Inbox: EU protectionism threatens global growth

Ultimately, it may not be collapse of the financial markets that sends the wider economy spiralling into depression: it may instead be the European Union’s protectionism and massive tariff walls that deal the fatal blow to global economic growth.
That’s the thinking of group of Massey University executive MBA students following recent study tour to Europe. Zaneta Schumann, Jussi Luukkonen, Enock Ndlovu, Gareth Jones and Kamelesh Prasad identified protectionism within the EU as significant obstacle for New Zealand businesses.
“This extends not only to economic matters, but is incorporated into complex network of cultural, financial and political arrangements,” they say. “It is impossible to build business success in Europe without some grasp of the history that underpins this reality.”
The study points out that almost every nation practises some measure of protectionism for its domestic products.
“However, the difference in Europe is that the amalgam of protectionism, politics and traditionally conservative business behaviour makes recognising and bridging the gap quite crucial.
“In addition, the EU’s mechanisms for protecting its economy are not only based on political, economic and financial reasoning, but are also founded on the strong emphasis placed on citizens’ rights.”
EU protectionist measures range from classical trade barriers such as tariff increases and “buy national” campaigns, to carbon footprints and behind-the-scenes, covert measures.
The students note that the current weakness of the US economy, combined with the European debt problem, has major ramifications and requires international cooperation and coordinated global response.
They also acknowledge that what one government sees as protectionism, another might consider as simply safeguarding jobs.
“The present state of drifting international politics poses the obvious danger that the world could slide further into protectionism and dramatic currency market fluctuations would only add to the uncertainty.” M

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