Page 40 - STRATEGY Magazine
P. 40

MARKETS
A Dark Room Blocks Light and Air
The new mood of protectionism in Washington, D.C., is bad news for some emerging markets, but for others it may be an opportunity to boost regional trade agreements and move up the value-added chain.
The 2008–2009 global financial crisis and re- cession triggered a range of protectionist responses around the world, culminating in the 2016 withdrawal, known as Brexit,
of the United Kingdom from the 28-nation Europe- an Union, and U.S. President Donald Trump pulling the United States out of the Trans-Pacific Partner- ship (TPP), an agreement between 12 countries that covered some 40 percent of the global economy, and triggering the clock to renegotiate NAFTA in 2017. While the advanced economies pull away from the global stage, what does this mean for the world’s emerging economies?
REGIONAL COMPREHENSIVE ECONOMIC PARTNERSHIP (RCEP)
Between 1985 and 2007, the world enjoyed substan- tial globalization and rapid economic growth. As the IMF noted in October 2016, “There is strong consen- sus among economists that international trade con- tributed to the rise in overall prosperity.” Recently, however, the organization warned that the trend of protectionism in advanced economies is one of the factors creating a more challenging environment for emerging and developing economies. This in turn has implications for the global economic outlook; emerg- ing and developing economies now account for more than 75 percent of global growth in output and con- sumption.
WHOM DOES PROTECTIONISM PROTECT?
Numerous studies have shown that free trade boosts international growth, as well as the growth rate of individual countries. Yet not all communities and producers have benefited equally, leading to calls for trade protection. Such policies vary from the imposi- tion of quotas and providing state aid to producers, to import tariffs and regulations that discriminate
TRANS-PACIFIC PARTNERSHIP (TPP)
NORTH AMERICAN FREE TRADE AGREEMENT (NAFTA)
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