Protectionism has no room in free trade

The US proposal on Framework for Sustainable and Balanced Growth took many G20 leaders by surprise at their recent Pittsburgh summit. Economic imbalance exists mainly because of the discrimination in free trade. G20 leaders should jointly fight against protectionism, says an article in Beijing News. Excerpt:

The US draft on Framework for Sustainable and Balanced Growth comprises three schemes: higher savings and lower budget deficits for the US, fewer exports from China and structural adjustment of Europe. Besides, the US also wants other G20 countries to sign up to a process of mutual assessment, to be policed by IMF, in order to ensure that they adopt policies consistent with a "sustainable and balanced" global economy.

According to mainstream explanations, the global economy faces imbalance because of US consumer hobbies and China's excessive dependence on exports. Thus the US framework seems to be a suitable remedy for the case.

The primary reason for imbalance, however, is discrimination that some of the world's major economies practice in the name of free trade. The US, for example, has for years restricted technology transfer to other countries, especially China. It has failed to reduce its trade deficit with China, too, which has intensified the economic imbalance.

But the shrinking consumption and economic imbalance are not serious enough for the US government to intervene. Thus by placing a set of policies aimed at demolishing globalization and free trade both, the US is seeking temporary relief without giving a thought to the consequences.

To address the problem properly, G20 countries have to ensure that free trade is practiced fairly and globalization is intensified. Protectionism is certainly not the answer.

(China Daily 10/09/2009 page9)