Calling the Protectionists’ Bluff
Most reports about globalization in recent years have focused on its difficulties, such as declining levels of trade and the abandonment of “mega-regional” trade agreements. But, although new trade deals can spark controversies, it is highly unlikely that protectionism will prevail.
BRUSSELS – Most reports about globalization in recent years have focused on its problems, such as declining levels of trade and the abandonment of “mega-regional” trade agreements. Indeed, US President Donald Trump has now terminated the Trans-Pacific Partnership (TPP) – a trade deal among a dozen Pacific-rim countries, including the United States and Japan; and negotiations on the Transatlantic Trade and Investment Partnership (TTIP) between the US and the European Union have come to a halt.
But headlines can be misleading. Although new trade deals can spark controversy, it is highly unlikely that protectionism will prevail. This is true even in the US, where Trump was elected on the promise of getting tough with major trading partners such as Mexico and China. So far, the Trump administration has taken no action suggesting that a new era of protectionism is at hand. And in Europe, the benefits of economic openness have been widely acknowledged, and negotiations on a free-trade agreement with Japan are currently underway.
Most developed countries remain fairly open today, and this pattern will likely continue. A new surge of support for protectionist policies would require a coalition of powerful interest groups to organize a campaign aimed at changing the status quo. With average tariff rates at negligible levels (below 3% for both the US and the EU), who would support a push for higher barriers?