Chapter 6 – “Unfair Fair Trade Laws and Other Mischief”
Stiglitz discusses the hypocritical U.S. “lessons” in trade liberalization, competition, and privatization taught to Russia in the 1990s. He submits that the U.S. (the West) did not always utilize its own purported methods of growth and economic stabilization while it continuously preached these methods to others.
He submits that the Treasury Department under the Clinton administration played a particular role in curtailing market forces and emerging democracy in post-communist Russia by stifling discussions on important economic and policy issues.
The U.S. lectured everyone about crony capitalism and its dangers. Yet issues of the use of influence appeared front and center in the instances described in this chapter. Stiglitz concludes that if the West’s preaching is not taken seriously everywhere, we should understand why.
Stiglitz concludes that we sent mixed messages to the Russians regarding market forces by telling them that :
 Trade liberalization is necessary for a successful market economy , yet when the
Russians tried to export aluminum and uranium to the U.S., they found the door shut
(p178). o U.S. political forces and industries used “fair trade laws” to protect U.S. industry by imposing tariffs on imports that they said were being “dumped” (being sold below fair market price) by Russia. The U.S. fair trade laws are seen as unfair by many other countries in the world and Stiglitz purports that they are
“naked protectionism” of U.S. industries (p 173). He highlights two examples of
Russian commodities traded unfairly in the U.S. due to these “fair trade laws”: aluminum and uranium. (See headings in bold below for more detail on these two cases.) Stiglitz states that we also told the Russians that,
 Competition is Vital , yet the U.S. government was at the center of creating a global cartel in aluminum and gave the monopoly rights to import enriched uranium to the U.S. monopoly producer. o Aluminum : Stiglitz states that Russia was not “dumping” aluminum but selling it at the international price, which happened to be low due to both a global slowdown in demand occasioned by slower global growth and because of the cutback in Russian aluminum use for military planes (p 173). Despite argument from the Council of Economic Advisors and the Department of Justice, then head of Alcoa, (later U.S. secretary of the Treasury) Paul O’Neill was successful in arguing f or a global aluminum cartel keep aluminum prices high. O’Neill was supported by the State Department (who had strong ties to the old-line state ministries in Russia) and Rubin, then head of the National Economic Council. o Uranium : For purposes of disarmament, the United States Enrichment
Corporation (USEC) would buy enriched uranium from Russian nuclear warheads, deenrich it and use it in nuclear plants. But, the “fair trade laws” were again invoked, this time by American uranium producers who purported that
Russia was “dumping” uranium on the U.S. While the USEC was in the end given

special permission to continue buying uranium from Russia, they did indeed hold monopoly power over the uranium industry in the U.S. Finally, the Russians were also told to:
 Privatize rapidly and honestly , yet the one attempt at privatization by the U.S. took years and years, and in the end its integrity was questioned. o The USEC : In the 1980s, privatization was a growing trend both in the U.S. and in Britain. With t he U.S. trailing Britain’s Thatcher in the number of industries privatized, they looked to privatize the USEC. This meant the USEC could no longer be protected from anti-trust laws. Studies showed that there would be no incentive for the USEC to keep buying the Russian uranium, since they were uranium enrichers themselves. The USEC promised to buy uranium “as fast as
Russia would sell it” but Stiglitz found a secret agreement between the USEC and Russia: The Russians had offered to triple their deliveries of uranium and the USEC had not only turned them down but paid a handsome amount in what could only be termed “hush money” (p 177). The privatization of the USEC thus was a much contested and long process, and occurred amidst controversy and accusations of corruption.