One cause for relief in the financial crisis is that, unlike in 1930s, the world has avoided a destructive protectionist war. The European Union has played its part by enforcing internal competition rules and promoting a multitude of free-trade deals. Last year it signed a pact with South Korea removing duties from most goods. It has just initialled a deal with Colombia and Peru. In theory at least, big trade accords are in the works with India, the Mercosur group, Canada, Malaysia and Singapore.
So the future of free trade is assured? Not quite. The battle in Europe between free traders (mostly in the north) and protectionists (mostly in the south) never ceases. One test will be the EU’s revision of trade concessions for developing countries known as the generalised system of preferences (GSP). The EU boasts that this is the world’s largest set of unilateral trade privileges for poor countries. It cuts or scraps tariffs on most products, helping 176 countries and territories. But the word is that next month the European Commission will propose halving this number. The cull could include such big exporters as Brazil, now seen as a competitor; oil- and gas-rich countries like Russia and Saudi Arabia that still get special treatment; better-off African countries, including South Africa; and the dependencies of rich countries, for instance Guam (America) and the Falklands (Britain). Read more here.
Date: April 21, 2011