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Beat your wife – she knows why
Published on 08 August 2012
Updated on 05 April 2024
Updated on 05 April 2024
This crusty folk wisdom came to mind as I read the report on the 2nd August webinar, in which “Brussel” – the mother of all mothers – stands (oh surprise) once more accused. I was busy travelling and unable to attend, so my comments here are to be taken with two pinches of salt.
According to the summary the EU stands indicted of the following instances of protectionism:
- asking for more reciprocity in public market access. Well, public procurement is exactly what the name says: “purchasing policies by governmental entities”. Public procurement (PP) has always been refuge of protectionist governments, and with public budgets representing up to 50 % of GDP, there is sure scope for misusing WTO rules on PP. “Homeland security” and “military expenditures” may be a four-lane highway to PP protectionism. Outsourcing may be a way to circumvent PP rules, for private contractors operating on behalf of the state may exempted from PP rules (just as “security contractors” in a war zone are not subject to Geneva Conventions). Staid examples are exempting “sub-federal entities” from the PP rules. Berlusconi’s Italy made a fetish of “emergency” conditions to disallow PP rules – most public works were executed by the Disaster Relief and Emergency Preparedness Agency. I presume all states have much to hide here, so a general call for transparency and material reciprocity would seem to be a correct stance to take.
- talks about an eco-recycling tax imposed on imported products. Countries differ in the way they fund recycling. I’ve paid already for disposing of my refrigerator by paying for a corresponding “ticket”. This is a market access, not a trade rules: in principle market rules should be non-discriminatory, and the report does not indicate in which way such a market access tax would be discriminatory.
- implementation of a financial transaction tax . I presume this is a “Tobin tax” on financial transactions (bonds, shares, derivatives, currencies). It might be used to set up a “relief fund” for when the bankers blow it again, or to refund governments for their largesse to said banks lately in distress. Such a tax only works at the global scale. On the merits it makes more than sense – it is about a necessity. That the EU is taking the lead here, is honorable. Protectionism? Case not proven.
Interestingly, none of these instances has an obvious “national flavor” (see the report: “protectionist surge, rampant within member countries of the European Union”) and the only possibly “defensive” measure, the eco-tax ,would appear to be less than critical.
Interestingly again, the stalemate in services liberalisation is not mentioned. Here the protectionist retrenchments are not simply those of the EU. Trade-wise the consequences are far deeper than the items above. Part of the problem may be the structure of the negotiation, and novel ideas may be needed to increase previsibility of the negotiating outcome.
Unmentioned finally is the issue of currency levels, competitive devaluations, currency management (oh my rembimbi…)…
As for the mantra: “standstill is already a step back” – I’m vaccinated: I’ve heard it for the last 30 years.
Strictly on the basis of the report – if these are all the sins Brussels is planning in the trade area – I’ll give it full marks for standing up for free trade principles.
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A veteran negociator on trade
A veteran negociator on trade issues, Aldo is right at explainind that eco-tax or financial transaction tax does not necessarily imply a resurgence of protectionism. He is also equally right at saying that the EU standing on those two grounds carries legitimacy and make sense.
My point nevertheless remain: the euro crisis, triggering a lot of social convulsions and discontent all over the EU, is triggering clearly a protectionnist wave among political elites and decision makers. More over, this trend is equally shared in the US before the incoming presidential election. And as always, a call for protectionism in the west will trigger reactions in emerging countries…
So, to make it short, my assumption remain: globalization is being seen more and more as a threat. Expect numerous backclashes to come, especially from Brussels.
Richard Werly