Europe leading the way in Protectionism!


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Resurgent protectionism, a ghost who comes from Europe

The setbacks in the GDP of many nations has led to this business practice, which damages the health of world economies

The resurgence of protectionism in several countries, mainly in Europe, both in trade and in capital flows following a prolonged recession, are a risk to the financial health of many economies.

According to a study published yesterday in New York by Standard and Poor’s, the closure of European economies may affect the development and growth of Latin American countries, mainly in the center of the region.

“The impact of possible shocks differs in several places outside the region. Central America is more vulnerable than Mexico and many Latin American countries, which have a greater capacity to adopt countercyclical policies, “says the report.

Latin America will grow between 3.5 and four percent in 2012 that is two percentage points higher than developed countries and currently available as a region of higher grades of sovereign debt before the start of the global crisis in 2008, according to S & P.

However, the rating agency warns in his study entitled The changing global economic outlook and its impact on Latin America a risk of unexpected change of the current policy framework affecting international trade and capital flows.

According to Standard and Poor’s (S & P), “uncertainty and change characterize the global economy in 2012” with the possible negative impact on emerging markets.

These recent analyzes, the firm adds the risk of “abrupt changes in the rules of the international economic system” that could “affect” the prospects for growth in Latin America.

For the World Economic Forum, there are many examples of countries taking measures that discriminate against foreign firms and products to protect its domestic market.

“The pressures of high unemployment are increasing the demand for protection and stabilization measures of the government. There are several legal forms of protection that can be applied administered through procedures such as those on anti-dumping , countervailing duties and safeguards, “the agency said in its 2010 report on Global Trade Facilities .

Then there is the prospect of many years of hardship and painful reforms in Europe (and to a lesser extent, in the U.S.), which could create an unexpected political backlash, changing the general course of international politics.

“The stagnation would undermine the perception of earnings, a result of increased international economic integration, potentially leading to a backlash in some countries for greater nationalism” they add.

Success stories

For specialists, Brazil is one of the nations in Latin America is turning to protectionism in the economy as a way to revive its growth rate, which rose from 7.5% in 2010 to 2.7% in 2011.

The country has great potential in raw materials and an internal market of 205 million.

The scenario in Latin America may be complicated if the sixth largest economy now decided to close. “There will be a slowdown in world trade will be cut and recovery prospects on a global scale,” according to the analysis of S & P.

Resurgent protectionism, a ghost who comes from Europe

Protectionism comming from Europe

France is another example. President Nicolas Sarkozy threatened on Sunday to ignore the European limitations on the issue of protectionism to support his country in an election more than an economic issue.Sarkozy said it was time to support local businesses and stop the uncontrolled flow of immigrants and cheap imports, which demonstrate the lack of protective controls.

He also proposed a European law similar to the Buy American , which would force governments to be in favor of the purchase only of products manufactured in Europe, and said France would begin to apply the rule unilaterally.

“I want a Europe that protects its citizens. I do not want unfettered competition. “

United States has been criticized for its other nation protectionism that violates NAFTA agreements and NAFTA.

Even Mexico has stated that “political restriction” in the U.S. Congress led by the unions, the clause Buy American for the consumption of American products and the tendency of EU to protect their companies, restrict international competition, as an example is the question of the entry of Mexican carriers to U.S. territory.

More anti-dumping

In recent years there is a rise in applications and implementations of the measures dumping (if a company exports a product at a lower price than it normally charges on the market, is said to be dumping ), says the World Economic Forum.

According to the agency, average tariffs in Brazil and Argentina rose three percentage points, due to increases in industrial taxes.

In contrast, there was a marked decrease in the average tariff rate of one to two percentage points in Nigeria, Mexico, Iceland and Ukraine.

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