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Revival Of Trade Protectionism Under Economic Crisis

2009/1/13 13:08:00 27

A wave of protectionism is taking place around the world, which may further hurt the economies struggling to survive.

From Beijing, Brussels to Washington, various industries have begun to line up for the government to protect imports.

This has happened during the past few economic recessions, but this time, as the global economy is generally in a predicament, trade restrictions may have more serious consequences.

In 1980s, Japan's economy was booming, so strength could not retaliate against US import quota measures for steel and automobiles.

But at the moment, all the economies in the world are having a bad time. No government has the ability to "return good for evil" as Japan did at that time.

Governments are competing to rescue the economy by launching stimulus packages, which may also bring protectionism, as countries try to ensure that their industries benefit from it.

In the US, Democratic congressmen and their supporters in the steel, textile and trade unions are pushing for a strict "buy American" clause in the US economic revitalization plan, so that the beneficiaries of government spending are limited to US companies.

European officials have been dissatisfied with this.

"There is no such thing as free trade at all. All trade is artificially controlled," said Di Mike, chief executive of the new steel company.

As both global consumer demand and corporate investment go downhill, trade protectionism will exacerbate economic problems and fuel economic growth engines.

The world bank has predicted that global trade may shrink by 2.1% this year, the first decline since 1982.

Last autumn, Ecuador announced a comprehensive tariff increase. The import tariffs on some imported meat increased from 25% to 85.5%. India increased the tariffs on steel, and not WTO members, Russia also increased tariffs on imported cars.

Other countries adopt different means, such as Indonesian importers requiring special permission to control imports of clothing, shoes and appliances, while Mexico threatens to ban imports of some US meat products.

In addition, all fronts have begun to resort to national legal procedures to prevent foreign competitors from obtaining government subsidies or dumping at low prices.