The protectionist threat

I've been getting a free ride lately as far as coming up with a reading list is concerned.

I read chartered accountant Andrew Sheng's column in the Star newspaper biz section every saturday and follow through on his recommended reads. His latest one is "The Next Convergence - the future of economic growth in a multispeed world" by nobel prize winner Michel Spence, professor of economics at the Stern School of Business at New York University. This excerpt which is taken from Part Four, Chapter 30, page 189 is noteworthy:

"The flow of knowledge, finance, and technology that underpins sustained high growth rates in emerging economies is closely linked to an open, rules-based, and globalized economy. Yet this global construct is coming under pressure in an environment in which advanced countries have stubbornly high unemployment and experience bouts of financial volatility. Growth  in the global economy comes to be seen as a zero-sum game, leading to suboptimal reactions.

As a result, the continued openess of industrial-country markets cannot be taken for granted. Political and policy narratives are becoming more domestic and narrow, while the international agenda and those voices advocating collective common global interests are having greater difficulty being heard."

In short, if the developed/industrialised nations decide to start slapping tariffs on imports and provoke a similar response from emerging market countries, this would be the start of a trade war and a lose-lose situation on all sides. What is truly scary is that the Doha round of trade talks which started in 2001 has been stalled for close to a decade now and the propects of WTO nations coming to a meeting of minds appear elusive. Unless Doha can somehow reach a conclusion and achieve a fresh consensus to strengthen the global free trade system, everyone's growth prospects will be jeopardised. So it's either Lose-lose or Win-win.