04:42 GMT +323 June 2017
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    Brave New World

    Protectionism on the Increase

    Brave New World
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    John Harrison
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    The noble cause of lowering trade barriers and thus encouraging international trade to the benefit of all countries is being threatened by a number of factors. The greatest of these is probably regionalism. Listen to a discussion on this topic with Dr Richard Wellings, Deputy Editorial Director at the IEA (Institute of Economic Affairs).

    Regionalism is on the rise. TTP, the possible signing up of European countries to TTIP, the EU, ASEAN and other regional trade agreements mean that whilst trade barriers within these organisations are likely to come down, it is very possible that barriers BETWEEN these groupings of countries will increase.

    By way of background information, Dr Wellings explains how trade barriers between rich and poor countries were never eliminated despite globalism. If they did come down, they were replaced with ‘regulatory protectionism.’

    An example which Dr Wellings gives to illustrate this point is car production. A new Indian car which is retailed for $2,500 inside India has to be retailed for $10,500 in Europe because of the cost of conforming to ecological regulations, making such a vehicle unattractive to European buyers.

    It is difficult for third world countries to compete on equal terms with first world countries because of priority control of technology. When third world countries group together it helps their economic growth as trade barriers are eventually eliminated between them.

    However this does not mean that they will then have access to first world markets, because regionalism entails that first world countries trade firstly with themselves.

    Tags:
    regulatory protectionism, trade agreements, globalisation, Trans-Pacific Partnership (TPP), ASEAN, EU
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