Held live from Brussels on 2 August, the webinar entitled 'Will globalism be defeated by a return of protectionism?', focused on the delicate question of a protectionist surge, rampant within member countries of the European Union.
Will this tendency lead to diplomatic/geopolitical confrontations? Below is a recap of the discussion led by Diplo's EU fellow Richard Werly. To get in touch with Richard, e-mail him at email@example.com
- Can the European Union get out of its economic crisis without resorting to protectionism measures?
Our assumption, from covering Brussels summits and regular talks, is negative. A simple screening of a recent EU proposal - asking for more reciprocity in public market access, talks about an eco-recycling tax imposed on imported products, implementation of a financial transaction tax - shows that a protectionism trend is vigorously taking place as the euro-crisis deepens.
Moreover, such a protectionist trend is favoured by national politicians in search for answers to convince European voters that job losses to emerging countries can be halted.
- Will this return of protectionism be limited to specific areas or countries?
Obviously, the immediate target for those advocating more protectionism is the main emerging economies, and mostly the export-oriented Asian countries. In this context, the incoming EU-China summit to be held mid-September in Brussels will be interesting to follow, and trade issues are expected to be on the table during the Asia-Europe Meeting (ASEM) summit to be held in Vientiane, Laos in October.
It has to be mentioned that, logically, the protectionism trend is in line with a call for more budgetary, fiscal, and economic integration within the European Union. In short, a 'European trade preference' is emerging into discussions, with countries from the vulnerable south asking Germany and other exporting countries to revamp their economic policies in order to accommodate the needs of the more fragile members of the EU.
- Should we expect a trade backlash and a crisis within the WTO?
The WTO is already facing a crisis. Its director-general, Pascal Lamy, whose mandate will end this year, has publicly warned against protectionist trends and, without mentioning specifically Europe, his concern is in part directed towards Brussels.
Our assumption is that the WTO will more and more become a confrontation arena, with trade giants confronting their divergent agenda. The whole concept of better governance in trade matters is getting under attack.
- Will emerging economies be tempted to take revenge on Europe?
Yes. This risk is becoming more acute as political leaders from those countries are taking a stronger stance against ailing European economies. This was highlighted recently by Argentinian president Cristina Kirchner'a attacks on Spanish economy minister Luis de Guindos, whom she mocked publicly. Our assumption is that a return of protectionism will lead to more political confrontations. We expect European bashing to increase as there is a widespread feeling in emerging countries that the EU, due to its unsustainable economic and social model, is gearing towards more problems and difficulties.
Listen to the recording of the webinar.