By Simon J Evenett of the University of St Gallen
Three reports on protectionism have recentyly been published in as many weeks: by the WTO , by the European Commission (EC), and by the independent Global Trade Alert, which I coordinate. What do these reports reveal about the sectors at greatest risk of 21st century protectionism? What do they mean for businesses operating internationally and for investors? Read more
Free-trade champion Mexico is on a reform drive that promises new openness in key sectors of its economy, especially energy. So what is it doing slapping protectionist measures on its shoe industry?
Fighting unfair competition from China, officials say.
The raft of new measures to protect Mexico’s industry – which makes 240m pairs of shoes a year – sounds distinctly off message, especially since President Enrique Peña Nieto has made boosting trade ties with China a priority. (He met his Chinese counterpart three times within six months to forge closer relations.) Read more
India has succumbed to pressure from governments, multinationals and industry bodies abroad to review its policy of boosting locally-made electronics.
It’s good news for international business. But what are the consequences for the Indian economy if demand for electronic products is increasingly served by imports? Read more
It’s bad news for consumers and the government but good news for traders (and vampires). Indonesia is suffering from a garlic shortage and prices have skyrocketed as a result, up by an average of 31 per cent in February alone.
Indonesians like to eat garlic and the surge in prices, which contributed to higher than expected inflation last month, will make life particularly tough for the nearly half of Indonesian’s 240m people who live on less than two dollars a day. Read more
By Humayun Shahryar of Auvest Capital Management
While the world is focused on the ongoing currency war, not enough attention is being paid to the rise in global protectionism. The number of trade disputes at the World Trade Organization in 2012 is estimated to be more than in 2010 and 2011 combined, with the G20 countries accounting for 80 per cent of the protectionist measures. While the recent stock market rally, resolution of the US fiscal cliff and the perceived easing of the European crisis may have taken attention away from falling global demand and slowing economic growth, a sharp rise in protectionism is on the cards in the coming months as governments react to rising unemployment, growing income inequality and slowing economic growth. Read more
After restrictions on foreign banks, foreign mining companies and foreign fruit and vegetables, the latest protectionist push in Indonesia is focused on credit card payment systems.
Bank Indonesia, the central bank, and a number of major state-owned banks are trying to breathe new life into an old proposal to develop a national credit card payment system to break the dominance of MasterCard and Visa, as has been done in China with UnionPay. Read more
Brazil’s tax system these days increasingly resembles the country’s popular soap operas or ‘telenovelas’- convoluted, farcical and incredibly hard to follow.
After months of frequent tax breaks and hikes, the finale of Brazilian protectionism seemed to come on Tuesday night with the announcement of higher import taxes on no less than 100 products. Read more
Anti-trade measures aren’t just about slapping simple tariffs on goods and services. There are new, subtler forms, and emerging markets are coming off worse when it comes to exports.
That’s according to the annual World Trade Report, published by the WTO this week. It has some important points for people with an interest in emerging markets. Read more
A series of somewhat ill-thought out and badly-communicated restrictions on trade and investment has given many investors in Indonesia the jitters.
But, say the Indonesia bulls, the backlash has been overdone and most of the new measures on everything from mining to fruit imports are either understandable or of limited impact. Read more
Ivan Ramalho does not think the government of Brazil is becoming more protectionist.
But the head of Abece, Brazil’s industry group representing international trading companies, says there are some sectors that are becoming more protectionist and some of them have the government’s ear.
“There is an intent that exists today, not in industry as a whole, but in some specific sectors towards more protection,” he said. “They want, of course, more protection and with more protection, prices will increase.” Read more
Few politicians in Latin America have the flair of Colombia’s finance minister, Juan Carlos Echeverry, when it comes to making a point. Opening up an economy is “as painful as giving birth”, Echeverry told Reuters recently.
The fact that Brazil and Argentina remain oblivious to Echeverry’s point, sticking uncompromisingly with protectionism, is an irritation for many in the region. Read more
Only the Argentines know why they still have not asked formally for a renegotiation of a trade agreement on cars that it has with Mexico.
This week, the country’s minister of industry said that the country would seek to do exactly that – presumably in an attempt to piggy-back on the example of Brazil, which last week renegotiated its own car agreement with Mexico to cap Mexican exports for the next three years.
But while Buenos Aires’ silence on the issue so far is unclear, one thing is crystal: the answer they will receive if and when they finally do get around to asking is going to be a big fat No. Read more
The news on Tuesday that Argentina will seek to renegotiate a bilateral trade deal on cars with Mexico could hardly have taken anyone by surprise.
In recent months, Buenos Aires has tried to halt the rise of imports in an attempt to protect its trade balance. After witnessing Brazil’s successful renegotiation last week of its own trade deal with Mexico, it must have felt that it would be crazy not to try the same. Read more
In the red corner: local contentism and currency war. In the blue corner: free trade and a floating currency. And the red camp wins with a technical knock-out in round one.
That was the surprise result of the clash of two economic models in Mexico City on Thursday, as Mexico went down without a fight before Brazil’s demand that it re-write a 2002 car trade accord. The nimble Mexican featherweight gave way to the lumbering heavyweight from Brazil. Read more
Did Mexico lose its battle with Brazil? That is what many pundits think happened after the two countries on Thursday settled a month-long wrangle over car exports that had, as its centre, the threat from Brazil to end a 2002 agreement on free trade in light vehicles.
Observers were quick to point out that Mexico had vowed to set 2011 export levels as a floor for any agreement on capping future car exports to Brazil. Clearly, that did not happen. Read more
After all the tough talks and posturing, in the end Mexico caved.
Mexico said late on Thursday night that it has agreed to limit its auto exports to Brazil over the next three years in order to avoid Brazil slapping a 35 per cent tariff on Mexico-made cars. Read more
As Brazil tries to force Mexico to accept changes to a bilateral agreement on trade in autos, Mexican car manufacturers are making it clear they won’t give in without a fight.
Teams from the two governments were holding negotiations in Mexico city on Wednesday after Brazil failed to impose an ultimatum last week. Mexico’s car makers recognise that the agreement has worked in their favour recently – but point out that it was strongly in Brazil’s favour for most years since it was enacted in 2003. Read more
The auto fight between Mexico and Brazil is heating up.
Mexican officials on Friday said they had rejected an ultimatum issued by Brazil on a long-standing bilateral auto accord. The terms the Brazilians are seeking would in effect kill the whole deal, they added. Read more
Brazil may be hot and Mexico not in the eyes of most of the world. But, says Jorge G. Castañeda, the Mexican political analyst and former foreign secretary: “There’s only two things in which Brazilians are infinitely better than we Mexicans: one is football, and the other is spinning yarns about their own successes.” Read more