• SHARE

Protectionist pressures are an increasing threat to free trade. The adoption of protectionist policies jeopardizes the prosperity of developed countries and sets back economic growth in developing countries.

The scariest danger signals are coming from the USA. Donald Trump, who now seems to have all but secured the Republican nomination, has based much of his appeal, especially to blue-collar whites, on his demands for protectionist trade policies. He accuses the United States of concluding “the worst trade deals ever made in the history of trade.”

He has accused Chinese trade negotiators of “raping” America and demands protection for American workers against imports from China. He rejects the North American Free Trade Area (NAFTA) and demands that American companies move production back to the U.S. or face tariffs. He contends that the U.S. trade deficit is evidence of “foul play.” His comments on Japan, demanding that it pay in full for U.S. military bases, indicate that Tokyo is also one of the targets of his ire.

His demand for a wall to be built at Mexican expense to stop immigration from Mexico and his wish to stop Muslims from entering the U.S. are another manifestation of protectionism and confirmation that with all his talk about making America great again, he is more of an old-fashioned Yankee imperialist than a prewar isolationist.

Japanese trade negotiators used to think that the Republicans were more in favor of trade liberalization than the Democrats. In fact Barack Obama, a Democrat, has worked harder than almost any previous U.S. president for the conclusion of free trade pacts covering both the Pacific and Atlantic areas.

Hillary Clinton, who now seems almost certain to win the Democratic nomination, has been under pressure from her avowedly socialist rival Bernie Sanders to adopt a more protectionist trade stance. If, as seems likely and as most liberal-minded people must hope, she becomes the next U.S. president she may not push for congressional ratification of the TPP as hard as Obama has done.

In Europe, right-wing anti-European parties and those in Britain supporting “Brexit” may claim to be in favor of free trade but in practice work for protectionist policies in relation to both goods and services.

Their objections to immigration from within Europe or from outside are in the long run incompatible with free trade arrangements. The prejudiced backers of Brexit, for instance, overlook the fact that many British fruit farms, hotels and care homes, as well as many other enterprises. can’t operate without immigrant labor. Free trade in the long run implies free movement of labor.

The Euroskeptics in Britain refuse to accept this thesis, and affirm that they are willing to accept sacrifices in order to regain full “control” of our borders.

Uncontrolled immigration combined with unrestrained free trade involving unfair trading practices such as dumping of goods in foreign markets can cause serious damage, including putting a strain on social services and housing. Governments in the countries affected need to introduce temporary safeguards to help the workers and firms feeling the brunt of such pressure. But safeguards must be strictly time-limited. If they are open-ended the industries involved will fail to adjust and economic growth will be held back.

Chinese dumping of steel has recently threatened to overwhelm the British steel industry. Tata, the Indian owner of a major part of what remains of the British industry, has put its British plants up for sale. So far no viable buyer has been found, although the British government has indicated its readiness to take an equity stake and accept some responsibility for the pension fund.

Inevitably, there have been demands for the imposition of anti-dumping duties on Chinese-made steel. But this could provoke Chinese retaliation against British exports. British manufacturers of steel products might then also be forced to pay higher prices for the steel they need, leading to increases in the prices of their products and making them less competitive in other markets.

The imposition of anti-dumping duties is in any case not within the competence of the British government but rests with the European Commission in Brussels, which has to look at the problem in its Europe-wide context, and with the rules of the World Trade Organization. Withdrawal from the EU would not make action against dumping any easier.

The development and spread of robots, which are increasingly replacing workers not only in factories but also in offices throughout the developed world, have induced concerns about their effect on employment. The increasing use of robots in China as wages rise has been cited as a further justification for trade protectionism. Such arguments are akin to those used 200 years ago by the Luddites who destroyed textile machinery because it was destroying jobs in the industry.

The increasing use of robots in manufacturing and service industries does raise employment issues, but so did the information technology revolution. In fact IT has led not only to increased speed and efficiency in many operations but has created new job opportunities in many spheres.

There are likely to continue to be many operations that even robots with advanced artificial intelligence can’t cope with. So there will continue to be jobs for educated workers. IT and robotization increase the importance of a good education. British restrictions on visas for overseas students, which have been adopted in an attempt to respond to anti-immigrant and Brexit pressures, are another example of counterproductive protectionism.

Prime Minister Shinzo Abe’s third economic arrow was aimed at tackling Japanese lack of international competitiveness, particularly in some service sectors, and promoting growth. Perhaps because too many vested interests were involved, the third arrow seems to have consisted more of talk than substance. Inward-looking organizations such as the Japan Medical Association seem to have successfully fended off attempts to increase competition. Little seems to have been done to liberalize Japanese immigration policies even in such areas as nursing, where the needs of an aging population call for effective action.

Hugh Cortazzi was Britain’s ambassador to Japan from 1980 to 1984.

In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.

SUBSCRIBE NOW

PHOTO GALLERY (CLICK TO ENLARGE)