Global Courant 2023-05-19 08:17:17
The Group of Seven summit in Japan this weekend could herald the beginning of a new era of global protectionism as the US continues to push for a G7-wide “screening of investment outwards” to China in certain advanced technologies.
It is also reported that the European Union and the UK are discussing strengthening export controls on semiconductors and other technology deemed critical to China.
As leaders of the world’s seven largest so-called “advanced” economies, which dominate global trade and the international financial system, the US Treasury Secretary said Janet Yellenwho was in Japan last week for a meeting of finance ministers has said: “Of course it would be most effective if there is a coordinated action by a group of like-minded countries and agreement that this is a workable approach.”
She added that the United States would continue “informal” talks on the measures with other G7 members, namely Canada, France, Germany, Italy, Japan and the UK.
The existing restrictions on China from the US and others have already led to a sharp decline in high-end tech exports, and with geopolitical competition between the US and China seemingly intensifying, it is likely that Western nations, led by America, will further exports will impose controls on new sectors and industries. These can be biopharmaceutical, biotech and agricultural products such as seeds.
While it is clear that each country at all levels must represent its own interests, I am skeptical of the creeping protectionism and urge political and business leaders to pursue a safe form of globalization.
As we have seen in recent decades, globalization promotes economic growth by facilitating the free movement of goods, services and capital across borders. When countries open up to international trade, they gain access to larger markets, benefit from economies of scale and attract foreign investment. This in turn leads to higher productivity, job creation and a higher standard of living.
Also, critically speaking, it encourages the exchange of ideas, knowledge and technologies between countries. It enables the transfer of best practices, stimulates innovation through competition and facilitates international cooperation in research and development.
Allowing the importation of goods and services from different countries generally gives consumers access to a wider range of products at competitive prices. On the other hand, protectionist measures restrict choice, restrict competition and raise prices for consumers.
Globalization has the potential to lift millions of people out of poverty. By integrating into the global economy, developing countries can attract foreign investment, access new markets and diversify their economies.
In addition, a rejection of protectionism promotes international cooperation and diplomacy. By participating in open trade and maintaining strong economic ties, G7 members can build mutually beneficial relationships with other countries.
This can lead to improved diplomatic relations, more stability and better cooperation on global challenges such as climate change, cyber security and public health.
While globalization has its challenges, the benefits outweigh the drawbacks. By embracing globalization and rejecting protectionism, G7 members can contribute to a more prosperous, interconnected and peaceful world.
Nigel Green is founder and CEO of deVere Group. Follow him on Twitter @nigeljgreen.
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