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U.S. trade protectionism grows, globalization retreats

Updated: 13 Sep 2009
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When the U.S. President Barack Obama decided to impose a tariff on tires imported from China on Friday, his beggar-thy-neighbor policy caused quite a stir at the ongoing 2009 Summer Davos.

The new tariffs, which will begin with a 35-percent duty the first year and decrease to 30 percent the second year and 25 percent the third year, found itself a hot topic among the participants.

Around 1,400 global business leaders and policy makers gathered at the summit in northeastern China's port city of Dalian to discuss how to resist the temptation of protectionism which raised its ugly head amid the global economic downturn.

The World Trade Organization predicted earlier that global exports will drop by 12 percent in 2009, leading to concerns that new forms of protectionism are taking root.

One shared belief among the politicians, scholars and businessmen is that protectionism does no one good. The latest protectionist drive of America will damage the interests of both China’s tire exporters and U.S. consumers. America's tire industry may also be a loser.

Alejandro Jara, deputy director-general of the World Trade Organization, told Xinhua on the sideline of the summit that he did not know whether the decision would be helpful to the tire industry in the United States or not because providers from other countries may also get opportunities.

"It's obviously a measure that does not help recovery and does not increase world trade," he said.

Kiat Sittheeamore, President of Thailand Trade Representative, said if it was a long-term measure which would only benefit a few groups in the United States, then it's not the principle that had been agreed at the G20 meeting in London, and it was difficult for the world community to accept it.

Two days ago, at the opening ceremony of the summit, China's Premier Wen Jiabao slashed protectionism, saying it would only delay world economic recovery and ultimately hurt the interests of the businesses and people of all countries.

"We must guard against and redress all forms of covert protectionist activities. As an active participant in economic globalization, China will never engage in trade or investment protectionism," he said.

In the ranging times of the financial crisis, China sent several trade and investment promotion missions to Europe and the United States to purchase goods and boost investment cooperation.

Professor Denis Simon, director of the program on US-China Technology, Economics and Business Relations at the Pennsylvania State University, said protectionism did not really build any momentum.

"If you are just busy fighting fires, if you are only busy dealing with problems of tomorrow and do not look in the long term, you are going to find yourself in a very bad position," he said.

But is the protectionism a necessary evil as someone has argued? Is it necessary before tougher regulation could take effect to ward off market risks?

It's actually a new form of protectionism -- a retreat of globalization and cross-border trade.

Ernesto Zedillo, former President of Mexico and now director of Yale center for the study of globalization, said he believed that protectionism was "always and everywhere bad."

He said some political leaders would use protectionism to pursuit some objects, which would create a lose-lose situation.

"Protectionism is not part of the solution. It's the part of the bigger and more dramatic problems. It will do nobody's good."

Source: Xinhua
 
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