The Financial Express

Resorting to protectionism for political gains short-sighted

| Updated: October 19, 2017 09:38:09

Resorting to protectionism for political gains short-sighted

The recent rising tide of trade protectionism in Europe and the US has triggered economic challenges, but at the same time exposed their myopic political vision, said a commentary published by the People's Daily last week.
The article, titled "Petty tricks of protectionism should be abandoned," comes as more European and US politicians resort to protectionism for political gains.
French far-right leader Marine Le Pen, for instance, labeled her economic policies as "intelligent protectionism." As a presidential candidate of the National Front (FN), Le Pen envisionedrestoring the glory of "Made in France" by tighteningborder control.
In the US, the Republicans are now consideringa border adjustment tax in Congress as a way to boost exports and reduce imports. The plan would in effect impose a tax on American imports while exempting American made exports from income tax calculations.
Meanwhile, the Chinese government, in recent years, has voiced its opposition against trade protectionism on many occasions, the article pointed out.
Chinese President Xi Jinping, while addressing the opening plenary of the 2017 annual meeting of the World Economic Forum in Davos, Switzerland in January last, told the world that "we must remain committed to developing global free trade and investment, promote trade and investment liberalization and facilitation through opening-up and say no to protectionism".
"Pursuing protectionism is like locking oneself in a dark room. While wind and rain may be kept outside, that dark room will also block light and air. No one will emerge as a winner in a trade war," Xi stressed.
Politicians that back protectionism for political gains are sacrificing their countries' long-term interests, the paper pointed out.
"Although protectionism policies will bring a country deadweight loss, they meet urgent appeals that can be turned into votes or political donations," read the commentary.
This conclusion echoes the findings of Italian economists who studied the changing attitudes of US policymakers towards protectionism in relation to their terms in office.
Economists Paola Conconi, Giovanni Facchini and Maurizio Zanardifound that senators serving out the final two years of their terms were significantly more protectionist after examining 29 final roll-call votes on trade liberalization between 1973 and 2005.
In a second study, Italian economists found that US presidents are more likely to initiate World Trade Organisation (WTO) disputes during the last year of their first term. But they did not find such a pattern during Presidents' second terms, when they no longer were eligible for reelection.

Courtesy: People's Daily of China.
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