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Trading Up

March 25, 2009

On April 2, world leaders of the G20 will meet in London for critical talks on the global economic crisis.  From my perspective, one of their key objectives should be to prevent new trade barriers from spreading like a virus around the world.

In November, leaders of the G20 pledged to refrain from raising barriers to trade and investment for a year.  A few days later, however, they started backing away from their commitments.

Interestingly enough, the World Bank just released a report finding that 17 nations of the G20 violated the November agreement through various actions, such as hiking taxes on certain imports, which restrict the flow of goods across borders. This goes to show that protectionism is alive and well.

At the next G20 meeting, leaders must hammer out substantive commitments that help – not hinder – the flow of goods across borders. By doing so, they can help prevent further declines in global trade.

Given the many issues facing all of us today, you might ask, ‘Why should anyone focus on barriers to trade and investment at this point in time?’  Simply put, freeing up trade has the potential to strengthen economies, raise standards of living and increase opportunities for nations, businesses and people.  Unfortunately, we are already seeing a decrease in trade and an increase in poverty as a result of the global economic crisis.  Erecting new barriers on top of existing ones will only compound these issues.  History tells us so.

During the 1930’s, trade barriers erected by countries to protect their people backfired and dragged the world into a global depression.  Let’s not make the same mistake twice.

While FedEx didn’t even exist at the time, today we facilitate global connections and trade in more than 220 countries and territories – so we see first-hand the positive benefits that openness and trade can create in a global economy – for both developed and developing economies alike.

Open access to capital, information, people, and foreign markets offers the best hope for current and future prosperity for people around the world.  We must continue to strengthen the policies and practices that have ignited development and economic growth, while developing smarter regulatory approaches.

As countries pursue domestic stimulus and bailouts, they must balance their policies against the precedents and impacts that these measures hold for global trade and the global economy.  Even small steps towards protectionism produce negative ripple effects that spread throughout the world.

Choosing protectionism is often politically expedient at home – but we have walked down that path before during a global economic crisis and suffered the consequences.  Instead, we need the G20 leaders to adopt an aggressive, transparent and well-coordinated action plan to help stabilize the world economy.


    Denise Mallini says:

    The G20 is and seems to me, to be about what will make the world stronger economically. In this time of a floundering US economy I am concerned that the USA has always been open to trade, yet our exports have always been subject to high tariffs of other countries. The balance of trade always seems to favor everyone else but the USA. The USA has and is still making other countries economies stonger than they were, with the volume of imports still flowing into our country. Look at China and Russia, both were supressed economically until the USA opened trade relations with them, which helped open trade with other countries, some of which were our alies. Many countries seem to think that the USA is the cause of the world economic chaos because we have lessen our commitments to import, as we have in the past. Open and balanced trade among countries interested in a strong world, would indeed be welcomed and looked upon as a step in the right direction. Working for a company that makes our living from shipping. A free and equal trade agreement with the world would be a commitment we all could live with and prosper from.

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