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.