Let’s not put on the shackles of protectionism
A wrong-headed column in The Times of London contends that the G20 nations need to get beyond the “false dichotomy” of “free trade versus protectionism”. Noreena Hertz of Judge Business School, Cambridge, notes rightly that Western leaders are hypocritically extolling free trade while implementing protectionist measures on the sly. Then, however, she insists that protectionism can be a beneficial policy if utilised carefully under international agreement.
To think that protectionism can be controlled once given official sanction is, in my view, naïve and economically dangerous.
Let’s shake off the shackles of free trade
The G20 leaders must be flexible – a little protectionism could give nations vital breathing space
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We also continue to be presented with a false dichotomy – free trade versus protectionism. What we need is a nuanced analysis of where on the free trade-protectionism scale nations need and want to be positioned, and what the implications of that are.
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I’m not advocating trade war, or proposing that powerful countries be allowed to erect trade barriers with impunity. It’s just that I don’t think protectionism should be seen as a taboo. Instead we should see it as a tool that can be deployed to address local economic freefall, but can also create far-reaching collateral damage.Its use, therefore, must be sanctioned by the global community, practised with caution, within guidelines.
Allowing any protectionism risks a trade war. If one country were given permission to raise tariffs against its trading partners, those trading partners would rightly perceive that as a threat to domestic industry and employment. It is impossible to imagine that they would do nothing to protect their economies in the face of what they would see as unfair trading advantages.
Furthermore, the greatest benefits from trade barrier reductions in recent decades have accrued to economically underdeveloped nations. If underdeveloped countries are to have any solid hope of improving their economic circumstances, free trade policies must continue and expand.