PROTECTIONISM – BAD MEDICINE, WRONG DIAGNOSIS

A phantom is stalking the globalised world and threatening to turn back history: protectionism, which made a big comeback in 2002, writes Benedetto della Vedova, a deputy in the European Parliament for the Transnational Radical Party. US president George W. Bush was the first to try this dance, beginning with tariffs on steel and then gigantic subsidies for agriculture. But the protectionist wind is blowing in Europe too (and not only in agriculture) where the economic crisis is provoking calls for state intervention and trade protectionism. Given that the transferral of traditional industries and production of intermediate goods to countries with lower production costs have benefitted, not harmed, the industrialised countries, Vedova argues that their invocation of protectionist policy is indefensible. The author agues that the industrialised countries should accept, whatever the consequences, the challenge of achieving production excellence in keeping with the new international division of labour. To do so it is necessary to renew systems that have aged to the verge of paralysis and make major investments in research and development. Financing for these changes could come in part from agricultural subsidies, which devour over 40 percent of the EU budget and force European consumers to spend far more one food than they would in a free market.