Open markets

Open markets drive economic growth

Economic openness — free-flowing trade — has helped create thousands of well-paying jobs in the Pacific Northwest and around the world, writes Nigel Sheinwald, Britain's ambassador to the United States. Given the current pressures on our economies, he writes, we need to recall that the prosperity created by our globalized economy has not come about by accident. It is the result of our collective choice for openness.

By Nigel Sheinwald

FOR governments all over the world, the top priority is to make possible the earliest global recovery and return to economic growth. If governments are to achieve this, they will need to resist the siren calls to put up trade barriers and restrictions, to shield domestic industries from foreign competition, and to close our systems off from the rest of the world.

Coming from a land at the edge of a continent — with weather not unlike Seattle's — the historical significance of trade, and the flows of capital and technology that bring prosperity, are as clear to me as they are in the Pacific Northwest. Open markets have been one of the greatest drivers of economic growth in our time.

Economic openness has helped create thousands of well-paying jobs and revitalize local communities and industries. And given the current pressures on our economies, we need to recall that the prosperity created by our globalized economy has not come about by accident. It is the result of our collective choice for openness.

It means biodiesel and wind-turbine firms from Washington investing in the United Kingdom, and British universities collaborating with firms such as Microsoft and Boeing to produce new products in factories on both sides of the Atlantic. In fact, British-owned affiliates employ some 13,000 people in the state, which along with Japan is the highest number of any country.

In rich countries, openness has created high-paying jobs and made available less-expensive goods and services for consumers. In the developing world, international trade and investment have lifted millions out of poverty.

Although the European Union and the United States together represent just 12 percent of the world's population, we account for 40 percent of the world's trade and 50 percent of the world's GDP. The U.S.-European transatlantic economy remains the largest, most integrated and longest-lasting economic relationship in the world.

We maintain this commitment to openness that has served us well by sticking to our principles, despite the choppy waters around us.

Worldwide, there thankfully have been few old-fashioned hikes in import tariffs. But we have seen a proliferation of subsidies and other support packages that could choke international trade.

At the London Summit last month, world leaders renewed a pledge not to impose new trade restrictions. But according to the World Bank, since then no less than nine G20 countries have imposed or are considering 23 new protectionist measures. These are on top of at least 47 trade-restricting measures imposed after the G20 Summit in Washington in November.

No one country is blameless — Europe's restoration of export subsidies for dairy products was regrettable. Likewise, here in the U.S. there are measures and proposals that, taken together, cause real concern. For example the "Buy American" provisions in the stimulus package and restrictions placed on those banks receiving federal help from employing highly skilled foreigners.

Washington is one of many states that has worked hard to attract investment and show the world that it is open for business. This strategy has paid off, winning Seattle and the state a reputation for high-tech, high-end industries that create well-paid jobs. In the UK, we have benefitted during the past 20 years from major growth in pharmaceutical and chemical industries, high-spec engineering, and the creative opportunities offered by new computer technologies.

The duty of governments and leaders is to stop anxiety about the economy forcing us to turn inward, and to take brave decisions in favor of open economies, to put us on the path to recovery and future prosperity.

We all need to be active to battle the signs of creeping protectionism, here and around the world. Business leaders are in the best position to champion the virtues of open markets. We cannot let those who would restrict trade and investment be the loudest voices in this debate. We need to keep reminding leaders of the value of foreign investment and trade to jobs and prosperity — because protectionism doesn't actually protect economies at all.

Sir Nigel Sheinwald is British ambassador to the United States.