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The_New_Protectionism

The_New_Protectionism - SCOTT EAML To trading partners...

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Unformatted text preview: SCOTT EAML To trading partners, stimulus and bailouts can look like industrial subsidies-and countries are retaliating By Carol Matleck was As the worid’s biggest econ— omies try to spend their way out of recession, they risk triggering another problem: trade protectionism. Developing countries are complain- ing that multioiflion‘dollar bailouts and stimuius packages give companies from the industrialized world an unfair edge over rivals from nations that can't afford to he so generous. Smaller countries are now scram— bling to defend themselves, and trade barriers are popping up worldwide Ecuador, for instance, has hiked tariffs on more than 600 categories of im— ports. Malaysia is limiting the number of ports that can accept inbound goods. And on May 26, Argentina and 15 other countries asked the World Trade Orga— nization to examine whether stimulus and bailouts are industrial subsidies, which under WTC) rules could give trading partners the right to retaliate. Such expenditures “might distort trade v and investment patterns for years to come,” says Alberto Durnont, Argen— tina's WTO representative. 'i‘he White House says those wor .. ries are overplayed. One senior official insists Washington’s stimulus spending is "consistent with [our] WTO obliga— tions.” But others say the bailoutSWboth in the US. and abroad-have been put together without considering their effects on trade. "It is all to protect in- dustries at a time of economic crisis and with very littie consideration of what trade rules allow," says David Spooner, a former Assistant Commerce Secretary in the George W. Bush Administration. CANADIAN ANXlETY Protectionism is had news for the global economy. Worldwide trade volume is forecast to contract at least 6% this yearr and both WTO chief Pascai Larny and World Bank President Rohert B. Zoeilick, a former as. Trade Repre— sentative, have war ned that protec — tionisrn could spiral out of control. It's lUNE 22. 2009 | BUSENESSWEEK - _‘ 9 Flat Rate Boxes are . great forshlpplng all over the . '- _ :jcountry But nowadays, with . ' 1 so” many people doing busl. ess 3 ."oniihe you could be shlpplng ' all over the World. Have any tips for shipping globally? -. o I sure do. The same PrIorIty Mail“. Flat Rate ‘Boxe you ve been using to ship domestically can also. be used. , to Ship Internationally to over! _'l90 countries, In fact You have I the same four sizes of boxes ' to choose from* And we 'li Sill! pick up your packages for free _ ho matter how- "many you have 5‘ to ship. 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All of our investor—related services are confidential and tree of charge Please contact: Miriam Buehl‘ requestlfigtaicom T +tl9 [0330 230 999655 www.gtai.com “ii ‘, GERMANY ts gfigi TRADE&!NVEST certainiy on the rise: A W’i‘O study this spring identified more than 100 trader restricting measures taken by 30 coun- tries over the preceding Six months. "The danger in this environment is that you get titmior—tat retaliations, and it serves nobody’s interest,” Zoellick told reporters on lune 9. “Buy American" requirements in Washington’s $787 billion stimulus package are adding fuel to the dispute. And more such measures may be on the way. A climate —change bill passed by a House committee, for instance, would provide aid to automakers for eiectric comment onlyif they're developed and built in the U. S. ”We want to contain the contagion of these Buy American provisions," says Guy Saintniacques, Canada's No.2 representative in Washington. Canada, the top trading partner of the US, is clearly worried. On lune 9, :3 Canadian diplomats converged on Congress to voice their concern about measures that might bar companies north of the border from participating in U. S. stimulus projects. After pumping billions of dollars into sickly banks and automakers, Wash— ington may now find it harder to obtain relief for American companies damaged by unfair subsidies to foreign competi~ tors. One of the hottest subsidy disputes in yearsfinvotving government aid to jetmaker Boeing and its European rivai Airbus—41's pending at the WC), with a preliminary decision due this sum— rner. Boeing predicts that the contro» versy over recent bailouts and stimulus - spending won’t affect the cases, which were filed five years ago. But even if the WTO rules in Washington’s favor, the two sides would have to negotiate rnon- BliSiNESSWEEK l JUNE 22. 2009 TRADE THOUGH World trade is set to decline this year, for the first time since 1982 ID FERGEHT CHANBE GLOBAL EXPORT VOLUMES '82 113 '55 '51 ‘59 '9l ‘9: '05 '97 '95 '{JS '93 '05 '37 '99 Data: World Bank eterydamages. Sometrade experts think that would now be politically difficult. “Just a year ago, the US. was ceiling for new discipline on industrial subsidies," says H. Deer: Kaplan, apartnerinWash- ington law firm Hogan & Hartson who specializes in trade. "Now, they're pro— viding some of those same subsidies." The U.S., of course, isn’t the only country spending lavishly these days. Most European governments have enacted stimulus packages and ‘ bank bailoutSWaid that’s often tailored to keep the handouts at home. Vienna, for in» stance, provided $140 billion to Austrian banks hard‘hit by losses in Eastern Europe but stipulated that none of the money could be used to aid subsidiaries outside Austria. Similarly, China has provisions that could bar foreigners from much of the work funded by its $586 bililon stimulus package. Meanwhile, trade barriers continue to rise worldwide, from a new rule in Azerbaiian requir— ing time ~consuming tab tests on some imports to a “Buy Paraguayan" pro— gram that favors domestic companies for government contracts in the South American country. “There’s noth— ing surprising about the protectionist backlash,” says Serhan Cevik, an ana~ iyst speciaiizing in emerging markets at Nomuta Internationat in London. “In times of crisis, politicians get away with these things” : aw: ~With Inna Sosseen and Steve Levine in Washington MAX fiOSSIIRELflERS ...
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