14 Sep 09 Back to Globalization or Back to Protectionism?

The news of the decision by the US to impose a duty on Chinese tyre imports (following pressure from US unions)[1] and the threat of response from China, really does raise the issue of protectionism.  It also questions the hopes of a new era of post crash global co-operation signalled at the G20’s first meeting and adds weight to the observations of others that the degree of post crash co-operation may be poor[2].

We can only hope that this is not an accurate leading signal.  If it is an accurate leading signal, then this is a key step to the type of economically divided world described in my “Jigsaw” scenario.  To avoid this outcome, leaders will have to stand firm against populist pressures for protectionist measures.  The voices for protectionist steps will grow stronger in the coming months as the advanced economies struggle with a slow and uncertain “U” and “L” shaped recoveries and the emerged economies spring back on the upward path of their “V” shaped recoveries[3].

What this does highlight is that firms must take a pluralist view of the future when preparing their plans.  Just staking your business’s future on one future view of the world (probably benign globalization) is just too risky.

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References
[1] Dyer, G and Braithwaite, T US tyre duties spark China clash FT.com, September 2009.
[2] Dunaway, S A Pretty Slow Recovery Council On Foreign Relations, September 2009
[3] Dyer, G and Lau, Justine China’s economic recovery gains pace FT.com September 2009.

Tags: globalization, protectionism, protectionist measures

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