilson when he said the doors of other countries would be battered down “even if the sovereignty of unwilling nations be outraged in the process.”
Protectionism quickly became a permanent feature of US trade policy. When the Americans negotiated the Free Trade Agreements of GATT, the WTO, and NAFTA, this was not done from a lack of protectionist sentiment but rather from a perceived advantage and a powerful negotiating position compared to its trade partners. It was always clear that American intention in creating these so-called “Free Trade” agreements was primarily to force open other markets to US firms and products. The US never reduced its own trade barriers unless it gained far more in return, and even then much of the original protectionist measures remained. The US had the strength and negotiating power to force agreements worded primarily to benefit American corporations, and were done with the expectation that the US would win on all fronts. And of course, on the occasions when this advantage didn’t materialise as planned, the US was immediately whining about unfair trade and wanting ‘a level playing field’. The American position on trade represents hypocrisy at its finest. The US preaches free trade only when it is winning and profiting from it, but whenever it finds itself falling behind due to the lack of competitiveness of American firms, the free-market theory is quickly abandoned in favor of unfair trade. In the context of the world’s free trade agreements, much of the world remains bitter at the extent of US control over not only bodies like the WTO but also of their arbitration and other committees which rather too often arrive at surprising decisions that favor the US. Without this unfair influence, the US would have won almost no trade disputes and would be much the poorer for it.
There are two currents in the protectionist river. One is mercantilist – a perhaps rational pursuit of profit for domestic manufacturers at the expense of foreign producers. The second is ideological and political, therefore often irrational and more difficult to combat. A major part of US mercantilist ideology is the excessively patriotic belief infused into Americans by incessant foolish propaganda that American corporations are the most efficient and produce the highest-quality goods in the world, the natural conclusion from this set of beliefs being that any nation surpassing the US must be cheating. The ideological current is also strongly infused with American exceptionalism and white supremacy. Americans whine when any nation acts to protect local industry sectors from destruction by the invasion of US multinationals because they deem it their God-given right to enter and plunder freely, regardless of the domestic destruction inflicted.
Also stemming from ideology, and understandably distraught over its general lack of competitiveness in anything other than weapons of war, the US has increasingly politicised its trade conflicts, not only using trade policies as tools of colonisation, but encouraging the European Market and other nations to erect trade barriers to China in a concentrated and multi-pronged effort to “open” China in ways most advantageous to US hegemony, and to close it in every other way. In particular, the US government persists in its determination to destroy China’s SOEs (since it cannot compete with them), attacking them not on commercial but on moral and religious grounds, foolishly claiming government shareholding as prima facie evidence of foul play. At the same time, both the US and European countries heavily subsidise many of their exports to China, sometimes doing substantial harm to China’s domestic producers. The hypocrisy in these measures is really quite astonishing.
The political and ideological side of US protectionist actions follow a typical pattern. First, the US government launches an inflammatory media blitz condemning China for multiple violations of WTO rules and all manner of illegal and unfair trade activities, invariably consisting of claims with no substance. The rhetoric is often extreme, with exaggerated and unsupportable claims of hundreds of thousands or millions of American jobs lost. After thus fanning the protectionist fires, the US arbitrarily levies punitive import duties meant to crush Chinese industries, and which are simply political extortion maneuvers meant to pressure China into admitting American firms into sensitive or national security sectors where China doesn’t want them. These include financial areas, telecommunication services and energy. But mostly what they want is to punish China for maintaining its SOEs which the Americans so bitterly hate because every thief dreams of robbing the biggest banks.
A great deal of the extreme pressure applied to China on the RMB exchange rate had a similar goal, that of forcing China to further open its markets to US MNCs. All of the rhetoric about the RMB was nonsense, although if China could have been forced to revalue, then so much the better for the Americans. But failing that, they hoped to at least break into new markets and plunder yet more Chinese bank accounts. The US trade cases taken to the WTO are of the same intent, not vital in themselves but useful as pressure negotiating tools. And of course, the WTO is largely controlled by the US. The Americans aren’t so stupid as to create a worldwide trade body and actually give it authority over them. The WTO is no different than the International Court of Justice or the IMF; it’s just another tool of imperial conquest and needs to be seen as such. And all of the foolish comments like “China has to decide whether to conform and adapt to the norms of international trade or continue to be an outlier”, are just American propaganda and hypocrisy with that special Christian moral flavor: “We don’t want you to commit economic suicide for us. We want you to do it because it’s God’s will.”
Since the US financial meltdown in 2007, and its beleaguered economy still showing no signs of recovery after nearly a decade, the US dramatically escalated its protectionist attitudes, with hundreds of trade complaints against China, almost all unjustified. The list of targeted products grew larger by the week, with the US government even levying double tariffs in dozens of cases, against its own commitment to international trade rules and agreements, and all declared illegal by the WTO. China does of course protest and challenge all of these American protectionist measures, but these defenses are time-consuming and expensive even when China eventually wins the cases. In many instances, American law does not authorise the government to take trade actions, but the US has repeatedly ignored its own laws to launch dozens of so-called trade ‘investigations’ against China during the past few years. When a US court ruled that the US government did not have the right to impose higher tariffs on goods from China, the Americans found a creative way to legalise their illegal actions. The US Congress passed new laws and backdated them four years, then levied the tariffs anyway. One has to admire the flexibility of American law enforcement and legislation, to say nothing of the apparent flexibility in the American concept of ‘rule of law’. And of course, making ‘a level playing field’. It should be noted the Western media play an active supporting role in this vast hypocrisy by first launching their demonisation blitz then publishing exaggerated articles about the necessity for the US to file yet another trade complaint against China. They then go silent, with the public never realising those filed trade complaints almost inevitably come to nothing.
The US government has cleverly enacted some trade laws that have become the world’s most efficient and vicious non-tariff trade barrier. The US International Trade Commission can launch what it calls Section 337 investigations (46) (47) against foreign companies for any purpose, with US companies regularly abusing this legislation for protectionist purposes that are clearly illegal. These investigations are a quasi-judicial trade measure the United States uses to protect its local companies from competition from imported products. Once a Section 337 investigation is initiated, the products in question and even similar products may be banned from the US market forever, even though the entire process is unlawful by international trade standards. In recent years, US companies have become increasingly fond of claiming alleged patent or IP infringements, and used these 337 investigations simply as a business strategy to drive out Chinese competitors and grab a larger market share. When Chinese companies must face these charges levied against them by American firms, they will necessarily suffer heavy losses whether or not they win the case. If a Chinese company does not respond immediately, its products will by US law be automatically excluded from the US market. But to defend such cases, a Chinese firm may have to pay many tens of millions of dollars for various charges, legal fees, and many other costs. This is a truly vicious piece of US protectionist legislation, and is only one such weapon in the US armory against foreign competition – invariably used whenever the US cannot compete. (48) Due to these new laws, it is a simple and painless matter for a US company not only to obtain government assistance against foreign competitors, but often to permanently cripple them. For these investigations, the US government supplies all the lawyers and pays most of the costs, while the foreign companies spend millions of dollars and months of time to defend themselves against accusations that are almost always groundless.
With this imaginative American process, it often isn’t necessary to actually impose the tariffs or other duties. These trade investigations are sufficient in themselves to destroy foreign competitors since the investigating body can, and frequently does, demand unlimited quantities of documents with short turnaround time and will impose crushing penalties for failure to comply. America’s so-called ‘International Trade Commission’ has on many occasions been irresponsibly ruthless, and even vicious, in applying these prosecutions to protect American industries. Here are two examples:
“In one case, Matsushita withdrew from an antidumping case and abandoned more than $50 million in export sales, because the Commerce Department demanded on a Friday that it translate 3,000 pages of Japanese financial documents into English by the following Monday morning. (49) In another case, the Commerce Department demanded that the management of a small Taiwan company supply it with more than 200,000 pieces of information and reply to a 100-page questionnaire that was written in English. But the management of the company consisted of only a husband and wife, and they were unable to respond. Using this lack of immediate response as an excuse, the US Commerce Department levied an “anti-dumping” duty of almost 60% on Taiwanese sweaters, making it impossible for these firms to survive. Within a year from the time this so-called “investigation” started, more than two-thirds of the companies that produced acrylic sweaters in Taiwan went out of business.” This is one way the US “levels the playing field” for its own multinationals.
In a classic protectionist maneuver, the US created an historic episode known as “The Chicken War”. France and Germany had placed tariffs of 2% or 3% on imports of US chicken, to which the US objected and responded by imposing a punitive tax of 25% on a huge range of European products, including the Volkswagen minibus. (50) (51) (52) (53) (54) Declassified documents later revealed that the minibus was included because the US auto unions were proposing a strike just prior to a Presidential election, and US President Johnson made a deal with the unions to punish Volkswagen’s success in America in return for abandoning the strike. Johnson therefore had the US Commerce Department re-classify the VW minibus as a truck to qualify it for the duty. The result was devastating: German truck exports to the US plunged by 35%, and the beloved minibus disappeared from the US market, never to be seen again. As of today, that “chicken tax” on the VW minibus still exists. This is the only reason the US automakers are so successful in selling light trucks in their home market; the competition has been obliterated by protectionist in the name of creating the “level playing field” that the Americans claim to venerate.
US protectionism was in great evidence against Japan in the 1980s, when the great America became genuinely afraid of Japan’s production efficiency and its high-quality goods. Japan’s success had Americans calling the Japanese ‘supermen’, and genuine fear was generated when Japan suddenly began repatriating its accumulated surpluses and buying American corporate icons like Universal Studios, Columbia Records, the Rockefeller Center, the Pebble Beach Golf Club, and more. Columnist William Safire, among others, wrote a blistering article in the New York Times about “The Yellow Peril”, and there were cries everywhere of “Where will Japan strike next?” In all of that, the Americans convinced themselves that Japan was somehow ‘cheating’, just as with China today, and adopted countless protectionist measures designed to combat Japan’s manufacturing advantages.
The US began making increasingly shrill accusations about Japan, increasingly unreasonable demands, and increasingly stupid threats. At one point, in order to ensure “fair trade” and “a level playing field”, US President Reagan proposed a 100% tax on all products made in Japan. That didn’t happen but the US began to apply increasingly heavy import duties on many Japanese products. One was a 50% duty on all Japanese motorcycles, which was the only thing that saved US-based Harley-Davidson from extinction; another was a 100% tariff on Japanese luxury vehicles. Since the US auto industry was in free-fall and couldn’t hope to compete with Japanese firms, Japan was also forced into “voluntary” export agreements where it would limit its sales to the US.
None of the above measures proved sufficient to forestall Japan’s rise or America’s decline, and in one of the greatest protectionist measures of all time the US browbeat Japan to sign the 1985 “Plaza Accord” (55) (56) (57) (58), an agreement to revalue the Yen. Just as with the Chinese RMB in recent years, the US claimed that Japan’s currency was too low, even though it had already appreciated from 360:1 to 240:1. Within two years the Yen doubled in value against the US dollar, crippling Japan’s economy – a fate from which it still has not recovered. You can see there are many ways to “level the playing field”. The US government has tried the same with China, for many years exerting enormous political and media pressure for a revaluation of the RMB, with many US officials claiming the Chinese currency was “at least 40% undervalued”. Of course, it was no such thing, as history has proven; the RMB was trading all along in the appropriate range, but US officials hoped to duplicate their success with Japan and force China to commit economic suicide by a major revaluation. Fortunately, China is not a US military colony as is Japan, and the Americans had insufficient leverage to accomplish their dirty deed.
Some years ago, the US forestry industry was having a rough patch. The US dollar was high and Canadian lumber (for building houses) was relatively much cheaper. So, the US Government arbitrarily levied a punitive duty of about 40% on all Canadian lumber. The Canadian forestry companies were not cheating or being subsidised, but US companies couldn’t compete so the government ‘leveled the playing field’ by an illegal duty that made Canadian products almost prohibitively expensive and severely damaged the Canadian forest industry. (59) (60) (61) (62) (63) To make matters worse, the “duty” was paid not to the US government, but to the US forestry companies. So now the US firms had a closed lumber market in which Canada would have to pay the US producers a huge cost differential on their exports to the US, effectively paying US lumber companies the value of all their lost sales.
Of course, the WTO ruled this was illegal and that all the duties collected had to be refunded, but by then almost three years had passed, the US dollar was down again and the Canadian industry was no longer a threat. The US eventually dropped the tariffs, but the damage was done. In spite of the illegality of the duties and the direct order from the WTO to refund the money, the US demanded that Canada ‘negotiate’ the amount of duties to actually be repaid. In the end, the US refunded only about half of the money collected. By then, the US forestry giants were flush with cash (paid by the Canadian companies) and ready to buy up all those same Canadian firms with their own money. In the US, this is known as “leveling the playing field” and of course “playing by the rules”.
There may be no US product category more deserving of contempt than that of agriculture, where the blatant protectionism is at an astonishing level. The US heavily subsidises its agricultural sector which encourages overproduction, generating surpluses that are then dumped on the world markets at prices well below production costs, while posting tariff and other barriers on agricultural imports. Haiti is one of the poorest countries in the world, but US firms sell American rice in Haiti at prices lower than Haiti’s domestic costs of production – a subsidy of probably 80% or more. The same is true of sugar cane, ethanol, and a multitude of other products. Brazil can produce fuel ethanol at 10% of the US costs, so the US “leveled the playing field” by imposing a tariff of 54 cents per gallon on foreign ethanol while paying US refiners a subsidy of another 45 cents, shutting Brazil out of the export markets. The result was more than $6 billion in annual ethanol subsidies to US producers and a remarkable increase in food prices, most notably corn. The US is also unforgivably ruthless in dumping agricultural products to destroy the productivity in other nations while creating markets for its own firms. When the US began its program to destablise Cuba, its first act was to impose huge tariffs on Cuban sugar imports which wrecked the Cuban economy but created a new market for Sanford Dole who had just succeeded in hijacking the nation of Hawaii. The US is doing something similar to China today with its subsidised exports of GM crops such as soybeans; the purpose of the subsidised low prices is to drive Chinese producers out of the market, after which the US will control much of China’s food supply and can raise prices to any level. This is already occurring in China, and is a template the US applies worldwide.
China’s auto exports are expanding by more than 20% annually but there are no Chinese cars in America. The question is, why not? The simple answer of course is US Federal Crash Standards. As Forbes magazine explained, “In a seemingly eternal battle of cat and mouse, as soon as Chinese manufacturers meet Euro 5 emissions or build a car that has NCAP 4 stars or better, a new range of standards and guidelines appear.” We then need to ask ourselves who are the real trade protectionists, and who is manipulating the rules of trade when they cannot compete? Is it the US or China? Certainly, if China played the same game as the US does on auto standards, there would be no American cars in China. And that would be a good thing.
As another example, the US levied a 55% duty on low-cost auto tires from China. No US manufacturer made tires in this price range, so China’s exports were not harming any US firms, and in fact were helping to maintain low retail prices in the US. Obama presented these punitive duties as “creating American jobs”, but no jobs were actually created, and the main result was that 300 million Americans now had to pay 55% more for their automobile tires. The US “punished” China by hugely increasing costs for its own citizens. After five years of ‘punishment’, the US Commerce department arranged for the American United Steelworkers Union to file another action request, claiming – without evidence – severe damage to the American tire industry caused by Chinese imports “unfairly benefiting from government subsidies” or otherwise being “sold below fair value” on the US market. In these cases, it is important to note that the definition of “fair value” is a price that American manufacturers cannot meet. Whenever American firms are uncompetitive in price – which is most of the time – foreign firms are accused of ‘dumping’ goods, of selling them below ‘fair market value’, thereby triggering more protectionist measures to bring the price of foreign goods to a high enough level that US companies can compete. These policies are almost always enormously dishonest and hypocritical, though again the media are always silent so few are aware of the details. With the Chinese auto tires, American companies like Cooper who export their production from China to the US will pay a proposed duty of only 12.5%, while Chinese firms exporting similar tires to the US at the same cost level, will pay duties of over 80%. In the US, this is known as leveling the playing field.
An American executive stated that “US tire manufacturers made the decision years ago to shift production of these lower-cost tires out of the US. All this action will do is force them to shift production to other countries”, which is exactly what happened. After nearly two years of struggle, a Chinese businessman set up a tire factory in Thailand, primarily to avoid the US tariffs. And of course, that was the intent; either drive the Chinese firms out of business, or drive the businesses out of China. Either way, the US gains an imperial victory. The enormous extra cost to American consumers is ignored because the only objective is to produce higher profits for US multinationals and the few elites who control them, to further the transfer of wealth from the middle and lower classes to the top 1%. Democracy in action. The US has done the same to China in a number of areas. Tianjin steel pipe was selling in the US at a 20% premium over its domestic price in China but American firms still couldn’t compete so the US levied a total duty of almost 60% on these steel products, driving Chinese exports down by 75%. Once again, Chinese firms are faced with the choice of closing down or moving their production out of China, since it isn’t always easy or possible to quickly develop new export markets. Many US duties on Chinese products are as high as 100% and some have reached more than 300%, on many billions of dollars’ worth of exports.
The US has increasingly passed a proliferation of “Buy American” legislation which, along with intense domestic political pressure, is intended to bully American corporations and low-level governments to avoid foreign goods. This, in spite of intense American pressure on countries like China to “play fair” and develop “an open market” for American firms in corresponding markets in China. In one celebrated case, California ripped out of the ground a newly-laid Canadian pipeline to replace it with “American steel”. It isn’t clear who were the beneficiaries of this one. Not long after this, US authorities ordered the dismantling of a newly built bridge in Colorado after discovering it contained steel beams from Canada. In another current case, Canada’s Prince Rupert Ferry Terminal which sits on federally-owned land, was sublet to the Americans on a 50-year management lease, and which will now undergo a massive construction upgrading – for which the Canadian government will pay – but which is fully subject to “buy American” rules. And that means that tens of millions of dollars’ worth of steel and other construction supplies will be provided by US firms, shutting Canada out completely from its own property.
In early 2014 the US introduced new laws requiring 100% American content in all federally funded transit projects, virtually eliminating even firms like Canada’s Bombardier who supply most of the US’ trains and buses. Canadian firms are therefore shut out of billions of dollars of government-funded transportation projects in the US while their American rivals are free to capture similar work in Canada. Similarly, the US administration is haranguing China on fully opening all sectors of the Chinese economy to permit American firms to participate in all government projects while at the same time heavily restricting the participation of Chinese firms in American projects, usually on spurious grounds of ‘national security’. We can legitimately ask why competition is ‘good for China’ but not good for the Americans. In August of 2016, it was suddenly announced that the joint venture between China Railway and XpressWest, a private American company, had cancelled plans to build America’s first high-speed railway between Los Angeles and Las Vegas. Why? Listen to the company’s statements:
“XpressWest indicated that its “biggest challenge” was a federal government requirement that high-speed trains must be manufactured in the United States to secure regulatory approvals. “As everyone knows, there are no high-speed trains manufactured in the United States. This inflexible requirement has been a fundamental barrier to financing high-speed rail in our country. For the past 10 years, we have patiently waited for policymakers to recognize high-speed rail in the United States is a new enterprise and that allowing trains from countries with decades of safe high-speed rail experience is needed to connect the Southwest region and start this new industry.” (64) (65) (66)
We are generally familiar with the stories of the Americans demanding the right to come into China and buy up every worthwhile company and brand while denying China an opportunity to purchase any companies in the US, usually on fictitious grounds of “national security”. In one case, a Chinese firm was refused permission to build a wind farm because it was near a military base. In another recent case, China’s Superior Aviation’s plans to buy US aircraft manufacturer Hawker Beechcraft collapsed from claims of more national security objections and the supposed difficulties of separating Hawker Beechcraft’s defense aerospace operations from other businesses.
More recently, Chinese companies are finding it almost impossible to sell communications and other higher-tech products in the US because the government regularly cites “national security concerns” and prohibits the purchases or sales. In a classic case of predatory protectionism, the US government banned all products from Chinese electronics firm Huawei, on the grounds that the President of the company once served in the Chinese military, and the company would be a “national security risk”. The real reason was to protect the US firm Cisco Systems from Huawei’s better products and lower prices, against which Cisco could not compete. The Australian government concurrently announced a ban on Huawei participating in its proposed $36 billion high-speed Internet network, claiming a responsibility to “protect its integrity” from Chinese cyber-attacks. Australia reported considerable US political pressure to make this decision, as have many European nations. In 2012, US telecommunications companies received a remarkable marketing document intended to cause suspicion about Huawei. The report claimed, “Fear of Huawei spreads globally. (67) (68) (69) Despite denials, Huawei has struggled to de-link itself from China’s People’s Liberation Army and the Chinese government”. It was later discovered that the paper’s author was Huawei’s main US rival, California-based Cisco Systems. But while Cisco was making these accusations about China, it was also revealed that Mike Quinn, a Cisco Vice-President, was a former CIA officer, and that many other senior Cisco employees had served in the US military. No double standard, here. As an indication of the blind supremacy mirror from which the US obtains its self-image, to say nothing of its unbelievable hypocrisy, the US government demands that Cisco be given open opportunity to sell similar electronics in China, and to the most sensitive industries such as defense, ridiculing China’s concerns about national security. American bullying hypocrisy is truly infuriating at times.
And then we have AmCham, the American Chamber of Commerce in China, the guardian angel of hypocrisy for Americans everywhere, complaining in the Washington Post that China was “aggressively moving ahead” with rules that would cut out foreign businesses, beginning what AmCham characterized as an “intense campaign” to force public institutions and businesses to install Chinese-developed software and hardware to protect domestic computer systems from NSA spying. But according to AmCham, while China cast the move as a national security issue, the requirements went “well beyond the norms set by other countries”. The report told us that China’s new rules “maintain an overly broad definition of national security, which is contrary to standard international practice”. China went beyond the norms set by other countries? The US, claiming “national security” virtually evicted Huawei from the country and Haier couldn’t even buy a dishwasher manufacturer, but when China replaces some Cisco hardware in sensitive situations, this is “going beyond the norms with an overly broad definition of national security”.
Nobody in the US government appears to have the intelligence to ask why, If Cisco has executives who were with the CIA, that wouldn’t constitute a threat to China’s national security. And, it of course does constitute such a threat. The efforts to discredit Huawei illustrate a fear and resentment among US firms of highly successful Chinese competitors that are taking over the world’s telecommunications markets, which were once a distinctly American industry. One US expert wrote, “It was long thought that we were the number-one economy and China just supplied cheap labor. But now it is clear that China has a lot to offer in terms of innovation and industrial policy, and now Americans are scared”. And so they should be. If the telecom market were “free and open” and “a level playing field” as the Americans claim they want, Huawei and ZTE would already have taken over the entire US market and Cisco would be reduced to assembling OEM playstations for Sony. In this context, it should be noted that US Ambassador Gary Locke is not a friend of China. Reports claim that in November 2010, when Locke was the US Commerce Secretary, he put intense pressure on Sprint Nextel to reject any bids from Huawei, for purely political reasons.
It is the same with the recent bitter US arguments about China’s exports of solar panels. During the past 5 years, due to huge investments in technology, China has become the world leader in producing solar panels at increasingly attractive prices. And in the process, the US had lost its lead, American firms were inefficient and overpriced, with outdated technology and the entire US solar industry virtually a walking corpse. So, a US trade panel approved an investigation into charges of “unfair Chinese trade practices” in the solar energy sector, concluding that US producers had been harmed or were threatened with mortal injury by the “unfairly low prices” of imports from China. It’s important to note that China’s trade doesn’t need to be unfair in any sense, for China to be punished by duties. It is enough that the Americans can’t compete, and so they ‘level the playing field’ by imposing punitive duties of up to 250% on billions of dollars of solar energy products from more than a hundred Chinese producers and exporters. The purpose is clear: The Americans cannot compete, and spitefully want to damage China’s worldwide supremacy in solar energy by (1) to remove them from the US market, and (2) attempting to reduce their revenues to help kill further research and development. This is just one of the ways the US tries to consolidate its leading position in any high-tech sector by warding off potential competition from China. This will of course hurt China, but will not help the Americans, and will greatly increase the installed costs of solar panels. This is protectionism at its worst, initiated by the world’s greatest proponent of “free trade” – which means, “trade is free, only if I am winning”. To make matters worse, the US bullied the EU and other Western nations to do the same. The entire solar industry risks a breakdown from this protectionist foolishness, but Obama insisted the US “would not cede solar, wind or battery industries to China”.
As China continues its economic development with the consequent upgrading of its industrial capability, it exports increasingly higher tech and higher value-added products to global markets, this of course affecting the market share of these high-end products from Western nations. In spite of all the blather and whining from American firms about China dumping goods or violating someone’s IP, or engaging in undefined “cheating” on trade, the bald truth is that US firms are simply resorting to illegal and unfair methods of protecting their market share, especially since high-tech products generate much more profit than do low-end items like garments or footwear that China manufactured initially. It is almost invariably true that the accusations of unfair trade against China and similar nations, are slanderous allegations intended for public consumption at home to turn the tide of public opinion and garner support for yet more protectionist measures that assist a few US firms while costing American consumers billions of dollars in higher prices. This is truly corporate welfare on a grand scale where the only winners are a few industrialists.
The US has always attempted to extend its extraterritorial influence and political domination by using the excuse of ‘national security’ to insert itself into the affairs of other nations which are of no apparent concern. One increasingly troublesome area is that of international mergers and acquisitions involving two foreign companies, one of which may have minor operations in the US. The Americans created a body named the Committee on Foreign Investment in the US (CFIUS), to examine foreign takeovers of US assets, but have increasingly used this body to interfere in Asian takeovers (especially Chinese) of European or other companies that have US assets. In one case, the Dutch company Philips had agreed to sell its lighting components business to a Chinese firm, but the Americans exerted enormous political pressure to block the sale because Philips had some R&D operations and a large portfolio of patents in a US company, which the Americans did not want China to obtain. Philips could probably have pulled those operations out of the US and then proceeded with the sale, but the Americans threatened retaliation in many other ways, including shutting Philips products out of the US market. Both the Europeans and the Chinese are expressing strong resentment against this blatantly political interference that has as its only purpose an American determination to control access to technology by other countries. In other words, the Americans have assumed the authority to tell a Dutch company it cannot sell technology to a Chinese company, under threat of losing access to the American market. On the other hand, the Americans demand the right to enter China and buy anything, the operative philosophy suddenly changing to ‘open markets’ and ‘free trade’, Chinese concerns about national security being dismissed as ‘Communist propaganda’.
In late 2015 the US levied an import duty of almost 250% on Chinese steel, on the pathetic grounds that steel imports from China “appeared to be excessive”. The simple fact was that China could produce high-quality steel at prices much lower than could American firms like US Steel who were mostly bleeding red ink. US Steel said the tariffs were “a good first step” toward halting “these harmful, illegal and unfair practices.” But of course, there were no illegal or unfair practices. The Americans are masters at couching trade pricing in evangelical terms and rushing the high moral ground, but the real issue is the matter of free trade, under which I should be able to sell my products at whatever price I choose. If I have misread the market and overproduced a product, I may well have to sell it off at cost, or even at a loss, to eliminate my inventory and recover whatever cash I can. This practice is a single event that is neither predatory nor immoral, with these discounts being both temporary and usually minor, reductions of perhaps 10% or 20%, and represent a real benefit to customers like the US auto industry who are also hurting.
And China’s cost advantage in steelmaking is also of that same degree, perhaps only 5% or 10%, but the US government does not in any sense try to ‘level the playing field’ as it claims, but clearly takes actions designed to cripple and even collapse a competitor’s industries. How else can we interpret US tariffs on Chinese steel at 250%? These moves are intended only to totally eliminate foreign products from the US market whenever American companies cannot compete – which is most of the time. Speaking to The Wall Street Journal, Li Xinchuang, deputy secretary-general of the China Iron and Steel Association, said China alone wasn’t responsible for an excess of global steel supply, and that higher tariffs imposed on its exports were unfair. “Overcapacity in the steel industry is global. It is not only a situation in China. We have both good quality and price. It is not about price alone. I don’t see why we can’t export when we can offer good quality to customers.” The Americans follow this pattern in every conceivable area in attempts to limit or eliminate competition for American firms. But these are all temporary measures that will require endless repetition because US firms in most industries are not competitive.
The US is fond of slandering China by boasting of all the complaints it has filed with the WTO against China for unfair trade. As always, the US media report only the accusation, not the verdict. In one typical instance, the WTO rejected all 13 claims made by the US and ruled American anti-dumping measures unlawful and in violation of WTO rules. In most cases the US simply abuses the process by employing questionable methodologies in its determinations. These persistent US practices are merely a form of harassment and aggressive protectionism, and unrelated to free trade. The Americans challenge billions of dollars of Chinese imports every year, almost all of which fail.
Similarly, the US repeatedly files trivial nonsense complaints with various trade bodies, in one case accusing the Chinese government of unfairly subsidising its cotton growers. In this case, the subsidy was lower than that permitted by the WTO and applied only to very small-scale subsistence farmers in remote, underdeveloped regions to protect their livelihood, the volume involved being insignificant in relation to China’s total production and consumption. Many of the claims made by US trade representatives were either recklessly incorrect or deliberately dishonest. Still with cotton, the Americans accused China of heavily subsidising domestic production to build reserves then export them at unfairly low prices, an absurd accusation since China’s cotton imports increased from 100,000 tons to more than 4 million tons in one decade, today buying more than half of the world’s production, and exporting nothing. And then we have the other side of the fence, where China presented cases to the WTO documenting the heavy US subsidies on autos and auto parts that were seriously distorting domestic industry in China, one of many such cases. In an unrelated instance at about the same time, the European Union requested WTO approval for sanctions of more than $12 billion against the US not only for providing Boeing with illegal subsidies but with American failure to comply with past rulings on illegal subsidies given to Boeing Aircraft. While the US consistently engages in these illegal protectionist activities against other nations, the American media publish only information critical of the trade practices of other countries. There are two important points here. One is that US citizens are never informed of the illegal trade actions of their own government because the information is very effectively self-censored by the media. The other is that the US government has for decades been repeatedly sanctioned for trade violations, with orders to cease and desist, and to refund extortionate duties and other funds collected. In virtually every case, the Americans, abiding by their world-famous rule of law, simply ignore the international trade authorities and continue their practices.
The world would be a better place if the Americans possessed half the excellence at producing and marketing products as they display for producing and marketing unsubstantiated claims of their moral superiority. US steel and aluminum industries have archaic, high-cost facilities and have been generally uncompetitive for a long time. China’s production facilities on the other hand are new and efficient and the country’s steel firms can produce at a cost lower than most. When the Americans were flooding the world with cheaper (often subsidised) steel and aluminum, that was justified on the basis of efficiency, competitiveness, and general American superiority, to say nothing of ‘letting the market decide’. But when China or any other nation can produce and sell equivalent quality at lower cost, the free market sentiment quickly disappears in clouds of accusations of cheating, dumping, subsidising, and whatever other adjectives happen to be convenient. The Americans seem to begin with a premise that the entire world market is theirs. If Boeing loses out on sales to Airbus, the Europeans must have cheated, or bribed airline officials. If China sells steel or aluminum at a lower price than American firms are able to do, we have an instant accusation Chinese firms are selling below cost. As I mentioned above, there are occasions where producers in every country will attempt to unload excess inventory, even at a loss, to recover their capital, but those occasions are a one-time gift to consumers who would be perfectly happy to purchase all their raw materials below the actual cost of production.
Still with steel, the Americans accused Chinese firms of “over-producing” and flooding the world’s markets with low-cost steel. Aside from the fact that the Americans repeatedly do this themselves, this should be one definition of a “free market”: I produce as much as I can and try to sell my production wherever I can. Volume means profits. However, it seems that any nation showing signs of becoming too successful must be quickly beaten down, which leads us back to our persistent WTO complaints. In any case, the Western iron ore companies, as one example, are famous for vastly over-producing during times of low prices, specifically to drive all marginal producers out of business, after which they control the market and can raise prices to unconscionable levels. Still with steel and aluminum, in 2016 the Americans were bullying half of the world in an attempt to create a semblance of uniform opinion that China reduce its production of these metals, going so far as to pay 5,000 people in Europe to participate in a staged protest against Chinese steel. (70) (71) The problem was simply one of American lack of competitiveness in metals production with a consequent increasing loss of markets and volume. The argument was that the world had no need for such high volume and that China should shut down half of its production facilities to save the world, but that is always the American way; I’m sick, but I want you to take the medicine. It didn’t seem to occur to many people that it was the American mills and smelters that were lacking sales, and maybe the US should shut down its inefficient, high-cost facilities ‘to save the world’. And once again, when US firms were flooding the world with cheap metal and forcing other nations to curtail production, there was no mention then of saving the world. These are yet more instances of the hypocrisy that seems to permeate everything American; it’s okay if I do it, but bad if you do it.
It was the same with China being admitted to the WTO; the Americans for decades did everything in their power to prevent China’s admission, then, when they could no longer prevent it, took credit for it. We see this again in 2016 with China up for designation in Europe as a market economy, a move which make trade easier and more free between China and Europe. Once again, the Americans are there, bullying all European governments to vote against China’s admission. Their success, if they are successful, will not benefit the US but will hurt China – which is the plan. The European countries estimated they might collectively lose about 60,000 jobs by giving China market economy status, but on the other hand would gain many more from increased Chinese investment in Europe. But the Americans got one of their so-called NGOs, (American-controlled) Aegis Europe, to compliantly estimate that Europe would lose at least 3.5 million jobs! None of this is related to trade in any sense; it is simply American imperial bullying, while filling the US media with huge daily doses of hate literature to obtain public support from an ignorant public.
Beijing has treated American companies far too generously for far too long, giving them preferential tax treatment, allowing for generous valuation of “knowhow” as a capital contribution to JVs, and so much more. It is time to even the playing field. The Chinese government allows hundreds of foreign multinationals to handle their businesses quite well in China, and virtually all of them are very profitable. It is time for the West to reciprocate for China. Open Market rules should apply equally to all. Chinese companies still face severe trade and investment barriers, Chinese exporters facing sharp increases in punitive duties and tariffs against Chinese goods and services launched by Western nations, almost invariably at the encouragement or demand of the US. China, as the world’s second largest importer, has suffered the most trade challenges of all countries for 17 consecutive years, with most of the trade friction between China and the US being political rather than commercial, the Americans most commonly claiming “National Security” as an issue. These measures primarily accomplish the US purpose of hindering Chinese firms from expanding overseas. Mostly, these are thinly-disguised protectionist measures, but many are serious. The US is especially concerned about China’s progress in any areas involving high technology, mostly because the US has militarised and weaponised this grade of knowledge, and wants to prevent China from making any military progress. It was for this reason that the US Congress recently approved a bill that prohibited both the Office of Science and Technology and NASA from coordinating any joint scientific activity with China. If that weren’t enough, the US excluded China from a list of 164 countries to whom it granted its new license exception called a ‘Strategic Trade Authorization’.
It was for this reason that exports to China of even simple PC micro-processors were banned for many years. The products or materials needn’t be for military use in China, the Americans simply wanting to keep China in the high-tech dark by any means possible. US restrictions on high-tech exports to China are “strict and extensive”, and have exacerbated trade imbalances between China and the US. They also damage China’s trade relations with other nations because the US State Department exerts substantial diplomatic and even military pressure (or threats) on the Europeans and other nations to follow the US lead. Many American firms have complained bitterly over lost business opportunities and market share in China as a result of the US government imposing control on more than 2,000 so-called “high-tech items” for export to China.
As well, a host of Chinese companies, including Huawei, ZTE, Haier and CNOOC have suffered setbacks to their overseas acquisition and merger plans because of US trade restrictions based on so-called US “national security” claims. Chinese companies are finding it almost impossible to purchase assets in the US, or to sell communications and other higher-tech products in the US because the government regularly cites “national security concerns” and prohibits the purchases or sales. As if purchases and sales weren’t enough to satisfy this cold war mentality, the US Congress is now considering stricter rules on investment from China’s State-owned companies, claiming these will pose both economic and security risks to the US. And of course, the US blocked investments by Huawei and ZTE, on totally unsupported and undocumented vague accusations of espionage.
Huawei Recently lost a chance to buy a US broadband software company (2Wire), because the US government simply didn’t want Chinese firms buying any anything American. The US government claimed Huawei was a “security risk” and killed the sale – even though the firm offered more money than other competitors. There have been many cases like this. CNOOC wanted to buy Unocal Petroleum in the US, but once again China’s ownership – of some oil wells, mostly in Asia – would be a “security risk”. This was a thinly-disguised decision to try to limit China’s access to sufficient supplies of petroleum. China’s Tangshan Caofeidian Investment Corporation was forced to abandon a joint venture with a US manufacturer of fiber optics, because it would “threaten US National Security”. The US home appliance firm Maytag was for sale and attracted a bid from Haier, but was quickly killed by the US on the basis of security, and a US firm outbid Haier by 20% to ensure the firm “wouldn’t go to China”. Yet US companies – with the fierce political support of their government – demand the “right” to come to China and buy everything, but China is not permitted to worry about its own ‘security risk’. Clearly, something needs to change.
It is almost comical, the way in which the US government and media raise irrelevancies and juvenile accusations about China “not playing by the rules”. What rules? China is learning quickly about these masters of economic hypocrisy, which is the real cause behind the ever-growing whining in the Western media. When others begin to win, in the same arena and under the rules that they used to take advantage of you for 300 years, suddenly the rules become “unfair”. Of all the nations in the world, the US is the most insanely mercantilist and viciously predatory, using every manner of political, economic and even military, pressure, to force the rules of every agreement to a form that works to its specific advantage. But whenever any other nation – and there are many examples – begins to beat the US at their own game, playing by those same US rules, it is always the Americans who instantly begin whining about others being “unfair”, about their superior competitors “not playing by the rules”, and crying to anyone who will listen that all they want is “a level playing field.” And of course, the US media lap this up like a hungry dog and regurgitate it to the masses, so most Americans believe that China really does not follow the rules. But it is always the US that breaks any rule and ignores any law that proves inconvenient.
Keep Your Wretched Refuse at Home
Immigration is a small but focused area of economic colonisation practiced by several Western nations but primarily the US. America has had for quite some time a predatory immigration policy meant to vacuum up and concentrate the best and brightest people – and the cash – from developing nations, programs presented in generous humanistic terms, but that really function as just another colonisation tool. Scientists and researchers playing musical chairs among the Western nations may create no net benefit or loss to any country, but laying out the red carpet to the brilliant and rich in the world’s developing countries is neither accidental nor benign, and incurs great losses to those nations because they are least able to afford this drain.
It may well be true that many of these migrants would have had little opportunity to pursue their research or other work in their home countries, but this fact serves only as an illusion to mask the larger reality. This emigration removes forever the potential contributions to domestic development by these people, however small they might have been, and permanently transfers those contributions to the US, thereby magnifying – and serving to maintain – the income disparity between rich and poor nations. In fact, while it may be true that these emigrants would have accomplished little at home, it is equally true that without them the US would also have accomplished little, and the economic disparity would not have increased. It may be true that many emigrants to the US feel gratitude for the opportunity to further their careers, but this is from the point of view of American individualism which ignores the larger social losses.
The inscription on New York’s Statue of Liberty, “Give me your tired, your poor, your huddled masses yearning to breathe free, the wretched refuse of your teeming shore”, is just feel-good nonsense for Hallmark Greeting Cards. If it ever had truth in it, that was a long time ago. There is no ‘wretched refuse’ reaching American shores today, and there hasn’t been for a long time. It is only the rich and gifted who are welcomed today. Americans have been brainwashed into believing their country is the richest because they are the best and brightest, but that has never been true. For millennia, China led the world in inventions, discoveries and innovation, and more recently countries like Germany and Japan have consistently surpassed the US in almost every field except weapons of war and fraudulent banking.
There is another category of immigration that made a major contribution to the wealth and development of the US, and that was what some choose to call “the great scientific exodus during and after World War II. But this great exodus was not quite according to the myth created for the gullible American public. It is true that some Jewish scientists left Europe for the US during the war but the major effect occurred later. After the war, the US government transplanted at least 10,000 German scientists and a very large number of Japanese to the US, but in virtually every case these were war criminals fleeing certain prosecution and probably death for their crimes. Most of the Germans were too prominent to be placed in American society and were hidden in the US military where they would attract less public attention, only to be released as memories faded. The same was true with the Japanese. One of the most famous was Werner von Braun who created the American missile and space technology, but there were many more with their skills in military matters, in obscene human experiments, in torture and much more, all treasured immigrants for the US military machine. The sum of their “contributions” to American society and world unrest can only be guessed at.
Control and Riches Through Cartels
There are many areas in which the US exploited its commercial reach through protectionist and monopolist policies designed to fill American bank accounts while draining the world. One prominent example is the commodity cartels for which the US has always been famous, with large American companies controlling and manipulating markets like petroleum. In 1952, a US Senate Committee published a report on the petroleum cartel, showing that seven firms controlled 85% of the world’s petroleum reserves. They controlled all major oil refineries and pipelines, fixed worldwide oil prices and divided the world’s market among them. Five of these firms were American, the other two being their European cousins. All worked in the dark to eliminate competitors and maintain a stranglehold on the world’s oil supplies, distributing and sharing production areas, and fixing transport costs and sales prices, to dominate the world by controlling its oil. Even today, we can see fully-laden petroleum tankers anchored well offshore, sometimes for months, waiting for the most profitable delivery time.
These Volumes provide only a glimpse, a brief summary, of US government attitudes and activities that have for centuries been directed to creating and maintaining the national wealth that Americans generally credit to their “democracy” and American ingenuity, and serve only to open a window on some origins of this wealth. But even from this brief introduction it should be more than apparent that America is not wealthy because of either freedom or democracy, but instead from a powerful military, ‘law of the jungle’ predatory capitalism, a healthy infusion of white supremacy and some accidents of history. As with all prior empires, America is wealthy today because for hundreds of years it copied, stole from, bullied, spied on, intimidated, invaded, colonised and plundered, weaker nations.
America is neither as innovative nor creative as the popular narrative suggests, and it should be more than obvious that claims to wanting “fair play” or “a level playing field” are merely jingoism for the masses and represent a rather high order of hypocrisy. When we peel back the layers and look behind the propaganda walls, we find little evidence that the US conducts itself internationally with any sense of honor or even justice. There is little in America’s foreign conduct that is either fair or moral, and certainly nothing decent. If I were an American, I would be dispirited and ashamed, finding nothing in the above to evoke pride in my nation. It is indeed a foolish and simple-minded pride, almost pathetic, that so many Americans derive a patriotic glow from their fringe membership in what is factually a vast and uncaring criminal enterprise that holds even them in contempt.
The areas we have covered in this book relate primarily to the actions and attitudes of the US government itself. There is much more to this picture of American wealth relating to the actions of US multinational corporations that is too extensive to deal with here. In a later Volume, we will examine the attitudes, actions and effects of the American religion of predatory capitalism that seeks to purchase and kill major brands in every other nation, precisely to eliminate competition for American firms.
I noted at the beginning of this volume that national and personal wealth do not necessarily coincide, that some portions of a nation can be extremely wealthy while the majority are impoverished. Many or even most of the events discussed above did not serve to enrich “America” as a nation but instead were a form of plunder that filled only a few pockets. The colonisations of poor nations were one such. Slavery is another.
Lastly, it is necessary to note that a great many of the actions involving or facilitating the accumulation of wealth were not taken by the US government as such, but by those who control the US government from the shadows, the most obvious of these being the US Federal Reserve which is not American but is privately-owned by Rothschild, Warburg and a few other European Jewish bankers. Many of the actions or events listed in this chapter were due to the FED’s owners and mostly benefitted them alone. Most of the war seizures, Japan’s Golden Lily, the Silver and Gold purchase acts, the currency manipulations, the establishment of the IMF and World Bank all fit into this category. There are many more, as we shall see.
Mr. Romanoff’s writing has been translated into 32 languages and his articles posted on more than 150 foreign-language news and politics websites in more than 30 countries, as well as more than 100 English language platforms. Larry Romanoff is a retired management consultant and businessman. He has held senior executive positions in international consulting firms, and owned an international import-export business. He has been a visiting professor at Shanghai’s Fudan University, presenting case studies in international affairs to senior EMBA classes. Mr. Romanoff lives in Shanghai and is currently writing a series of ten books generally related to China and the West. He is one of the contributing authors to Cynthia McKinney’s new anthology ‘When China Sneezes’. (Chapt. 2 — Dealing with Demons).
He can be contacted at: email@example.com
Reference links – How the US Became Rich – Part 6
Project Shamrock spying
Project Echelon spying
Xerox copiers came out of the factory “espionage-ready”
Five Eyes spy network
(22) https://www.statecraftblog.co.uk/post/five-eyes-the-oldest-and-largest-spy-network-in-history#:~:text=The%20Five%20Eyes%20%28FVEY%29%2C%20consisting%20of%20Australia%2C%20Canada%2C,intelligence%20exchanges%20between%20the%20Allied%20nations%20during%20WWII .
CIA, NSA, spied on Enercon
Kenetech stole from enercon
NSA accused of hacking into UN internal video conferences
Brazil Thomson-Alcatel NSA spying
Patrick Buchanan “Behind a tariff wall”
US Section 337 investigations
China Won The 337 Investigation Lawsuit – Huaxiao
Matsushita 337 investigation
(49) Investigation No. 337-TA-392 usitc.gov›publications/337/pub3418.pdf
investigation, pursuant to subsection (b) of section 337 of the Tariff Act of 1930, as amended … (Toshiba) and Matsushita Electric Corporation of America (Matsushita)
US “chicken war”
1985 “Plaza Accord” Japan
US duties on canada lumber
(59) https://www.canada.ca/en/global-affairs/news/2021/05/statement-by-minister-ng-on-us-preliminary-duty-rates-on-canadian-softwood-lumber.html#:~:text=%E2%80%9CU.S.%20duties%20on%20Canadian%20softwood%20lumber%20products%20are,and%20hinder%20economic%20recovery%20from%20the%20COVID-19%20pandemic .
XpressWest hgh-speed train canceled
Fear of Huawei spreads globally
The us government paid 5,000 people in Europe to participate in a staged protest against Chinese steel.