A Replay of the 1970s
The global economic crisis, and governments’ responses to the crisis, did not precipitate a descent into 1930s-style protectionism. That is a relief. But, argues Fredrik Erixon and Razeen Sally in a new paper, it provides no refuge from policy measures that will slow down globalisation and growth in the next decade. “Creeping protectionism” is increasing, and the crisis has reinforced trends visible before the start of the crisis. New patterns of protectionism are similar to developments in the 1970s and 1980s rather than the 1930s. Domestic “crisis interventions”, especially in capital and product mar kets, and the return of Big Government, will spill over to external policy, with more defensive trade policies and fragmented capital markets as consequences.
In FocusThe Elusive Quest for Asian Economic Integration What will happen to regional economic integration in Asia? In a new paper, Razeen Sally takes stock of recent trade-policy initiatives in the Asian region and outlines recommendations for future regional and global integration in Asia. Sally argues that recent talk of region-wide FTAs, and east-Asian initiatives on financial and monetary cooperation, are too ambitious and remain grand visions. Rather, future regional and global integration depends on renewed unilateral, non-discrim inatory liberalization, this time going beyond border barriers to tackle behind-the-border regulatory barriers.
Censorship May Violate WTO Rules Online censorship may violate trade rules, argued Hosuk Lee-Makiyama and Brian Hindley in a recent paper. Google’s decision to withdraw from China unless its censorship policy changes has provoked widespread interest for bringing China for dispute resolution at the WTO. Censorship practices are sometimes designed to benefit local actors at the expense of foreign firms. Google, as well as other firms, have been challenged by censorship practices that clearly are protectionist, argued Lee-Makiyama and Fredrik Erixon in a recent article in the Wall Street Journal.
A Modern Trade Policy for the EU European and global trade policy need a new direction, according to a group of senior business people who launched a report on EU trade policy in the next five years. The EU Trade Policy Study Group, formed last autumn, charts a new course for EU commercial policy. Stressing the modern realities of global business, the Group calls for a speedy end to the Doha Round, a new profile of EU’s bilateral policy, a quick reversal of crisis-induced protectionism, and a comprehensive pro-competitive reform agenda in Europe.
EU Trade Policy after the Lisbon Treaty The Lisbon Treaty will introduce a number of changes to European Union (EU) external trade policy decision making. In a new paper, Steve Woolcock examines what changes to European trade policy formation the new Treaty will bring. Woolcock argues that the EU will strengthen its role as a trade actor and that it will compensate for the relative decline in EU market power due to systemic changes in the international trading system.
Better Competition Policies to Fight Europe’s Dependency on Russian Gas Competition is a crucial factor in creating domestic resilience in case of gas supply disruptions. This new paper investigates the relationship between the level of competition in the gas markets of EU member states and their vulnerability to supply cuts from Russia. It finds that there is a high correlation of these two factors. Unfortunately, the Third Gas Directive passed in 2009 will not significantly boost competition. Furthermore, the current antitrust cases in the gas sector do not focus on the markets that need it most, namely Bulgaria, the Baltic States, and Slovakia. This needs to change.
The EU’s Biofuels Policy and the Renewable Energy Directive: Violating WTO Rules What happened to the professed environmental goal to substitute fossil fuels wit biofuels, asks Fredrik Erixon in a new study of EU biofuels policy. Biofules policy has become an industrial policy using various measures to shelter domestic producers from foreign competition. Protectionism increases the cost of moving away from fossil fuels – but the EU is about to usher its policy farther in that direction with its Renewable Energy Directive. If it is implemented in the way that has proposed, the EU is likely to run afoul of its obligations in the World Trade Organisation (WTO).
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