|Issue of the Day: Protectionism Affecting Globalization|
Published Thursday, September 10th, 2009
Over the past two years, rising protectionism, recent declines in global trade and foreign direct investment, and rising inflation in once cheap locations has become a subject of much business analysis. All leading to what the Financial Times called earlier this year “Deglobalisation: ugly word, scary idea and now painful reality.” Examples include the US Container Security Initiative (CSI), which has stagnated or stopped trade into the US for some companies, regionalization of the supply chain, and insourcing, the return of jobs to the original country.
For the US part, it employs the global reaching Container Security Initiative, which has been in all US ports and 47 foreign ports, with funding of $140 billion in 2007. Also, the installment of the Employ American Workers Act, affecting hiring companies that are recipients of bailout funds, is forcing some to jobs in the US, which is good for the US. Other foreign governments have adopted protections. Russia has introduced a temporary import tariffs on laundry equipment. Australia launched a “local jobs first” program as part of its stimulus package. Brazil introduced tariffs on steel products.