Now more than ever, we should avoid politicizing trade
Jonathan Arnott

Editor's note: Jonathan Arnott is a former member of the European Parliament. The article reflects the author's opinions, and not necessarily the views of CGTN.

Except in the most extreme of circumstances, I oppose the politicization of trade. The more that goods and services are able to flow freely between countries, the better. Since the World War II, there has – until the last couple of years – been a trend towards liberalization of trade.

In the U.S., recovery from the Great Depression was slower and more painful than it needed to be. Sky-high duties (almost 60 percent on goods subject to duty, and 20 percent across all goods) discouraged international trade and encouraged stagnation. While the trend has been bucked slightly in recent years, globally tariffs overall remain close to historic lows.

As the global economy is reeling from the impact of COVID-19, the world faces a similar challenge today to the stock market crash of 1929 and subsequent depression. A sudden and dramatic cut in economic activity requires a considerable response. Governments worldwide do appear to be listening. 

An economic stimulus isn't always the best way out of a recession, but when facing the economic stagnation of a depression it can be the only way to get money circulating again. The post-COVID economy must be treated in the same way as a depression, even though the cause is different.

At domestic level, there seems to be genuine recognition of the threat. Yet I fear that the European Union and the U.S. could be repeating the mistakes of history. The latest spat is over the Nord Stream 2 pipeline, planned to run through the Baltic Sea, linking Europe to Russia. 

The U.S. has threatened economic sanctions on any companies participating in the installation of the new pipeline. They do have a point over the potential isolation of Ukraine, but I'm far from convinced that economic protectionism is the best way to make that point.

Allseas' deep-sea pipe laying ship Solitaire lays pipes for Nord Stream 2 pipeline in the Baltic Sea, September 13, 2019. /Reuters

Allseas' deep-sea pipe laying ship Solitaire lays pipes for Nord Stream 2 pipeline in the Baltic Sea, September 13, 2019. /Reuters

The European Union, for its part, has often been guilty of politicizing trade itself: One of my biggest frustrations in the European Parliament was seeing how often trade negotiations were stalled over unrelated political issues. In this case, however, the European Union is arguing the opposite. 

When Josep Borrell (the EU's High Representative), echoing Angela Merkel's sentiments last month, said "I am deeply concerned at the growing use of sanctions, or the threat of sanctions, by the United States against European companies and interests," he is not wrong.

Robert Lighthizer, the U.S. Trade Representative, is – like many in the Trump administration – more protectionist than most 21st-century Republicans. Indeed, he was chosen precisely because he holds such views. 

In 2008, he wrote an op-ed piece for the New York Times defending "the venerable history of protectionism." Some of the points he made in that article are reasonable: that belief in free trade should not be blind. There can be reasons for a targeted intervention. 

Yet his complaint last month about World Trade Organization (WTO) tariff imbalances is telling. Brazil may (if it wishes) impose an average tariff of 31 percent under WTO rules; the U.S. just 3.5 percent. It is indeed imbalanced, but the remedy should be to decrease protectionism internationally rather than increase it within the U.S.

In international relations, action tends to lead to reaction. The U.S. policy of demanding that other nations lower their tariffs by threatening to increase their own otherwise has been one which has met with mixed success at best. 

Now is not the time for such a hawkish approach: From all sides, this is a time for de-escalation. Global rebuilding requires making trade as easy as possible. The European Union has sadly permitted non-tariff barriers to trade to be built up over a long period of time; the United States, for its part, is hawkish over sanctions and seeking to impose more traditional tariffs.

Putting up barriers to trade is not a zero-sum game: such actions are corrosive and harm both parties. There can be circumstances when, as a last resort, it becomes absolutely necessary – but trade restrictions of any kind are a dangerous tool, to be used sparingly. I wonder whether the Nord Stream 2 pipeline can really fall into this category – is it really so egregious that this kind of response is necessary? 

There is an overarching narrative at present, a global catastrophe which we should all be fighting together. I fear, though, that many nations are falling into the same traps as during the Great Depression: We have failed to learn the lessons of history, and are on the point of repeating protectionism.

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