Fair-Weather, Free-Traders
In many countries politicians’ fealty to open markets is already more rhetorical than real. In November the leaders of the G20 group of big rich and emerging economies promised to eschew any new trade barriers for a year and to work hard for agreement on the Doha round of trade talks by the end of December. Within days, two of the G20 countries, Russia and India, raised tariffs on cars and steel respectively. And the year is ending with no Doha breakthrough in sight.
As economies weaken, popular scepticism of open markets will surely grow. Among rich countries, that danger is greatest in America, where grumbles were heard long before recession set in. The new Congress, with bigger Democratic majorities, has a decidedly less trade-friendly hue….
Now that their exports are faltering, emerging economies too may become less keen on trade. The WTO’s rules allow them plenty of scope: after two decades of unilateral tariff-cutting most of their tariffs are well below their “bound” rates, the ceilings agreed in the trade club. On average they could triple their import levies without breaking the rules.
Politicians from Washington to Beijing are being pressed to help troubled industries, regardless of the consequences for trade. A bail-out of Detroit’s carmakers, whatever its final extent, will be a discriminatory subsidy. As China’s exporters go bust by the thousand, industries from textiles to steel have been promised handouts and rebates. Subsidies will beget more subsidies: Nicolas Sarkozy, France’s president, says that Europe will turn into an “industrial wasteland” if it too does not prop up its manufacturers. They will also invite retaliation. With China’s bilateral trade surplus at a record high even as America’s economy slumps, Congress will not take kindly to Beijing’s bolstering of its exporters.
… It is hard for a free-trader not to worry. So what is to be done? The first requirement is political leadership, especially from America and China. At a minimum, both must avoid beggar-thy-neighbour policies. Second, a conclusion of the Doha round would help. A deal would reduce the risk of broader backsliding by cutting many countries’ bound tariffs... Third—Doha deal or not—is greater transparency. A good recent idea is that the WTO publicise any new barriers, whether or not they are allowed by its rules.
The best insurance against protectionism, however, is macroeconomic stimulus. Boosting demand at home will reduce the temptation to divert it from abroad. By historical standards policymakers are acting aggressively, as the Federal Reserve did this week. But the effort is unevenly, and poorly, distributed. Emerging economies from which capital is fleeing have little room to boost spending. Some creditor countries (notably Germany) are holding back on fiscal stimulus, while the world’s biggest borrower (America) is acting the most boldly. A bigger push to boost domestic demand in creditor countries coupled with more help, through the IMF, to cushion cash-strapped emerging economies would ease the world economy’s adjustment and brighten the prospects for free trade. In the 1930s protectionism flourished largely because of macroeconomic failures. That must not happen this time.
■ Scanning
Ex. 2. Find the English equivalents in the text:
1)в поле зрения
2) верхний предел
3) в среднем
4) нарушение правил
5) независимо от конечного результата
6) промышленный пустырь
7) политика «разори своего соседа»
8) уменьшить соблазн
Ex. 3. Find the words or phrases in the text that mean the following:
1) a situation in which companies can trade freely without limits, and prices are changed by the number of goods and how many people are buying them;
2) doubting that something is true or useful;
3) very interested, eager to do something very much;
4) an amount of money which is returned to you, especially by the government, for example when you have paid too much tax;
5) to start doing something bad when you have been doing something good.
Ex. 4. Choose the best answer(s) according to the text:
1. What state of the Persian Gulf is mentioned in the text?
a) Saudi Arabia
b) UAE
c) Qatar
d) Bahrain
e) Kuwait
f) Oman
2. How many countries of G20 are named in the text?
a) 6 ; b) 5 ; c) 7 ; d) 2 ; e) 4
3. What organizations were mentioned in the text?
a) the International Monetary Fund
b) the International Metalworkers' Federation
c) the World Tourism Organization
d) the World Trade Organization
e) the European Union
f) the United Nations
g) the Congress
4. How many ways out of the situation described in the text are suggested?
a) 1; b) 2; c) 3
5. What fields of economy (industries) are mentioned in the text?
a) tourism
b) textile
c) banking
d) farming
e) steel
f) oil
g) car