Protektionismen truer

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Af: Richard Quest
22. okt 2011
Den finansielle kriser har presset verdens lande så meget, at risikoen for en stigende protektionisme for at forsvare de enkelte landes arbejdspladser og virksomheder er overhængende.

Det mener CNN-profile Richard Quest i sin faste blog på borsen.dk:


When Pascal Lamy, the Director General of the World Trade Organisation, spoke to me on 'Quest Means Business' last week I didn't want to waste time talking about the Doha Round of World Trade Talks. Frankly after nine years of talking the parties still haven't completed the technical negotiations. Completion of the round is still at least a year away.

The bigger problem at the moment, is that more countries are at risk of introducing policies to protect home industries. For one simple reason: jobs and the unemployed!

One of the defining moments of the Great Financial Crisis, was when world trade fell off a cliff. It was the first time in 50 years global trade suffered such a dramatic decline. It sent the strongest message that the global economy was badly damaged. For the G20, we would sink and swim together.

The rebound in trade over the past 12 months has been equally astonishing. While graphs of growth in developed countries look L shaped, global trade has rebounded with a U or V shape. This of course is a very positive development - global trade is the engine of growth - but worryingly nothing seems to have changed since the bad old days before the crisis.

Today's trade flows are just as distorted as they were before. This year, China's trade surplus will be + 5% and Germany's +5.2%. On the deficit side the US will be around -3.2%, Australia's -3.9% and South Africa's -5%.

As the developed world inches its way back to growth, there is simply not enough steam in the engine to create new jobs. Lamy calls this the "red danger zone" and worries that now might be the time when countries try to protect their home industries by introducing protectionist policies. Lamy said on QMB last week, "Thanks to the WTO disciplines, we haven't had any of that expected wave of protectionism... but we are not out of the woods. Protectionist temptations are rooted in social demands for protection. And the social demands for protection are rooted in unemployment."

Until now, politicians have resisted the protectionist road. True, during the darkest days of the crisis, the World Bank identified about 23 policies introduced by various countries designed to protect home industries. They ranged from automobiles to agriculture. The measures were detailed and complicated, but all fundamentally were designed to keep out someone else's cheaper goods. But a general rush to put up barriers was resisted. Time and again, the G20 in its communiqués warned against this. In June the Toronto Summit's final declaration read "While the global economic crisis led to the sharpest decline of trade in more than seventy years, G-20 countries chose to keep markets open to the opportunities that trade and investment offer. It was the right choice."

Still, the protectionist lobby is gaining ground. For instance, US lawmakers are clamouring for action against China to redress the Chinese currency which is being kept artificially undervalued to protect China's exports. Even the US Treasury Secretary Tim Geithner was starting to sound protectionist (or maybe just populist) when he told us, "China is running a set of policies that are designed to keep the currency undervalued. It is undervalued. They are moving to let it rise, but not very quickly." He stopped short of accusing the Chinese of currency manipulation - but only just.

Meanwhile In Japan the government has started intervening to weaken the value of the yen, which had reached a fifteen year high against the US dollar. Stopping the climb will help protect Japan's fragile recovery, and assist Japanese exporting companies. Using the currency to tinker with trade is rarely a sound long-term economic policy. If Japan wants to keep the currency down then intervention will need to be massive and sustained - and so far there is little evidence of either, except talk.

Intervention and name calling are the sexy part of trade rhetoric. But longer-term, solving this is going to require hard work. It can be found in the latest report from UNCTAD - the UN trade body which warns that unless countries do rebalance trade flows then we are headed for big trouble down the road. UNCTAD says the only real solution is for trade deficit nations to become more competitive by cutting costs. For countries like the US, large parts of the EU, Spain (obviously Greece) this is a long-term project, which frankly, is guaranteed to fail because of political haggling.

Structural change is not what an electorate wants to hear about at the moment, when we are facing double digit unemployment percentages at home for the foreseeable future. The hot-heads will argue, better to build barriers than the boring business of change. That would be a mistake. As Mr. Lamy put it "world trade is doing much better, but unemployment is not doing much better. And as long as unemployment will be as dire as it is, for the moment, we will remain in the red danger zone."

Oh and as for that Doha Round of World Trade talks. When I asked Mr. Lamy why he didn't just admit it couldn't be done and abandon them - he called that "an interesting intellectual view of what we should do." A polite way of saying rubbish! In the end though - I wonder which will happen first - structural change or the Doha Round? Or maybe neither.
Profil
Richard Quest authorimage Quest Means Business sendes hver mandag til fredag kl. 20.00 dansk tid på CNN International med Richard Quest som vært med adgang til en vifte af eksperter og korrespondenter der leverer analyser, tal og nyheder fra alle kroge af finansverdenen. Se mere på CNNs website.
Se desuden "Quest Means Business" mandag-fredag på CNN klokken 20.00
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