NEW STUDY HAS LESSON FOR G20: ENDING PROTECTIONISM IS THE BEST STIMULUS
Slashing trade barriers “most effective anti-poverty measure ever seen.” Protectionism and broken G-20 promises are “economic suicide”

London – A new study published today by International Policy Network and the F2T Campaign – No Longer Us versus Them – shows how removing trade barriers over the past two decades has internationalised production. The result: better, more efficient products, higher growth rates, especially in poorer countries, and over a billion people lifted out of poverty.
Author Daniel Ikenson says:

“Tumbling political, administrative trade and logistical barriers have underpinned the most efficacious anti-poverty campaign the world has ever seen: more than one billion people have lifted themselves out of poverty in a generation because of the freedom to trade.”

Yet in response to the economic crisis many governments have introduced new barriers to trade. Over 100 protectionist measures have been implemented since November 2008 – increased tariffs, subsidies for “domestic champions”, local lending requirements, labour market restrictions and many others. Since the G-20 vowed not to introduce new protectionist measures in November 2008, all 20 governments have already broken their promise. Ikenson continues:

“In one breath, governments renounce protectionism; in another they introduce such policies. This shows a profound lack of understanding of the new reality of global commerce. Today’s competitors defy national identification. A product might be designed by teams in the USA and India, have components produced in Thailand, Poland and Mexico, while final assembly takes place in China, from where it is distributed to millions of consumers around the world. As a result, restrictions intended to benefit one domestic constituency harm all other collaborating partners in that supply chain – and hurt other domestic producers too.”

IPN Project Director Alec van Gelder adds:

“Trade barriers are economic suicide. They lead to inefficient, wasteful, environmentally damaging production – and destroy jobs. Policies such as ‘Buy American,’ Britain’s local lending requirements and similar protectionist policies are counterproductive: they isolate and undermine economies that rely on globally integrated production and supply chains. If governments care about the welfare of their people, they should eliminate trade and investment barriers now.”

--ENDS

Study available here.

International Policy Network is an independent development think-tank based in London and is a founding member of the Freedom to Trade (F2T) Campaign, which includes 73 civil society organisations from around the world.

Daniel Ikenson is associate director at the Center for Trade Policy Studies at the Cato Institute, Washington D.C.