Sunday, July 10, 2016

Roll back protectionism

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For the first time since World War II, those arguing to remove barriers to trade are on the defensive in Europe. The ghost of protectionism haunts the Continent.

We see this play out in protests against EU trade deals with the U.S. and with Canada, where the agreements’ opponents consciously avoid the debate that lower tariffs benefit consumers, and choose to focus on side issues. They take issue with the use of private arbitration courts to settle disputes, despite the fact that the system has worked successfully since the 1950s. They also stir up fear that “regulatory cooperation” will endanger sovereignty, when in truth it’s no more than a burdensome process that identifies incompatible and protectionist elements in EU and U.S. legislation.

The debate over whether to grant market economy status to China, which would deprive the EU of possibilities to impose trade restrictions on the country, is also making waves. The European Parliament is very much on the protectionist side of this debate. Surprisingly, so is business.

All kinds of protectionist instincts surfaced in the campaign for the U.K.’s referendum on its membership in the EU. In the aftermath of the Brexit vote, some EU capitals are keen to restrict the City of London’s access to the EU, despite the fact the move would drive up the cost of financing big projects in the EU, and hurt consumers.

Likewise, some Brexit campaigners have discussed engaging in silly tit-for-tat protectionism strategies, such as threatening to impose tariffs on German car imports into the U.K. This, again, would hit consumers hardest.

Europe has enough debt, regulations and taxes already. It shouldn’t add protectionism to the mix. Consumers should be the focus of debates on trade agreements.

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