Trade has always been an instrument of control in international relations and diplomacy. Developed countries with strong production base usually deploy trade in the management of its relations with other countries, especially, perceived competitors. They also use it to either build friendly relations and or to frustrate hostile nations or multilateral organizations. It is an instrument of cooperation when it is mutually beneficial. However, when not properly controlled, non-restrictive trade could result in dumping, potentially destroying the economy of a nation. This could be in form of stifling domestic producers; loss of job; currency volatility and other similar economic challenges. It is in this regard that scholars mooted the idea of trade protectionism or more broadly, economic protectionism.
The idea of economic protectionism dates back to the 19th century when the main proponent, Fredrich List, a German economics guru published his magnum opus calling for trade protectionism. In the master piece, List insisted that economic protectionism is a desideratum if small industries must develop and build the capability to compete favourably with their foreign counterparts. His postulations contributed immensely towards influencing the economic policy dispositions of many North America and Euro-Asian nations both in 19th century as well the beginning of 20th century. Meanwhile, the contemporary leader of the school of thought is John Keynes, a British scholar.
The idea by states and intergovernmental organizations to formulate policies and programmes and take deliberate steps to shield domestic industries and firms from foreign competition through the instrumentality of several trade barriers such as tariffs; subsidies; quotas; and currency control is referred to as economic/trade protectionism. The aim is often to ensure that home businesses are not out-competed, out-maneuverer, and dominated by foreign companies within the domestic economy. The advantages of this policy disposition are numerous, particularly as it allows a country to assert its sovereignty over various sectors of its economy and block external domination of critical sectors by foreign, often bullish firms and their goods. This ensures that jobs are protected and so are domestic industries. Protectionism also aids in protecting the peoples age long culture and tradition and frustrate its adulteration. A critical example is in the area of movies; fabrics; and agricultural products to mention a few. However, there are multiple arguments against protectionism. Perhaps the most prominent is that it usually triggers trade wars, resulting in retaliatory policies, potentially leading to reduced international trade and interconnectivity. Additionally, economic protectionism could result in higher prices for buyers, a development which may have significant effect on the peoples’ purchasing power. However, as is normal in social science, there are scholars for and against the policy, and their arguments and defence remains strong and valid, depending on the biases of the particular analyst.
Presently, the world appears to be returning to protectionism and economic nationalism. This could be as a result of the economic woes thrown up by the corona virus pandemic, prevailing geopolitical tensions particularly in the Middle East and Europe, coupled with challenges of disruption in global supply chains. Besides, the emerging trend appears to have gathered more impetus following the outcome of the 2024 US presidential election with the winner, Donald Trump favouring protectionism. Already, concerns have been triggered in Canada; Mexico; European Union; China and other parts of the world that seem to be shaping up in anticipation of Trump protectionist policies.
Generally, the development may have severe implications on countries with weak production base as it would reduce market thereby threatening revenue, although it would encourage concerned countries to build relationship with new markets that are open for trading. It is however expedient for the World Trade Organization to upscale efforts at encouraging global open trade and its deployment in uniting the world.
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