The Free Trade Tax

READING, UK -- The very pillars of free trade are once again under fire. This time, international law and politics are the aggressors. UK-based construction firm Mabey & Johnson was recently fined with 5 million British pounds under charges of corruption associated with the acquisition of international construction contracts. Iraq, Ghana, and Jamaica are listed as among the nations involved.

The "unusual case" was opened following a drastic change in the board of directors. Five of the company's prior directors resigned and were replaced with new members who decided to reveal the company's doings to the Serious Fraud Office (SFO). Following extensive talks with the SFO, the company pleaded guilty to "two charges of conspiracy to corrupt and one charge of breaching UN sanctions".

Of particular interest is the related UN sanction: Mabey & Johnson was found in violation of the UN oil-for-food program in Iraq, a humanitarian-based amendment to the prior comprehensive sanctions against Saddam Hussein's regime following its invasion of Kuwait in 1990. Detailed evidence documents the upkeep of very positive "extensive commercial interests" in Iraq following the Gulf War and the subsequent sanctions.

The World Trade Foundation (WTF) strongly objects to the irrational treatment of Mabey & Johnson as well as the economic isolation of the citizens of Iraq. Repeatedly, economic theory has demonstrated that free unregulated trade is mutually beneficial between nations. It not only creates more jobs but it also positively affects the standards of life in all nations involved. Thus, in essence, politics simply becomes an unnecessary layer of bureaucracy that obstructs the betterment of welfare around the world.

While demonstrating its willingness to resist the negative forces of isolation and pressure politics, had secured itself over 60 million British pounds' worth of international contracts. This added stream of revenue has helped drive employment in the UK, while also acting as a force of foreign investment in otherwise isolated regions. The WTF asserts that Mabey & Johnson was acting in the mutual interests of both the UK and the other target states.

In essence, the 5-million-pound fine that Mabey & Johnson incurred for its "close personal relationships" and "white man's handshakes" with business partners abroad fails to be a true deterrent of crime, but rather acts as a tax on the over 60 million pounds to be reaped from truly free trade.

Related reading: http://news.bbc.co.uk/2/hi/uk_news/8275626.stm