The danger of trade barriers

Even in the most favorable economic climate, some of the supposed apostles of free-trade values have been prone to exhibit distinct double standards. The United States, for instance, is fond of threatening sanctions and insists on imposing highly protectionist textile quotas, while the European Union has repeatedly used spurious excuses to launch antidumping investigations.

If they behave like this in good times, it is worrying to consider what further restrictions may be imposed during an economic slowdown brought on by the Asian financial crisis.

A tide of protectionism is already sweeping across the U.S., with congressional opposition recently forcing President Bill Clinton to withdraw his request for fast-track approval of trade agreements, and several anticompetitive bills now under consideration.

As Trade and Industry Secretary Denise Yue Chung-yee warned, at a seminar in Miami, the massive devaluation in Southeast Asian currencies threatens to accelerate this tendency. The affected countries will try to revive their economies through cheap exports, a strategy which is already showing signs of success, with a substantial increase in Malaysian exports following the depreciation of the ringgit.

Already there are signs of U.S. uneasiness about the effect of such devaluations on their soaring trade surpluses with Asian nations, with China and Japan being warned by Washington not to allow their currencies to follow suit. If the U.S. moves further into the protectionist camp, the resulting reduction in world trade would make the effects of the Asian financial crisis seem trivial by comparison.

That is the message Ms. Yue was trying to get across and it deserves the support of everyone in Asia and the U.S. if the danger of a global recession is to be averted.

-- South China Morning Post, Hong Kong