International Law

Trade Protectionism Du Jour

By Stan

Not sure how long this is going to go on, but it appears as though the strategy of most countries over the next couple of years is to publicly decry protectionism and talk up free trade, and at the same time vehemently defend its own protectionist policies.

A few things to look at today:

1. A useful New York Times article that summarizes the current state of protectionism.

The surge in protectionism is casting a shadow over an economic summit meeting of world leaders scheduled for London on April 2. At the last such gathering, in Washington in November, former President George W. Bush persuaded the Group of 20 members to commit to protecting free trade ? whatever the pressures caused by faltering economies and lost jobs. The members include industrialized and developing nations, and the European Union.

?No sooner was the G-20 statement issued than it was breached,? said Daniel M. Price, an official in the Bush administration who helped negotiate the agreement. ?Instead of just talking about trade liberalization, countries need to take immediate steps to show they mean it.?

Far from heeding their pledge not to erect new barriers for 12 months, many countries have raised import duties or passed stimulus measures with trade-distorting subsidies.

2. The latest “spontaneous” call for free trade from China’s private sector, in this case, the M&A crowd, which comes a scant few days after the Coke deal was rejected. Coincidence? I report, you decide.

One of China’s national trade associations on Saturday issued an open letter to protest rising international trade protectionism.

The letter, entitled “Resist protectionism and implement responsible global business practices,” was issued by the China Mergers and Acquisitions Association, a non-governmental body run by the All-China Federation of Industry and Commerce.

“The financial crisis is spreading across various industries in different countries,” the letter said. “Protectionism only makes the situation worse.”

It called on chambers of commerce and multinational corporations in all countries to help rebuild confidence in globalization and to work toward a common goal of economic development.

“Globalization provides an easier environment for cross-border investment and reduces regulatory barriers to trade,” it said.

With all the offshore acquisitions that Chinese enterprises wish to make this year, you can be sure that we will keep seeing this sort of language for some time.

3. In light of the New York Times article, which enumerates some of the U.S. and EU’s recent protectionist measures, I enjoyed this passage from a joint statement released by new USTR Ron Kirk and EU Trade Commissioner Catherine Ashton:

We also agreed on the importance of maintaining a sustained effort to follow through on the pledge G20 Leaders made in November to refrain from raising new barriers to investment or to trade in goods and services, and we endorsed the process recently commenced at the WTO for monitoring trade measures undertaken in response to the international economic situation. At a time when the temptation to turn inward, and away from the rules-based system, may be stronger than it has been in decades, we also agree that the United States and the EU must lead by example, turning outward more intelligently to continue to strengthen the rules-based system and create new market opportunities.

There is nothing more I like to write about than hypocritical government officials. It makes for a better story when there is a “good guy” and a “bad guy” to portray. On the other hand, since all nations seem to be doing one thing and saying another on trade, at least there is a lot to write about.

Expect me to beat this topic to death over the coming months.

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Full post as published by China Hearsay on March 23, 2009 (boomark / email).