Protectionism does not protect
Can a stronger EU help to harness globalisation?
Will life be more difficult for our children? More than half of Europeans seem to think so.
As many fear for their future, they also expect more from their leaders. They are calling on their local, regional and national governments to do more to give them a brighter future. Often, they point the finger at their national governments and the EU institutions for not taking more decisive and concerted action to protect them. They blame open trade and globalisation for their woes and for the current rapid transformation of our economies and societies.
Some demand a simple response: ‘Let’s just “shut down” globalisation; let’s just close our borders to trade by raising tariffs and other barriers; and let’s put an end to immigration by tightening our borders.’
They do not, however, elaborate this argument further to its logical next steps: if we close our borders, others will do the same. They forget that globalisation also brought important benefits that would just be lost if we went down this track.
In the EU, trade currently supports 1 in 7 jobs. That’s already 30 million jobs. And for every extra billion euro we can export, we can create 14,000 extra jobs. On the other hand, by raising trade barriers by 10%, the surest outcome is a loss in national income of around 4% (OECD).
Of course, not everything has been positive and things are changing — fast. But anti-globalism assumes that globalisation singlehandedly led to economic hardship, to factory closures and stagnant wages. Although globalisation may certainly have overlapped, and sometimes reinforced, the trends driving the 21st century, it is not a force of nature in itself.
As has often been the case in world history, the biggest changes stem from technological developments. And we are still only in the early phase of the transformation and opportunities that the Internet and digital technologies will unleash. Every dimension of our lives will be affected with the rise of the Internet of Things, automation, and artificial intelligence.
In a world where you can order anything you want online or where personal data can be accessed in a few clicks from the other side of the world, protectionism is, at best, an empty promise.
We cannot just close the door on these changes. They are everywhere: Smartphones, apps and robots replacing functions formerly performed by humans, cars switching from mechanics to electronics and software. In a world where you can order anything you want online or where personal data can be accessed in a few clicks from the other side of the world, protectionism is, at best, an empty promise. Adaptation is the only way forward. And the impact that these developments will have on our everyday lives depends on the policy choices made today at every level, from local, to regional, national and European.
Can a stronger EU help to harness globalisation?
Last month, the Commission published a Reflection Paper on ‘Harnessing Globalisation’. It acknowledges the challenges that come with globalisation and recognises that many live ‘on the sharp edges’ of globalisation, while not enough has been done to protect the most vulnerable. Yet, it rejects a defeatist approach.
Beyond the binary
Protection in the 21st century must be recast. It has to be about adapting and empowering, rather than merely protecting — even if protection per se and taking measures to ensure a level global playing-field remain important tools when faced with unfair trading practices and disruptions. But in changing times, protection has to be more about equipping workers with the skills and training opportunities that foster adaptability; about continuously updating our talent pool with new skills, such as digital and entrepreneurship. It has to be about shifting Europe’s competitive edge towards services-based industries, digitalisation, technological and social innovation, decarbonisation and the circular economy. And it needs to include remodelling welfare systems to better target the excluded.
All these areas are those where the EU, as the world’s largest single market, with its common rules and high standards, can act to share the benefits of globalisation more fairly and to empower citizens, businesses, regions and Member States so that they can benefit more from the future’s hyper-connected global world.
Resisting this change can only lead to one place: a dead end.
