Buried in the communique coming out of the G-20 confab in Los Cabos this week was an important pronouncement shining light on a deeply troubling trend in global trade — the emergence of a new wave of protectionism. While underscoring their commitment to open trade and investment, the G-20 leaders said "We are deeply concerned about rising instances of protectionism around the world."
My boss, ITI President Dean Garfield and the US Chamber's President Tom Donohue, put a fine point on this new protectionism in a compelling Wall Street Journal op-ed that ran in the run-up to the G-20 meeting. The piece was titled "Protectionism Is Back: the 21st-century euphemism is 'indigenous innovation,' and it's as damaging as ever." It highlights that, while we have all benefited from the stunning power of innovation, "there are forces trying to stifle it and replace it with economic schemes that threaten global trade and recovery."
Designed to boost to fortunes of domestic companies at the expense of foreign players, these discriminatory polices are often hard to defeat with normal trade remedies. They include forced tech transfers, unfair procurement policies, local content requirements, domestic standards mandates where widely used global standards already exist, and restrictions on the free flow of information.
While all sectors are being impacted, the tech industry, with its heavy reliance on global markets and deep supply chains around the world, often bears the brunt of this new, insidious trend.
Garfield and Donohue lay out a number of sensible responses, including a need for companies to use the power of their investments to drive better policy, a call on the U.S. Government to work more closely with like-minded economies to turn back the tide of misbehavior, stronger enforcement action in the World Trade Organization and other fora, and better policy at home to fix our own problematic approaches to tax, immigration, and education.
But we also need more honest and firm discussions at the highest levels in the G-20 and other such international gatherings. We do applaud that the leaders in Los Cabos raised the matter in their communique, but all the G-20 leaders need to put their money where their mouths are. Brazil, China, and India were at the meeting in Mexico this week, but their governments are at the forefront of putting in place many of these bad trade practices.
Protectionism is a real threat to the entire system of transparent, market-based global trading rules. Too much is at stake to let this problem fester. One hopes that when the G-20 leaders next meet, they will issue another call to knock back this dangerous trend of protectionism, but really mean it — each and every one of them.
-- John Neuffer is Vice President of Global Policy at the Information Technology Indsutry Council.