The world is changing; countries that were once consigned to poverty have pulled themselves out of the pit of economic despair and the years ahead promise opportunities on an unprecedented level And the UK, with its financial expertise, is poised nicely between the new burgeoning economic superpowers and the old order.
But there’s a real danger it could all unravel as protectionists, more concerned about retaining their relative wealth rather than their absolute wealth, attempt to stem the overwhelming economic tide.
These protectionists could de-rail the economic growth from the developing regions - more likely they will consign the very economies they are trying to protect to the economic dustbin, living off past glories.
But worse than that, history also tells us that unless the established order embrace change and welcome it, conflict can be the disastrous consequence.
The battleground is already being laid out - and in the week just gone, there were a myriad of examples
Perhaps the most worrying sign was the action taken by the US Senate Banking Committee to tighten rules on the takeover of US assets by foreign companies. The furore over the Dubai purchase of UK owned PO, which barely raised a flicker in the UK, caused a storm of protest state side, as US senators worried that a company from a Muslim country could gain control over US ports owned by PO. And now, Congress must be informed of all foreign purchases of US companies and the US government must spend more time vetting the prospective purchaser’s credentials and whether they could pose a security threat.
But while Congress tightens the rules - US Treasury Secretary John Snow warned that US legislation threatened jobs. He said: “We need foreign investment in the United States, but it’s being put in jeopardy now by legislation that is well-intended.”
The British Ambassador to Washington, David Manning, put it more strongly and warned that protectionist policies threaten the dominant position the United States currently holds in the global economy.
Alan Johnson, the Secretary of State for Trade and Industry, was even less diplomatic. He accused the US of hypocrisy and in a criticism, not only of the US, but some EU countries too, said: “The irony of protectionism is that it destroys what it seeks to protect. Free trade is not, and cannot be a one-way street. There can’t be one set of rules when your team plays away and a different set of rules when they play at home. Such hypocrisy makes global progress impossible. How can the richest countries in the world lecture others about the gains from liberalisation whilst adding further barriers to entering their own markets?”
And then a few thousand miles east or west depending which way you are looking, - US Secretary of Commerce, Carlos Gutierrez, is visiting China. He warned: “The voices in the United States calling for protectionist policies are very real. There is a real protectionist and isolationist sentiment creeping up in our country. That is not good for trading relationships.” Mr Gutierrez was trying to use the threat of changing US sentiments to persuade China to lift trade barriers and allow the Chinese currency, the yuan, greater flexibility on financial markets. And said: “An erosion of trade between the two countries would have a negative impact on the US economy and have even greater consequences for progress in China.”
But the debate is not restricted to trade between the US and China and with Muslim countries.
The EU and many US politicians are at loggerheads over airline traffic. The Bush administration and most of the EU’s officialdom are backing a policy known as open skies. This allows US airlines access to any suitable airport in the EU, and European airlines free access to the US. For Trevor Traveller the policy can only be good news. More competition, and no doubt more choice and lower prices.
But Congress doesn’t like it. And is trying to delay proposals, while the Senate is also trying to put the scuppers on the plan. At the moment, there are many restrictions for EU airlines wishing to invest in the US. But US airlines are giving much freer access to Europe. If protectionist US politicians have their way, there is a real danger the EU will retaliate with like-minded legislation.
Meanwhile, in the EU, European Commission President, Jose Manuel Barroso, is fretting over the rising tide of protectionism from countries such as France and Spain. He said: “I believe economic nationalism is a threat to our European values.”
And then our Gordon threw his pennies worth into the debate. Last week he warned that failure to complete the single market is damaging industry and hurting consumers. Looking specifically at the energy sector, he said: “This problem is costing us £10bn a year more for gas than we should be paying.”
“The failure to complete the single market is not just damaging to industry but is hurting consumers as well,” Mr Brown told parliament’s Treasury select committee. He said: “That’s why the European Union must now reject protectionism and must move towards a far more open market for energy, for financial services, for telecommunications and for utilities.”
Sources
Protectionism door threatens to slam on Open Skies USA Today
Johnson blasts US ‘hypocrisy’ over rise in protectionism Independent
Chancellor blames protectionism for adding GBP10 billion to UK bills The Energy Business Review
‘China, US should fight protectionism’ China Daily
Comments
Trackbacks