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  • Time to Safeguard Ourselves from Rising Protectionism

    Last week, Pascal Lamy, chief of the World Trade Organization (WTO), gave a stark warning that rising protectionism is a serious threat to global economic recovery.

    Indeed, not too long ago, The Heritage Foundation’s Center for International Trade and Economics also counseled that “global trade freedom needs a boost.” We are unlikely to see a dramatic increase in tariffs, such as the Smoot–Hawley tariff that exacerbated the Great Depression, but non-tariff barriers (NTBs) to trade are on the rise, according to the WTO.

    NTBs include a range of restrictive practices that obstruct trade, including quotas, antidumping duties, labeling requirements, customs clearance procedures, and subsidies. Such barriers limit freedoms of consumers and producers in the global marketplace, gravely undermining productivity gains and economic growth for the country as a whole.

    Though in many respects NTBs and tariffs have similar effects, NTBs tend to be more detrimental to the future prospects of free trade. Not only are they harder to see than tariffs, but they are also more difficult to effectively counter under international trade agreements. Nor is it easy to eliminate such measures once they are in place, as we’ve seen in this country with numerous agricultural subsidies.

    For example, U.S. sugar subsidies alone are estimated to cost $3.5 billion and thousands of jobs each year to support a niche industry. Yet that subsidy has resisted numerous elimination and reduction attempts, most recently in June and July of this year.

    The recent rise in restrictive trade practices is bad news for both the U.S. and the rest of the world. In the short term, they reduce the trade flows that we need to get back to the path to dynamic economic recovery. Worse, in the long term, they will prop up inefficient producers and undermine economic freedom around the world.

    It is time to reverse course on this destructive trend toward protectionism and reaffirm our commitment to freer trade.

    Ella Peterson is currently a member of the Young Leaders Program at The Heritage Foundation. For more information on interning at Heritage, please visit http://www.heritage.org/about/departments/ylp.cfm.

    Posted in Economics [slideshow_deploy]

    3 Responses to Time to Safeguard Ourselves from Rising Protectionism

    1. KJinAZ says:

      Rarely do I disagree with Heritage on much, but I must say that I disagree with the NTB's being the same thing as tariffs. The term free trade is not a valid description of anything. Trade between nations at any level requires agreement on terms. There are many factors that dictate those terms outside the control of the buyer and seller. Things like exchange rates, import and export laws, and usually transportation are all areas that must be addressed in every transaction.

      Here in America we have a great deal more rules and laws designed to protect our consumers from faulty or dangerous products. These would be considered NTB's, and yes they do have a cost factor but is saftey a tariff? We also have laws about the explotation of minors, and yet again is this something we would wish go give up to save a few cents on a item? NTB's are nothing more than regulations that someone put in place to protect the public. Yes NTB's cost money but they are needed to keep our playing fields working well together, without them it would be anarchy which we know doesn't work.

    2. Great job. All barriers have costs and make production costs and consumer prices higher. I will use this in my AP Economics class this year.

    3. Blair Franconia, NH says:

      It's time we thought of ourselves and screwed China for a change.

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