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Opinion&Analysis Tuesday, August 02 2016 BUSINESS REPORT

❚❚ DILBERT

PROTECTIONISM, the political economic choice throughout the world history, is again in fashion. A protectionist shift is no radical departure for the US. It is a return

to the status quo.The international turn to trade lib-

eralisation since World War II represents the exception to protectionist rule.

Republicans of yesteryear, such as Don-ald Trump now, sought to protect indus-tries from foreign competition.

Old the Grand Old Party (now theRe-publican Party) leaders said free-traders were agents of a vast British conspiracy to undermine the US. As the close-knit global economy becomes ever more frayed, these same policies are also increasingly coming under fire.

Protectionism, the preferred political economic choice throughout much of world history, is once again in fashion.

The US, long considered the leading promoter of international trade liberalisa-

tion, has a Republican presidential nom-inee threatening to withdraw the US from the World Trade Organisation (WTO) and the North American Free Trade Agree-ment (Nafta).

Trump is also promising a trade war with two of the country’s biggest trading partners, Mexico and China.

And it is a popular protectionist pos-ition: a bipartisan majority of Americans now believe free trade has been bad for the US.

At first glance, this may come as a surprise. But from a longer historical perspective, such a protectionist shift is no radical departure for either the US or the global economic order. It is a return to the status quo.

Rather, the international turn to trade liberalisation since World War II – from the General Agreements on Tariffs and Trade to the WTO – represents the rare exception to the protectionist rule.

Nationalist policiesAside from the notable case of Free Trade England, which unilaterally adopted free trade in the 1840s, most nations in the latter half of the 19th century sought safety from the gales of modern global market competition behind ever higher tariff walls. These were further buttressed with gov-ernment subsidies to domestic industries and imperial expansion.

Few nations pursued that policy pack-age with more gusto than the US.

Under Republican auspices, it adhered to stringent economic nationalist policies at home from the 1860s onwards, while increasing its imperial proclivities abroad.

Not until under the change of course executed by Franklin Delano Roosevelt’s (FDR) State Department would free trade begin to displace protectionism as the pre-ferred policy for US economic expansion.

What brought about this sizeable mid-20th-century political, economic and ideo-logical about turn within the history of modern US trade policy?

The answers awaited discovery in 19th-century America.

It was hidden amid the conspiratorial conflict over free trade, imperialism and global economic integration (economic globalisation).

The battle over economic globalisa-tion became particularly frenzied behind

the high-tariff walls of late-19th-century

America, where protectionist sentiment ran rampant within Republican political circles.

The tariff issue dominated US politics like no other in the late 19th century. And, echoing Trump’s rhetoric today, the Republicans of yesteryear sought to pro-tect the country’s infant industries from foreign competition, especially from Free Trade England’s cheaper imports.

By the 1880s, the Grand Old Party had become the party of protectionism through and through.

As a result, US advocacy for free trade was portrayed by Republicans as tanta-mount to a British conspiracy. Very dif-ferent from their often professed love of Adam Smith today, Republican protection-ists began seeing Adam Smith’s invisible

hand hidden behind any attempt to lower high US tariff walls.

Far from being late-19th-century sup-porters of trade liberalisation, paranoid protectionist GOP leaders instead time and again charged the free-trade oppos-ition with being agents of a vast British conspiracy to undermine the US’s pro-tected markets.

Republicans’ paranoiaWhen US free traders appeared to be gaining the upper hand in national pol-itics in the early 1890s, future Republican president William McKinley – who had well-earned his nickname “the Napoleon of Protection” as a Republican congress-man from Ohio – exemplified the party’s protectionist paranoia.

He charged that a transatlantic con-spiracy was afoot. He declared that it was “beyond dispute” that a secret partnership existed between “free trade leaders in the US and the statesmen and ruling classes of Great Britain.” Similar charges of a transatlantic conspiracy had followed the US free-trade movement throughout the latter half of the century.

If the “paranoid style” were a Victorian American play, the alleged conspiracy of free trade would deserve top billing.

And yet it was the work of this same conspiracy-laden American free-trade movement of the late 19th century that laid the foundations for the subsequent

US promotion of free-trade initiatives like Nafta and the WTO in the 20th century. Those are the very same free-trade in-itiatives that are now under fire from the Republican Party.

The conflict returnsDespite short-term setbacks and long-term charges of being in cahoots with the Brit-ish throughout the late 1900s, the US’s free traders would nevertheless maintain a semblance of cohesion and optimism as they took the free-trade fight well into the 20th century.

They would continue their struggle for what proponents and critics alike now describe as a US-led neoliberal world order that came into being in the 1930s and the 1940s.

This same US-led neoliberal economic order is now under attack, even within the US itself.

The global conflict between free trade and protectionism has once again re-turned to the US’s shores – and the terms of the debate mirror those of the late 19th century.

Marc-William Palen is a lecturer in imperial history at the University of Exeter. This article initially appeared on The Globalist. Follow The Globalist on Twitter: @theglobalist. Adapted from The “Conspiracy” of Free Trade: The Anglo-American Struggle over Empire and Economic Globalisation, 1846-1896 by Marc-William Palen

Free trade and protectionism conflict returns to the US

Marc-William Palen

Not until under the change of course by FDR’s State Department would free trade begin to displace protectionism as the preferred policy.

❚❚ DIARY

WHAT do you do if you find out your husband is having an affair? Confront him? Dump him? Try to forgive?

If you are in China, and have a spare $59 000 (R817 400), you could just hire a “mistress dispeller”.

Increasingly popular in China’s largest cities such as Shanghai and Guangzhou, mis-tress dispellers specialise in end-ing affairs between married men and their extramarital lovers.

However, they don’t do this by

using violence, lawyers or any other ways which you might ex-pect. Instead, when a woman dis-covers her husband is cheating, she can hire a mistress dispeller to subtly infiltrate the mistress’s life, become friends with her and win her trust in an attempt to break up the affair.

Weiqing International Mar-riage Hospital Emotion Clinic Group is one such service.

Set up in 2001 in Shanghai, it now operates in as many as 59

cities, and gets rid of hundreds of mistresses via several basic rules.

Shu Xin, Weiging’s director, said that first of all their mis-tress-dispelling company will fig-ure out what kind of mistress they’re dealing with (ie, whether she is in it for money, love or sex). Then, they will “draw up a plan”.

The mistress dispeller will next start befriending the mis-tress, either through working out at her gym, moving in nearby, or getting a job with her. – Daily Mail

There’s a way to wean hubby off his mistress in ChinaYou can write, fax or e-mail a letter to: The Editor, Business Report, PO Box 1014, Johannesburg 2000Fax: (011) 838-2693e-mail: brletters@inl.co.zaInclude daytime telephone numbers and full address.Pseudonyms are not acceptable.The editor reserves the right to edit or reject lettersDIRECT ENQUIRES TO:JHB NEWSDESK 011 633 2484You can send feedback, complaints or suggestions to:e-mail: br.editor@inl.co.za

❚❚ CONTACT

INVITED guests gathered at the Protea Hotel Midrand last week at the launch of the construction industry’s draft sector code for Black Economic Em-powerment (BEE) may have wondered

whether it was appropriate for the Con-struction Sector Charter Council (CSCC) – the industry executive authority for empowerment and transformation in the sector – to announce the draft sector code for BEE when this has yet to be gazetted.

After all, isn’t a draft sector code a transition towards the final sector code in terms of the BBBEE Amendment Act administered by the Department of Trade and Industry (the dti)?

In the normal course of things, the above would certainly be the case. Except that given the current prevailing circum-stances in the construction industry, oc-casioned by the February repeal of the 2009 construction sector code by the Min-ister of Trade and Industry, a different ap-proach to the normal rules was necessary.

With the widespread industry uncer-tainty over the future existence of the construction sector code – permeated by the repeal – it became more than neces-sary and imperative that a launch and unveiling of the intended new measure-ment framework, representing a public statement of commitment and intention, outlining the approach and process under-taken, needed to be held for government,

the industry and all interested stakehold-ers to witness.

It was against this background that, af-ter many months of protracted alignment negotiations among industry representa-tives, the CSCC revealed the summarised contents of the revised draft construction sector codes that are not only aligned to the dti Generic Codes of Good Practice, but also seek to radically facilitate eco-nomic transformation of the industry throughout its value chain. Once gazetted by the dti through a prescribed national gazette notice, the draft construction sec-tor code will then be open to public scru-tiny and comments. A process that lasts for 60 days. Throughout this period, the CSCC and the dti will be engaging interested groups with the view to solicit comprehen-sive submissions.

But why the construction sector code in the first place?

While the need for an industry con-struction sector code has long (as early as 2003) been established, the recent conclu-sion of the draft sector code represents a groundbreaking shift in the trajectory

for economic transformation of intended designated beneficiaries. Occurring on the heels of the Competition Commission’s finalisation of the investigation into col-lusion in relation to the construction of 2010 world cup stadia by some industry leading players, the gazette of the sector’s empowerment measurement framework provides a window of opportunity for the industry to self-correct and commit to vol-untary rebuilding initiatives.

Sector codes must generally address in-dustry specific empowerment challenges and peculiarities. As a norm, they must first be products of industry wide consul-tation among major commercial entities in the sector.

At best, they must enhance what al-ready exists between them and the generic Codes of Good Practice managed by the dti. Where the sector code deviates from the generic BEE codes, it must do so based on sound economic interests and evidence. The revised draft construction sector code unveiled last week seek to achieve exactly that.

What makes the construction sector code so different?

Transitional period – When the 2009 Construction Sector Code were gazetted, a 12-month transitional period for phas-ing in and implementation was provided for. This revised construction sector code makes no provision for a transitional period. It is envisaged that, following the public commentary period, the sector code should be finally gazetted and imple-mented by October.

Scope of application – Compared with the old 2009 construction sector code and the generic codes, the revised draft Con-struction Sector Code now properly defines the scope of application and includes the three segments of the value chain, namely the built environmental professionals, the contractors (general build), and the manu-facturers and suppliers of building materi-als, plant hire and equipment.

National Priority Imperatives – Unlike the old sector code, the revised construc-tion sector code has taken into account and incorporated principles and objectives

that are embedded in various policy instru-ments and interventions in the country, namely the National Development Plan; Skills Development Plan; the creation of sustainable and decent jobs; meaningful, accelerated change in construction econ-omy; and procurement transformation and standardised industry methods.

In particular, the revised codes seek to herald the dawn of the new measurement emphasis that focuses on the following areas of economic transformation ;

Black Ownership – which is set at 35 percent after four years of the codes being promulgated. This is 9 percent above the target set out in the generic dti codes:

■ Accelerated levels of black manage-ment recognition in all the echelons of construction companies and firms by black women appointees.

■ Increased contractor and supplier development of emerging small contract-ors through decisive procurement trans-formation.

■ And more importantly, facilitation of an increased pipeline of professional

expertise through skills development enhancement.

Evidently, no provision is made for the controversial and hugely disliked prin-ciple of “once empowered, always em-powered” commonly found in the mining and financial services sector. The exit and termination of black ownership in construction companies will, as proposed by the draft sector code, be handled in accordance with the terms of the recogni-tion of ownership retention after the sale or exit as outlined in the generic codes of good practice.

With all said and done, the real work of measuring the true impact of the con-struction sector empowerment framework begins once the gazette has been com-pleted. Should we fail, then history stands to judge us harshly. The construction in-dustry and the country should therefore look forward to the dawn of the new measurement industry.

Thabo Masombuka is the chief executive of the Construction Sector Charter Council

Towards a new dawn: draft code in construction

Sector codes must generally address industry specific empowerment challenges and peculiarities... They must first be products of industry wide consultation.

❚❚ QUOTE OF THE DAYTake chances, make mistakes. That’s how you grow. Pain nourishes your courage. You have to fail in order to practice being brave. – Mary Tyler Moore, American actress

CHARTINGTHE FUTURE

Thabo Masombuka

The construction industry’s draft sector code for BEE was launched last week, despite the draft not yet being gazetted. PHOTO: SIMPHIWE MBOKAZI

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