Last week, Pascal Lamy, chief of the World Trade Organization (WTO), gave a stark warning that rising protectionism is a serious threat to global economic recovery.
Indeed, not too long ago, The Heritage Foundation’s Center for International Trade and Economics also counseled that “global trade freedom needs a boost.” We are unlikely to see a dramatic increase in tariffs, such as the Smoot–Hawley tariff that exacerbated the Great Depression, but non-tariff barriers (NTBs) to trade are on the rise, according to the WTO.
NTBs include a range of restrictive practices that obstruct trade, including quotas, antidumping duties, labeling requirements, customs clearance procedures, and subsidies. Such barriers limit freedoms of consumers and producers in the global marketplace, gravely undermining productivity gains and economic growth for the country as a whole.
Though in many respects NTBs and tariffs have similar effects, NTBs tend to be more detrimental to the future prospects of free trade. Not only are they harder to see than tariffs, but they are also more difficult to effectively counter under international trade agreements. Nor is it easy to eliminate such measures once they are in place, as we’ve seen in this country with numerous agricultural subsidies.
For example, U.S. sugar subsidies alone are estimated to cost $3.5 billion and thousands of jobs each year to support a niche industry. Yet that subsidy has resisted numerous elimination and reduction attempts, most recently in June and July of this year.
The recent rise in restrictive trade practices is bad news for both the U.S. and the rest of the world. In the short term, they reduce the trade flows that we need to get back to the path to dynamic economic recovery. Worse, in the long term, they will prop up inefficient producers and undermine economic freedom around the world.
It is time to reverse course on this destructive trend toward protectionism and reaffirm our commitment to freer trade.
Ella Peterson is currently a member of the Young Leaders Program at The Heritage Foundation. For more information on interning at Heritage, please visit http://www.heritage.org/about/departments/ylp.cfm.