Protectionism Alert

Recently, many news outlets have reported on “protectionism” on the rise in many countries, particularly the United States. “Buy American” idealism has always sounded like a choir-like voice to many who work in the automobile industries and others manufacturer-related industries.

The New York Times recently reported a study from the European Bank in Feburary found that there is no clear evidence that protectionism is accuring, but there are clear signs of protectionism pressures are on the rise particularly in Europe and the U.S., where many of its citizens do not believe globalization benefits its nation.

The Associated Press reported recently that the Elite 8, plus 5 of the fastest growing developing countries called for more open markets and to fight againt protectionism during the recent G-8 conference in Italy.

The call for completing the trade deal, known as the Doha round of trade talks, comes at a particularly difficult time. The economic crisis is stoking protectionist impulses and forcing governments, especially the United States, to intervene in the private sector in extraordinary ways.

The Center for Economic Policy Studies, a London based research center began keeping track of any trade-distorting policies that may develop as the pressure thickens, called the ”Global Trade Alert.” It’s a database that allows users to search by country imposing new policies, the countries affected and the product it limits.

Since the stimulus package was approved, “Buy American” laws have popped up meaning that provisions have been set that some projects will only be approved if the steel, iron and manufactured goods were produced in the United States. Several governments, not just the U.S., are challenged on how to protect domestic business and remain an open market.

In an attempt to avoid repeating that scenario, a draft of the joint statement signed by 17 nations reads: “We reaffirm our commitment to maintain and promote open markets and reject all protectionist measures in trade and investment.”

Time will tell if the agreement follows through.