Protectionsim makes a big comeback grounded in growing fear, distrust
In the wake of the Dubai ports imbroglio, some lawmakers are saying the U.S. needs to rethink its openness. Rep. Duncan Hunter, R-Calif., chairman of the House Armed Services Committee, for example, is demanding that all of the USA's "critical infrastructure" be owned and managed by American citizens.
Hunter's legislation would require foreign companies that own anything deemed "critical" to national security, economic security or public health to sell within five years. Sen. Charles Schumer, D-N.Y., reacting to the surging U.S. trade deficit, has proposed imposing a blanket 27.5% tariff on Chinese imports if Beijing doesn't allow its currency to appreciate.
A combustible mix of security and economic dangers has left Americans increasingly unsettled about their engagement with the rest of the world. Color-coded terror alerts and the persistence of the global al-Qaeda network mean danger is a fact of daily life. Compounding public unease is the relentless economic rise of China and India, which seems to imperil many Americans' financial futures.
From 1994 until last year, a solid plurality of Americans saw foreign trade as an opportunity rather than a threat, according to USA TODAY polling. In May 2000, for example, trade was backed 56% to 36%. But in a June 2005 survey, by a 48% to 44% margin, more respondents judged it a threat.
The USA isn't alone in getting cold feet over globalization. Europe, too, is witnessing a renewed concern. In France, Spain and Poland, governments are blocking foreign firms from acquiring companies even in seemingly benign consumer industries.
"I think we're riding a wave of xenophobia," says William Reinsch, president of the National Foreign Trade Council, a pro-trade group.
This isn't the first time the U.S. has faced the issue. An earlier age of global economic integration in the decades before World War I ended with the guns of August 1914. After the war, trade recovered in fits and starts. But then the 1930 Smoot-Hawley Tariff triggered a protectionist frenzy that by 1934 had slashed international trade by two-thirds.
USA Today, March 15, 2006
China Says It Will Protect Steel Makers
China's government on Wednesday expressed concern at soaring iron prices and warned that it would take unspecified measures to protect its steel makers if talks with foreign suppliers of iron ore fail to produce reasonable prices.
Associated Press, March 15, 2006
Protectionism Storm Clouds EU Talks
A growing storm over protectionism is increasingly dividing the European Union as finance ministers meeting in Brussels argued over the role of the state in their economies.
State intervention in a series of recent high-profile corporate deals has deeply divided member countries, leaving the European Commission scrambling to defend the benefits of the EU's common market.
Luxembourg Prime Minister Jean-Claude Juncker warned that open European markets meant little to individual citizens as they look for security from the state in the face of upheavals caused by big corporate deals.
"We must not believe that our compatriots will turn towards Europe when they feel they are threatened by industrial projects that they don't understand," he said late Monday after chairing a meeting of eurozone finance ministers, which featured a "healthy, wise and virtuous" debate about protectionism.
Italian Economy Minister Giulio Tremonti warned that Europe faced gridlock if EU governments presented protectionism as a solution in member states, including France and Italy, that are entering electoral periods.
"If the theme of control of property, limits on property, nationalism, internal protectionism, becomes a theme of domestic election campaigns, Europe as it is now will not last another year," he said.
Agence France Presse, March 14, 2006
Outbreaks of "economic patriotism" have been rampant in recent months.
China said it wants domestic companies to build its high-speed rail lines, its canals and its power stations and South Korea is upset at an offer by a US corporate raider for the South Korean tobacco giant KTG.
"We are getting back to a tougher stance in terms of economic confrontation," said Christian Harbulot, the director of School of Economic Warfare in Paris.
Agence France Presse, March 14, 2006
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