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.