With strikes here in protest at the hiring of contractors from elsewhere in Europe and Barack Obama set to embark on a Buy American campaign, there is a real danger that the world is heading towards another bout of protectionism. Politicians must be honest on the issue. The idea that British contractors should be barred from bringing teams to other European countries would not be tolerated, so even in these difficult times, there cannot be restrictions on other EU workers here. Of course, there should be a level playing field but not preferential treatment.
The reason is obvious. A not insignificant proportion of retail earnings in December is the result of cross-border trade, with people from the Republic shopping in Newry and other Northern Irish towns. I suspect there has been a similar boost in London from French and other Eurostar shoppers. All are enjoying an advantageous exchange rate. All are keeping UK retailers going, and helping keep their staff in work. In Ireland pleas for patriotic shopping have been studiously ignored. At least within the EU, there is free trade, but we must not try to rein it in. If we try to impose protectionism, we can be sure that we will lose more than we gain.
And the same will be true in Barack Obama's America. Herbert Hoover's disastrous tariffs deepened the depression and reduced world trade to a third of its 1929 levels. If Obama is serious about re-engaging with the world, the worst thing he could do is give in to the protectionist unions bent on destroying free trade. It isn't easy when faced with the complaints of workers to give it straight. But if Gordon Brown wants to strengthen his world economic leadership credentials ahead of the G20, the best thing he could do would be to preach and practice a policy of free trade as an important part of recovering from the recession.
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