Precisely as market-friendly candidates in Latin America win elections to replace protectionist governments — ones that had come to power in the last 15 years in the so-called “pink tide” (as opposed to a full-blown “red tide”) of left-wing electoral victories in the region — the wider world seems to be moving back toward protectionism, as newly elected leaders promise to erect barriers to trade.
At the Asia Pacific Economic Cooperation (APEC) summit, held in Lima, Peru, this past weekend, the mood was not upbeat. Though its 21 member countries reiterated their commitment to eliminating trade barriers, after the Brexit vote and Donald Trump’s victory in the US election, there is little hope for market-friendly advocates around the world. In fact, just two days after APEC ended, Trump announced that his government would withdraw from the Trans-Pacific Partnership (TPP) trade deal, an initiative championed by several APEC members.
Resistance against trade has historic roots in Latin America, but it is also now becoming increasingly popular in industrialised countries. By increasing competition, free trade benefits consumers. People have access to more goods at lower prices. Yet, because there is more competition, companies are hard pressed to reduce costs. Bringing labour costs down in manufacturing, intensive production has become the only survival strategy for many companies. That has led corporations to move factories away from more developed countries where labour costs are more expensive and relocate in less developed countries in search of a more competitive edge.
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