Protectionism for the sake of protectionism?

Dr. Yıldız Tuğba Kara*

Addressing the last Asia-Pacific Economic Cooperation (APEC) trade ministers meeting, U.S. Trade Representative Robert Lighthizer said defending the country’s own market against unfair trade is not “protectionism” per se. He also brought up the challenging question of how we should re-define the relationship between globalization and free trade, the definition of which he claimed “is sort of migrating.”

As the time lag between the pace of today’s globalization and adjusting socio-economic policies has widened, free trade has once again been made a scapegoat. The U.K.’s Brexit decision, the U.S. president’s trade policy decisions such as the withdrawal from the Trans-Pacific Partnership (TPP) and renegotiating the North American Free Trade Agreement (NAFTA), French President Emmanuel Macron’s call for a “Buy European Act,” Europeans’ call for an EU-level mechanism to screen foreign investments, and the greater emphasis put on reciprocity instead of liberalization in free trade agreements, are among the most obvious recent signs of public opinion turning against globalization as well as free trade.

In practice, the global consensus around free trade and its merits is continuing. All countries still embrace the principles of international trade and investment. They want to enjoy the benefits of globalization but they also want to insulate themselves from its downsides as much as possible. Governments increasingly pick and choose whom they trade with, what sort of capital they welcome, and how much freedom they allow for doing business abroad. As a result, after two decades in which people, capital and goods have been moving ever more freely across borders, walls have been going up - though they are walls with gates. As The Economist magazine rightly defined, we are now experiencing “gated globalization.”

Whether globalization is manageable or not, whether we should try to manage it, and if so how do the main questions around the current ordeal stem from discontent with globalization, are all questions being asked. But long before the globalization process was blamed for all our social ills, futurists, think-tanks, NGOs and policy makers were all discussing these questions and how to remedy these ills without giving up globalization. Issues such as Industry 4.0, artificial intelligence, the Internet of things, big data, robotization and the future of work, the impact of 3D printers on manufacturing, and the importance of intellectual property rights protection and STEM education, which are also the catalyzers of Society 5.0, were all discussed. There was obviously no easy answer to how to generate new jobs, deal with economic and social consequences of robotization such as possible mass unemployment and migration, and sustain a lower-skilled work force in the face of automation and robotics. 

However, one thing is obvious. Focusing on trade policy tools is inadequate to address challenges linked to globalization, and the popular demand for protectionism is misleading. Although globalization and free trade always go hand in hand, nurturing each other, the trade policy to regain the trust of public opinion and boost responsible globalization cannot be protectionism. “Regulating globalization” cannot be achieved through what has recently been called “enlightened protectionism.”

There are intense debates about whether protectionist trade policies - such as the U.S.’s “Buy American, Hire American” order, aiming to minimize the use of waivers and maximize made-in-America content federal projects, changes in the H-1B visa program, or protecting U.S. steel industry - will do more harm than good for U.S. competitiveness. These debates cannot be unheard by the relevant decision-makers in the U.S.

In that respect, it seems to be more about buying time and getting ready for the upcoming challenges of globalization, rather than “protectionism for the sake of protectionism.” There is a global race going on among nations to close the gap between the pace of globalization and adjusting socio-economic policies. Countries that do not urgently take steps towards envisioning the goal of Society 5.0 will be the biggest losers. 


* Dr. Yıldız Tuğba Kara is Vice President of the Society 5.0 Institute.