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Which way are the trade winds blowing?

Read My Lips > Global Trade
Protectionism — Strangling Global Trade?

By The Globalist

India, China and the United States will still be the world's three most populous nations in 2050. But there will be plenty of demographic change in other countries, given that 99% of future population growth is going to occur in developing countries. We wonder: Which country will be home to the fourth-largest population in 2050?

What is the challenge for developed countries?

"We ask that the West abandon its neo-mercantilism — its hoarding and protectionism. We ask for equitable access to the world's markets."

(South Africa's President Thabo Mbeki, June 2004)

"You've got to threaten protectionism to avoid protectionism."
(Fred Bergsten, director of the Institute for International Economics, May 2005)

Do some Western leaders agree?

"Let us make these unacceptable trade subsidies history. Let us make developed country protectionism history."

(Gordon Brown, Britain's Chancellor of the Exchequer, July 2005)

Which double standard has long irked development specialists?

"It is incongruous, to put it mildly, that the industrialized countries that created an international economic architecture after World War II should reinforce protectionism in their home markets — while preaching the principle of open trade to developing economies."

(Jean-Pierre Lehmann, professor of political economy at IMD, December 2002)

Is today’s world trading system the continuation of a historic process?

"Protectionist barriers and other obstacles to balanced trade — aggravated by the concentration of investments, knowledge and technology — have followed colonial domination."

(Brazil's President Lula da Silva, October 2004)

And yet, isn’t protectionism a global problem?

"I know of no country where the constituency for protectionism takes long vacations."

(Tomaso Padoa-Schioppa, European Central Bank vice president, March 2004)

"Let us make these unacceptable trade subsidies history. Let us make developed country protectionism history."
(British Chancellor of the Exchequer Gordon Brown, July 2005)

Do people proudly wear the "protectionist" label?

"Nobody ever wants to be called a protectionist."

(Daniel T. Griswold, director of the Cato Institute's Center for Trade Policy Studies, January 2004)

How does the new head of the WTO view the issue?

"The real challenge that the World Trade Organization faces is no longer the anti-globalization movement — but rising protectionism in Europe and the U.S."

(Pascal Lamy, incoming director-general of the World Trade Organization, May 2005)

And yet, are the benefits of free trade often oversold?

"Simply opening markets and waiting for free trade to solve problems frequently does not work."

(Clyde Prestowitz, president of the Economic Strategy Institute, June 2003)

Paradoxically, can protectionism be a tool to advance free trade?

"You've got to threaten protectionism to avoid protectionism."

(Fred Bergsten, director of the Institute for International Economics, May 2005)

"Each year, as more import duties are phased out, the pain keeps coming. It's getting desperate."
(Jose Maria Imaz, official of a Mexican group of rural farmers and businesses, December 2002)

Do some in Europe wish to keep protectionist measures in place?

"Europe should not only protect its internal market and its national products with custom tariffs, but also with indirect measures such as health, environmental and safety controls, applied to goods coming from Asia."

(Giulio Tremonti, Italy's Economy Minister, October 2003)

Why are Germany and France not moving aggressively to remove trade-distorting policies?

"Regulatory and protectionist instincts still run deep in the countries that invented the Napoleonic code and the craft guild."

(Editorial in The Economist, March 2005)

Are there other European perspectives?

"Protectionist ideas in the long run will mean less economic growth and fewer jobs. It is not a sustainable strategy to shelter ourselves now from imports."

(Thomas Ostros, Sweden's trade minister, April 2005)

What defines current U.S. trade policies?

"The Bush trade strategy is finally coming into focus. Call it trade policy on the cheap: Negotiate on multiple fronts — but sign only those deals that don't ask too much of America's protectionist special interests."

(Brink Lindsey, vice president for research at the Cato Institute, November 2003)

"We ask that the West abandon its neo-mercantilism — its hoarding and protectionism. We ask for equitable access to the world's markets."
(South Africa's President Thabo Mbeki, June 2004)

Should the United States worry about growing protectionist sentiment at home?

"The real threat to U.S. hegemony is not that the sentiments of foreign investors will make foreign debt unsustainable. It is that protectionism and isolationism at home will put an end to the dynamism, openness and flexibility that power the U.S. economy."

(David H. Levey, former managing director of Moody's Sovereign Ratings Service, and Stuart S. Brown, professor at Syracuse University, February 2005)

Are U.S. worries about China overblown?

"If China floods the world with cheap clothing, rival producers may suffer — think Pakistan, Mauritius. But the United States, a net importer of cheap clothing, is bound to benefit if China drives the price of T-shirts lower."

(Sebastian Mallaby, Washington Post columnist, April 2005)

How does Asia view U.S. and EU protectionism?

"The Europeans use health standards to protect their agricultural markets. Now it appears the United States is moving in the same direction — only using security issues as a protectionist tool."

(Senior Southeast Asian government official, October 2003)

Why do some people support protectionism for developing countries?

"The price of coffee is a matter of life or death to millions of small-scale producers throughout the developing world. Free trade has left them in economic ruin."

(Bianca Jagger, human rights activist, November 2002)

"Nobody ever wants to be called a protectionist."
(Daniel T. Griswold, the Cato Institute's Center for Trade Policy Studies, January 2004)

Do people on the spot agree?

"Each year, as more import duties are phased out, the pain keeps coming. It's getting desperate."

(Jose Maria Imaz, official of a radical Mexican group that represents rural farmers and businesses, December 2002)

What may be one of the most effective ways of debunking protectionist arguments?

"If the arguments of the protectionists were valid, Bangladesh and the Congo would be economic powerhouses, for they have low wages and few environmental or labor standards."

(Former U.S. National Security Adviser Brent Scowcroft, October 1997)

And finally, what shadow is looming over global trade?

"A specter is haunting the global economy — the specter of protectionism."

(Financial Times columnist Philip Coggan, November 2003)

 

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