Is Protectionism About to Raise Its Ugly Head?
United Daily News editorial (Taipei, Taiwan, ROC)
January 14, 2009
The entire world is attempting to rescue the economy. Interest rate competition has brought rates down to nearly zero. Monetary policy is no longer effective as a stimulus measure. The only methods left are government-to-business financial relief, or exchange rate depreciation. These can all be regarded as protectionism of a sort. In 2009, protectionism has become a growing concern.
The contraction in demand has led to a sharp recession. Every nation's production capacity is greater than its production. Every nation's production exceeds its need. A labor surplus has led to large-scale layoffs. All these provide a breeding ground for protectionism. Since mid-December last year, the world's governments have clearly tilted in this direction.
‧ French Prime Minister Mr. Sarkozy recently said Europe must take all necessary measures to protect its manufacturing sector, otherwise it will become an "industrial ruin." In other words, protectionist sentiment has significantly increased.
‧ In the United States the media, including professional journals, have increasingly made mainland China the scapegoat for the recession. Susan Schwab, US Trade Representative to the WTO, has officially accused mainland China of providing cash subsidies and low-interest loans to its industries. She has accused mainland China of dumping machinery and clothing. The United States International Trade Commission has officially proposed increasing import duties on China's iron and steel products from 35% to 40%. Rumors have emerged that before stepping down, the Bush Administration deliberately encouraged Israel toi invade the Gaza Strip, leaving a mess for Barack Obama to clean up. Meanwhile, these two major protectionist measures are messes the Bush administration has left for the new president to clean up in the economic and trade realm.
‧ Mainland China's Ministry of Commerce decided to initiate anti-dumping investigations before New Year's Eve. It will investigate dumping of European carbon steel components widely used in automobiles, electronic equipment, heavy machinery, and building construction. If necessary, it will appeal to the WTO. In recent years mainland China's iron and steel industry has developed rapidly. It now accounts for 40% of global production. Related precision industries have also made rapid progress. Advocates consider this a means of protecting its own precision industries.
The trends cited above are merely the most conspicuous. This is the most serious recession in 70 years. It is not part of the ordinary business cycle, but represents the bursting of a bubble economy, caused by global tightening. That is why although the world has spent several trillion dollars to rescue the economy, none of the measures have been effective. Instead, the situation has become increasingly serious. According to the World Bank's latest assessment, global trade this year will decline 2.1 percent. Unemployment on the other hand, has been climbing. Last year unemployment in the United States increased from 6.7% in November to 7.2% in December. In the Eurozone unemployment currently stands at 7.8%. In Germany it stands at 7.6%. The most destructive aspect of the recession is the surge in the number of unemployed. Therefore current efforts have shifted from saving the stock market and saving home mortgages, to preventing unemployment and saving industries. If other means of rescuing the economy fail to take effect immediately, especially regarding unemployment, protectionism will be the most expedient means populist demagogues use to rally political support. The temptation is not hard to understand, especially for the incoming Barack Obama, who will be inaugurated less than a week from today. The 1930 Smoot Hawley Tariff Act victimized the entire world. History must not be allowed to repeat itself.
Therefore, the Israeli-Palestinian issue will be Barack Obama first political test upon taking office. Protectionism will be his first economic test. In recent weeks, The U.S. Edition of Business Week this made this its cover story. The importance of the issue must not be underestimated, especially in Washington and Beijing.
For the past twenty-five years, the US has been sitting pretty. Its imports have increased from 9 percent GDP to 18 percent. Meanwhile its manufacturing sector workforce has fallen from 17 million to 13 million. According to U.S. statistics, mainland China's clothing exports to the U.S. constitute over half the market. Over a dozen important iron and steel plants in the United States have been shut down. Mainland China's iron and steel pipe exports to the U.S. have increased by the month. This is why liberals advocate protectionism. Obama has expressed protectionist sentiments over South Korean's automobile imports and mainland Chinese products. How he resolves the contradiction between free trade and unemployment is worth watching. We will know soon enough. Obama also advocates resorting to deficit spending to save the economy. US government debt will reach 1.2 trillion USD this year. The U.S. has repeatedly asked mainland China and oil-producing countries use their foreign exchange reserves to patch up the holes in the US economy.
When the time comes, will the United States use protectionism as a means of applying pressure vis a vis foreign exchange? Will it be held hostage by liberals committed to protectionism? These bear close watching. Once protectionist policies are implemented, they will worsen the global economic crisis. No economy, including Taiwan's, will be spared.
2009.01.14 03:31 am
‧在美國方面，除了媒體及專門著作以中國大陸為衰退替罪羔羊的言論升高外，美國貿易談判代表席瓦布已正式向世貿組織提出指控，宣稱中國以現金補助及低利貸 款的方式，讓機具及成衣對美傾銷；此外，美國的「國際貿易委員會」已正式提議，將對中國鋼鐵製品提高進口稅，由百分之卅五到百分之四十。已有論者指出，布 希政府在臨去之前鼓勵以色列入侵加薩走廊，是在國際問題上出難題給歐巴馬；而兩項重大的保護主義措施，則是在經貿問題上給新總統出難題。
以上所舉的動向，只不過是其犖犖大者。根據目前的全球大趨勢，這波七十年來最嚴重的衰退，由於它並非一般景氣循環的現象，而是眾多經濟泡沫破裂所造成的全 球緊縮；因而，儘管全球已砸下數兆美元救經濟，卻彷彿均未見效，反倒是問題日趨嚴重。根據世界銀行最新評估，今年全球貿易將減退百分之二點一，而各國失業 率已不斷攀高。美國去年十一月為百分之六點七，十二月已增至七點二；歐元區目前已達七點八，其中的德國也有七點六。由於衰退時最具有破壞力的乃是失業人數 激增；於是，目前全球救經濟的步調，已由救股市、救房貸，逐漸往救失業和救產業的方向移動。由於其他救經濟的手段並不能立即生效，而救失業則最能立竿見 影，在這方面，保護主義則是最民粹且廉價的手段。特別是對於不到一周後即將就任的歐巴馬，此種誘惑也就不難理解了。但一九三○年的「史穆特—豪雷法案」， 其實是使全球受害的保護法案，這歷史不容重演。
過去廿五年，美國長處順境，因而它的進口由佔ＧＤＰ百分之九暴增為百分之十八；而相對應的，則是其製造業就業人口在廿五年內由一千七百萬降為一千三百萬。 據美方統計，中國成衣輸美市佔率已超過一半；而就在美國重要鋼鐵廠已陸續關閉一打左右之際，中國鋼鐵管輸美卻逐月大增。這都是自由派提倡保護主義的理由。 由於歐巴馬本人在過去這段期間對南韓汽車、中國製品都有過具保護主義傾向的表態，因而他在自由貿易與救失業這兩個矛盾的課題上將如何處理，自然動見觀瞻。 此外，歐巴馬主張赤字救經濟，政府債務今年將達一點二兆美元；邇來美方已多次放話，要求中國及石油生產國將外匯存底挪為挹注美國破洞之用。