Special Report: Global Financial Crisis
By Fei Liena, Ming Jinwei
BEIJING, Feb. 14 (Xinhua) -- The U.S. Congress on Friday finally approved a massive 787-billion-dollar stimulus package, an unprecedented attempt by the U.S. government to revive the sagging economy.
However, the package retains the controversial "Buy American" provisions, which prohibit the purchase of foreign iron, steel and manufactured goods for any stimulus-funded infrastructure projects.
History and economics have told us, facing a global financial crisis, trade protectionism is not a solution, but a poison to the solution.
Experience has shown trade protectionism can protect nothing. During the Great Depression in the 1930s, the protective measures taken by countries like the United States triggered trade wars, further hurting international trade and the world economy.
The British newspaper Daily Telegraph has recently published a commentary: "Protectionism is, in the end, no protection at all", citing the U.S. Great Depression in 1930s as an example, saying that protectionism could not solve the crisis, the protectionists would only hurt themselves in the end.
A member of the U.S. Chamber of Commerce, Chris Braddock, thinks that since 95 percent of the world's consumers live outside the U.S., the "Buy American" provisions will trigger retaliation by other countries. They will only buy local products as well, then the U.S. enterprises will be the first to be affected, he said.
From the economic perspective, trade protectionism is an out-of-date mentality. In free trade, participants can show their advantages over others through free and fair competition, which benefits all.
Of course, it is necessary to be concerned with vulnerable groups of people in the development of free trade. It is also necessary to help various industries to grow their comparative advantages, and necessary to establish a fairer, more rational international trade system. However, that is not what protectionists think. In nature protectionism rejects competition. It tries to close the door to protect the interests of a minority. In a globalized world today, protectionism is bound to fail.
Canadian International Trade Minister Stockwell Day has recently pointed out that trade protectionist measures will trigger trade wars that would wind up hurting everybody's economy.
Japanese Finance Minister Shoichi Nakagawa has also said that trade protectionism will have a negative influence on the world economy, and Japan will firmly oppose it.
Before the G-7 meeting of finance ministers and central bank chiefs on Friday, British and German officials had all expressed opposition to the trend of trade protectionism.
Trade protectionism will also cause catastrophic effects to some poor countries, making the current financial crisis one of a humanitarian crisis as well. In the past few years, world trade has kept increasing, helping the less-developed economies to continue to develop, and their people to gradually improve their living conditions.
However, the current financial crisis has dragged some poor nations back into poverty. The World Bank has recently pointed outthat the newly-emerged poverty population in the world caused by the financial crisis could exceed 200 million in 2008 and 2009, and the infant mortality rate in poor countries could also rise in the next few years.
There is no doubt that the re-emergence of trade protectionism will not only stimulate trade disputes, cause an impact on the international trade system, but also exacerbate poverty in the world and give rise to more tragedies.
The international financial crisis is a global challenge which requires practical cooperation among all countries. In a globalized economy, the fate of all nations has been tightly bound together. Only through concerted cooperation and efforts can the concerned parties effectively cope with the crisis.
History has told us the more critical the situation is, the firmer we should stick to opening-up and cooperation. Trade protectionism will only deepen and prolong the crisis.
At this critical moment, all countries should actively create a free and convenient environment for trade and investment, deepen international economic and trade cooperation, and promote healthy development of the multilateral trade system, so as to lay a foundation for the world economy to get over the crisis at an early date.