Published: 12th Jul, 2019
In economics, protectionism is the economic policy of restraining trade between states (countries) through methods such as tariffs on imported goods, restrictive quotas, and a variety of other government regulations. Protectionist policies protect the producers, businesses and workers of the import-competing sector in a country from foreign competitors. According to the proponents, these policies can counteract unfair trade practices, to allow fair competition between imports and goods and services produced domestically. WTO rules allow countries to use methods of protectionism but in a limited manner and in specific cases.
Most of the time, protectionism stems from a desire to help improve domestic manufacturers by making them more competitive with imported goods. And often times, these desires stem from a weak jobs market that could be improved with more domestic manufacturing jobs.
In other cases, a government may only be seeking to protect a single strategic industry. For example, many countries imposed tariffs on Chinese photovoltaic solar panels after the country began dumping them into the global market following a slowdown in demand and over supply. The goal was to protect their own domestic solar operations and ensure energy security in the future
Types of Protectionism
Protectionism encompasses a number of different economic policies designed to restrict trade and boost domestic manufacturers. From new taxes to import restrictions, these policies are implemented by both emerging markets and developed economies alike, and can have a negative impact on global free trade.
Some of the most popular protectionist policies include:
- Tariffs - A tariff is a tax on imports, which can either be specific (so much per unit of sale) or ad valorem (a percentage of the price of the product). Taxing imported goods increase the cost to importers and raises the price of the imported goods in local markets. This gives domestic equivalents a comparative advantage. As such, tariffs are distorting the market forces and may prevent consumers from gaining the benefit of all the advantages of international specialization and trade.
- Quotas - Limiting the number of goods that can be produced abroad and sold domestically limits foreign competition in domestic markets. Once again, they reduce the amount of imports entering an economy and increase the equilibrium price within the market. The government receives no revenue from a quota, as it does with a tariff, unless it can set up a system of licenses.
- Exchange controls - The government could limit the amount of foreign currency available for paying for imports.
- Export subsidies - Export subsidies allow exporters to supply the market with more product than the natural equilibrium would have allowed. Foreign consumers will enjoy increased economic welfare as the price of their purchases fall. Domestic employees might enjoy more wages and job security. But taxpayers are footing the bill for this. Domestic firms might divert trade into exports and ignore the home market. This could lead to increase in domestic prices.
- Exchange Rates - Intervening in the foreign exchange (forex) market to lower a currency's valuation can raise the cost of imports and lower the cost of exports.
- Import Quotas Domestic Subsidies - Subsidizing costs or providing cheap loans to domestic companies can increase their competitiveness against foreign imports.
- Administrative obstacles - Countries can set administrative hurdles. For example, they may require significant levels of paperwork and then deal with these processes slowly making it difficult for importers to compete on a level playing field with other firms.
- Health and safety standards - Countries may set onerously high health and safety standards for goods that are imported, once again making life difficult for importers.
- Environmental standards - Countries can set high environmental standards that they know only domestic firms are likely to be able to achieve, once again making life difficult for importers.
Costs of Protectionism
If a country is trying to grow strong in a new industry, tariffs will protect it from foreign competitors. That gives the new industry's companies time to develop their own competitive advantages.
Protectionism also temporarily creates jobs for domestic workers. The protection of tariffs, quotas or subsidies allows domestic companies to hire locally.
Proponents for protectionism argue that nearly all developed countries have successfully implemented protectionist programs. For example, the U.S. auto industry has been a consistent beneficiary of protectionism and has flourished for the most part over the past several decades, despite cheaper competition from Japan and Germany.
These arguments seem to hold true in specific situations, but it's difficult to determine cause and effect totally.
However, costs outweigh benefits over the long run.
In the long term, trade protectionism weakens the industry. Without competition, companies within the industry have no need to innovate. Eventually, the domestic product will decline in quality. It will lower quality and more expensive than what foreign competitors produce.
The Indian strategy of import-substitution industrialization (ISI) strategy based on heavy protection to indigenous industries was very effective in deepening and widening India's industrial base and giving the economy a lot of freedom from foreign dependence. However, over time, the excessive protection through import restrictions started leading to inefficiency and technological backwardness in Indian industry.
Protectionism and Deglobalisation
Until the 2007/2008 financial crisis, the global economy enjoyed one of the fastest growth periods and prosperity phases in its history. Trade liberalisation and technological advancement have often been quoted as the main drivers of the golden era of globalisation. While in the pre-crisis period open markets played a pivotal role in triggering growth and job creation on a global scale, the recent global economic downturn has resulted in an enhanced recourse to measures that can be described as "protectionist".
This has given rise to trade-restrictive measures. Anti-dumping actions account for the majority of restrictive measures imposed, with most of the investigations concentrated in sectors such as metals (particularly steel) and chemicals. G20 members also imposed more distortive measures in the form of government support for sectors such as infrastructure, agriculture and export-specific activities. This is also leading to rise of trade disputes.
Protectionist stance of West
A new WTO report indicates a worrying rise in economic protectionism. Countries are imposing new protectionist trade barriers at the fastest rate since the onset of the recession in 2008.
The anti-trade sentiment fuelling this growing protectionism is evident in the rhetoric of various politicians and their constituents, particularly in the US and Europe. The recent BREXIT referendum delivered yet another blow to the free market rules that have been enforced for decades in the West.
There appears to be a growing hostility to international trade of any kind, and many of the trade barriers being imposed will only hurt the economies they're supposed to help.
If the anti-trade trend persists, the already ailing global economy will only further struggle to improve, and the prosperity of future generations will be compromised.
Unfortunately, the West's growing protectionism goes far beyond reasonable, limited measures to protect domestic industry. There is evidently a growing general hostility to international trade. This can be seen in the strong opposition to a number of major international trade deals currently under negotiation or awaiting ratification.
The Transatlantic Trade and Investment Partnership (TTIP) under negotiation between the US and EU has faced harsh criticism.
The Transatlantic Trade and Investment Partnership (TTIP) under negotiation between the US and EU has faced harsh criticism.
Example: China's excess capacity in steel and Aluminium
Protectionist measure has their counter effect. If one country's illegal trade practices are hurting another country's economy, that nation has the right to respond in lawful ways in order to protect their domestic industries. Indeed, many of the trade measures recently adopted have been in response to massive Chinese overproduction of various materials, particularly regarding steel and aluminium products. This overproduction is due to excess capacity. The glut has led to a steep drop in steel prices, with China's industry dumping cheap exports into countries around the world and threatening to put their domestic producers out of business, costing thousands of jobs. In response, countries have imposed high tariffs onto Chinese steel imports to protect their domestic producers. For ex. India has effectively taken counter dumping measures against China's cheap export of Steel.
Protectionism in India
Recently India has imposed Minimum Import price (MIP) as growing imports from steel surplus countries like China, Japan and Korea with predatory prices have been a major concern for the domestic industry since September 2014.
India has also imposed anti-dumping duties on certain steel products to guard domestic players from cheap imports. These measures are called anti dumping measures. In response Japan has dragged India to the World Trade Organisation (WTO) dispute settlement system. The shrinking GDP growth in West has given way to protectionist sentiments which favour domestic production to save jobs.
Role of G20 nations
Against this backdrop, how can the G20 leaders take a further step in order to ensure an open global trading environment?
Firstly, the G20 leaders could reaffirm a commitment to uphold the rule of law in the global economy, with a view to advancing free and fair trade and fighting against any abuse of legitimate trade-restrictive measures. The rule of law should remain the fundamental principle of conducting international business - that is, it should be conducted according to existing contractual laws between contracting governments, without resorting to any illegal measures. Free and fair trade is both the goal and the belief that this is the only way to enjoy balanced trade with economic efficiency and moral equity.
Secondly given the emergence of new economies, technological evolution, alarming risks of the tragedy of the commons, and new electoral and political dynamics, existing rules might need to be further clarified or updated. Nations need to use the WTO and other international for a more actively via consultations and negotiations, and to find solutions by signing new multilateral or plurilateral agreements.
And finally, the G20 leaders can collectively cultivate a review and peer-learning process about domestic solidarity policies that address the pains caused by trade to certain segments of the population. G20 can be a global platform to enhance knowledge sharing and mutual learning. Such social policies can include a wide range of trade adjustment assistance programmes for workers such as wage insurance, subsidies for and portability of medical insurance, reemployment services such as training and assistance with geographic relocation. It may include certain assistance to firms and farmers. Solidarity is something that should be protected.
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WTO tries to maintain the scenario of free and fair trade mechanism based on following principles:
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BREXIT, one of the biggest geopolitical risks of 2016, became a reality on June 23 2016 when the "Leave" camp won by a small margin with 51.9 percent of the vote.
The referendum, with an unprecedented voter turnout of 72 per cent, has attracted the attention of the whole world, as its outcome will not only impact the future of the United Kingdom, but also bring about huge and unpredictable changes to the European integration process, as well as to the future of globalization.
From a strategic and global perspective, BREXIT may be defined as the first wave of anti-globalization and rising populism that washes over the world, in particular the advanced nations. What follows next will certainly be more intense and ferocious as globalization and anti-globalization forces engage in fierce battles in different fields involving more countries both in and outside the EU.
What does BREXIT mean?
It is a word that has been used as a shorthand way of saying the UK leaving the EU - merging the words Britain and Exit to get BREXIT.
What was the breakdown across the UK?
- England voted for BREXIT, by 53.4% to 46.6%.
- Wales also voted for BREXIT, with Leave getting 52.5% of the vote and Remain 47.5%.
- Scotland and Northern Ireland both backed staying in the EU.
- Scotland backed - Remain by 62% to 38%,
- Northern Ireland - while 55.8% in Northern Ireland voted Remain and 44.2% Leave.
After the referendum, the government changed and Britain got a new Prime Minister - Theresa May. The former home secretary took over from David Cameron, who resigned on the day he lost the referendum. Like Mr Cameron, Mrs May was against Britain leaving the EU but she played only a very low-key role in the campaign and was never seen as much of an enthusiast for the EU. She became PM without facing a full Conservative leadership contest.
She triggered the two year process of leaving the EU on 29 March 2017. She set out her negotiating goals in a letter to the EU council president Donald Tusk.
Meanwhile, European countries like France, Greece, Spain, Denmark and others see anti-EU forces gathering strength, and their parties gaining more votes in domestic and EU elections. Populist movements such as the French "standing in darkness" and the "movement of angry people" in Spain are spreading in ranks and influence. A successful BREXIT will no doubt encourage such sentiments more.
Besides world has witnessed the unstoppable rise of Donald Trump as the U.S. Republican presidential candidate. It can be safely said that with BREXIT becoming reality, he will gain more appeal among blue-collar Americans.
In sum, Europe is experiencing a fundamental shift in social physiological framework and political ecosystems.
What is the procedure?
This Article allows European Union member states to notify the EU of its withdrawal and obliges the EU to try to negotiate a 'withdrawal agreement' with the state. The form of any withdrawal agreement would depend on the negotiations and there is therefore no guarantee the UK would find the terms acceptable. The EU Treaties would cease to apply to the UK on the entry into force of a withdrawal agreement or, if no new agreement is concluded, after two years, unless there is unanimous agreement to extend the negotiating period.
The key topics are set to be the exit bill the U.K. is required to pay to the EU for the price of leaving, rights for EU citizens to remain within the U.K. following BREXIT and vice-versa, the future freedom of movement for, above all, people and goods and the complicated political situation between Northern Ireland and the Republic of Ireland.
How long will it take for Britain to leave the EU?
Accroding to Article 50, the UK has two years to negotiate its withdrawal. But no one really knows how the BREXIT process will work. The terms of Britain's exit will have to be agreed by 27 national parliaments, a process which could take some years.
EU law still stands in the UK until it ceases being a member. The UK will continue to abide by EU treaties and laws, but not take part in any decision-making.
What do 'soft' and 'hard' BREXIT mean?
These terms have increasingly been used as debate focused on the terms of the UK's departure from the EU. There is no strict definition of either, but they are used to refer to the closeness of the UK's relationship with the EU post-BREXIT.
At one extreme, "hard" BREXIT could involve the UK refusing to compromise on issues like the free movement of people even if meant leaving the single market. At the other end of the scale, a "soft" BREXIT might follow a similar path to Norway, which is a member of the single market and has to accept the free movement of people as a result of that.
Has any other member state ever left the EU?
No nation state has ever left the EU. But Greenland, one of Denmark's overseas territories, held a referendum in 1982, after gaining a greater degree of self government, and voted by 52% to 48% to leave, which it duly did after a period of negotiation.
Impact of BREXIT
Impact on UK
- For the U.K., BREXIT certainly will weaken its position in the world as well as its "special relationship" with the U.S., even though it will retain its permanent membership in the United Nations Security Council and the pound will continue to be one of the global reserve currencies.
- Scotland announced its intention to hold another referendum on independence immediately after the U.K. referendum. Northern Ireland, with its traditional friction with England, could follow the example of Scotland too.
Impact on EU
- BREXIT will disrupt the EU's internal equilibrium. With Britain out, the bloc's seven non-euro countries will account for only 15 per cent of EU economic output, as opposed to more than 30 per cent with Britain in. BREXIT will increase Germany's political and economic supremacy in the EU - a prospect neither Berlin nor its partners welcome.
- BREXIT will harm the EU's cohesion, confidence and international reputation. The biggest consequence of all, therefore, is that BREXIT will undermine the liberal political and economic order for which Britain, the EU and their allies and friends around the world stand.
- From the perspective of EU integration, the EU has been leading the world in global governance, with its regional integration as a litmus test. But the EU and Eurozone in particular have been hit hard by the debt crisis and resultant economic crisis testing the cohesion and viability of the EU and the euro.
- Most recently, the EU has been flooded with refugees from Syria, Iraq and other war-ravaged countries in the Arab world, further straining the fabric of the EU as an example of globalization, especially the principle of freedom of movement of people. All these have stirred up anger and deep-rooted frustration among ordinary people in the EU, directed at governments and elites of those countries.
Impact on financial markets
- BREXIT will make financial markets more sensitive to the vulnerabilities of the 19-nation Eurozone.
- Investors will ask whether, in the light of the BREXIT shock, eurozone governments have the political will and public support to strengthen the architecture of European Monetary Union.
- More ambitious proposals, such as an Italian plan for common EU "migration bonds" to finance the EU's response to the refugee and migrant crisis, will have little chance of being turned into action.
- ndividual eurozone countries will be under intensified market scrutiny.
- Ahead of the British vote, yield spreads widened between German government bonds and those of less financially solid southern European countries. The outlook for Portugal, which is ruled by a shaky coalition of the moderate and radical left, is unsettling investors.
- Global stock market suffered a collective "Black Friday" crash, with the British stock market down 8 percent and Dow Jones dropping 700 points.
- The Japanese stock index was hit most severely with a historic drop of 7.9 percent triggering "a fuse break." Needless to say, the British pound suffered, with a 10 percent slide versus the U.S. dollar.
- The above figures show that we do live in a globalized world of common interest, with financial as well as political risks transmitting super-fast around the world with no exceptions, as the lines among nations and between politics and economics become unrecognizably blurred. That is what is meant by "shepherd effect" or "butterfly effect."
Global Impact
- The polarization of political ecosystems in Western nations has produced and will continue to have a huge impact on the globalization process, world politics and economics. Even though the world had been forewarned by the referendum in U.K., the outcome still brought about unprecedented consequences.
- Many experts believe that BREXIT might trigger a chain reaction both within the EU and around the world. EU members like Greece, France, Spain, Sweden and Denmark, which already have frictions with Brussels, might follow suit and ask for their own referendum.
- That is why right after the U.K. referendum, Germany, France and other major EU countries urged the U.K. to start negotiation with EU as soon as possible for fear that it could spark other dissenting voices within the EU.
Impact on India
- India is presently the second biggest source of FDI for Great Britain. Indian companies that would set up their factories in the UK could sell their products to the rest of Europe under the European free market system. However, now it will not be an attractive destination for Indian FDI as before.
- With BREXIT, India will lose its gateway to Europe. This might force India to forge ties with another country within the EU, in order to access the large EU market.
- With Britain cutting off ties with the EU, it will be desperate to find new trading partners and a source of capital and labour. With migration from mainland Europe drying up, Britain would be able to accommodate migration from other countries, which will suit India's interests.
- Britain is one of the most important destinations for Indians who want to study abroad. Presently, British universities are forced to offer subsidized rates for citizens of the UK and EU. With BREXIT, however, the universities will no longer be obliged to provide scholarships to EU citizens, which will free up funds for students from other countries. Many more Indian students may be able to get scholarships for studying in the UK.
Impact on China
- BREXIT will affect economic and geopolitical interests of China. Even though the UK, which had $78.5 billion in bilateral trade with China in 2015, is not among China's top trading partners, Brexit could have an outsize impact on China's future export performance."
- One of the losses China will face is that it can no longer use Britain as a gateway to the EU to sell its products.
- Many Chinese companies have made the UK one of their favorite destinations of direct investment. In 2015, Chinese companies completed 22 major acquisitions in the UK. The biggest was the $9 billion purchase of a 33.5% stake by China's General Nuclear Power Corporation in Britain's Hinkley Point nuclear power plant. If the UK economy deteriorates because of the uncertainty and loss of access to the EU market following Brexit, the value of Chinese investments will be impaired.
- A weaker Europe would give space to China to rise in global power matrix. But a strong EU was a counterweight to the US hegemony which China would miss mow.
Conclusion: The Biggest Concern is the future of globalization
We are living in an era of globalization which is believed to improve standard of living by increased trade, investment, growth and employment. But after the 2007 sub-prime crisis of the USA and 2010 sovereign debt crisis in Europe, the belief of world community in globalization was shaken. Add to this is floundering multilateral trading system called WTO and its Doha Round failing 3 deadlines without any consensus, eventually shaking the very base of globalization.
Many observers have pointed out that globalization has aggravated the problems of poverty, inequality and employment while it has benefitted a few countries and the elite population only. The adverse consequences of globalization are appearing in many forms.
When times are bad it is more impulses like anger, frustration, disappointment which determine outcomes of referendums rather than rationality. The right politics is on rise and extreme national identities are being asserted increasingly tending the way it was during the first or second world wars.
It is difficult to conclude how it would affect the UK, Europe and the global economy, but one thing is sure that there would be remarkable changes in the driving forces of global economy and rise in de-globalisation.
Nation first policy is a part of de-globalisation which is visible in the EU policies related to refugees. The crisis in 2015 highlighted a key shortcoming in the European asylum system: the failure to share responsibility fairly across all EU member states.
A refugee is a person outside their country of nationality who is unable to return due to fear of persecution. The United Nations Refugee Convention says a refugee is a person who: "owing to a wellfounded fear of being persecuted for reasons of race, religion, nationality, membership of a particular social group or political opinion, is outside the country of his [or her] nationality, and is unable to, or owing to such fear, is unwilling to avail himself [or herself] of the protection of that country."
People seek refuge because they fear for their lives and their futures.
The decision to leave home could happen suddenly or take a long time after months or even years of the situation getting worse. The main reasons people leave their homes are:
The decision to leave home could happen suddenly or take a long time after months or even years of the situation getting worse. The main reasons people leave their homes are:
- Conflict: Armies fighting for control may try to weaken the other side by threatening lives of civilians, kidnapping children, raping women, burning crops and forests, destroying houses, schools and health clinics, polluting wells and laying landmines. People flee in fear to escape further pain and loss.
- Oppression: The ruling power may not respect human rights by imposing harsh treatment, especially on people it suspects of disagreeing or opposing it. This means people flee in fear for their safety.
- Hatred: Hostility, retaliation and injustice between ethnicities, religious or other groups can threaten people's lives. As a result, people flee in fear for their lives.
- Environmental issues: Natural disasters and climate change also cause people to flee. Despite the difficulties they face, they are not protected by international refugee laws. In some cases environmental issues cause resource shortages that lead to conflict, creating refugees.
Common refugee experiences include seeing their homes and communities destroyed and spending many years living in refugee camps or in volatile urban situations. Mobility and opportunities for employment are limited, and they often do not have access to health or education services. Many have been subjected to rape and torture, witnessed friends being murdered or been separated from their family when fleeing their homes.
Current Refugee Movement in Europe
- Today, some 84% of those reaching Europe come from the ten countries that produce the most refugees: Some 84% of those reaching Europe come from the ten countries that produce the most refugees: Syria, Afghanistan, Somalia, Sudan, South Sudan, the Democratic Republic of the Congo, Myanmar, Central African Republic, Iraq, and Eritrea. In these countries, large areas are affected by war and severe civil strife.
- The majority of arrivals to the European Union in 2016 have come via the Mediterranean. Since the beginning of the year, more than 4,600 people have died or gone missing while attempting to reach Italy from the North African coast. This is the highest recorded number of deaths in the Mediterranean to date.
- The highest number of migrants arrives in Greece and Italy, often after a perilous journey across the sea. In Greece, around 62,000 people are waiting to have their asylum applications processed, with about 11,400 of them held in facilities on the Greek islands. Each month, less than 1,000 asylum decisions are given, with more than that number of asylum seekers arriving. In Italy, over 11,000 people per month applied for asylum in 2016, and on average between 6,000 and 8,000 are processed every month. Faced with this unprecedented situation, both countries have struggled to provide decent reception facilities with even basic services.
What is the European Union's asylum policy?
The miss-management and politicization has led to a humanitarian and political crisis largely of the EU's own making that needs to be addressed with the utmost urgency.
Instead of providing for safe and orderly channels into the EU for asylum seekers and refugees and sharing responsibility for them equitably, the EU and its member states have endorsed policies designed to limit arrivals and to outsource responsibility to regions and countries outside of the EU.
Individual member states have rolled back asylum rights at a national level and the European Commission has proposed an overhaul of the common European asylum system that is more informed by logic of deterrence than a commitment to basic human rights.
- The EU Common European Asylum System (CEAS) is a set of EU laws, completed in 2005. They are intended to ensure that all EU member states protect the rights of asylum seekers and refugees. The CEAS sets out minimum standards and procedures for processing and deciding asylum applications, and for the treatment of both asylum seekers and those who are recognized as refugees. Implementation of CEAS varies throughout the European Union. A number of EU states still do not operate fair, effective systems of asylum decision-making and support, leading to a patchwork of 28 asylum systems producing uneven results.
- Asylum seekers have no legal duty to claim asylum in the first EU state they reach, and many move on, seeking to join relatives or friends for support, or to reach a country with a functioning asylum system. However, the "Dublin" regulation stipulates that EU member states can choose to return asylum seekers to their country of first entry to process their asylum claim, so long as that country has an effective asylum system.
- EU countries in the north, the desired destination of many refugees, have sought to use this Dublin system to their advantage, at the expense of the south, where most refugees first arrive. Yet these efforts have been obstructed by failures of asylum systems in the south. Domestic and European courts have ruled against asylum seekers being returned to Greece, notably in a landmark case in 2011 that found Belgium in violation of the European Convention on Human Rights for exposing an Afghan national to detention, harsh living conditions, and risks arising from shortcomings in Greece's asylum system after a return.
- To address the uneven application of CEAS and the problems of the Dublin system, a reform of the CEAS was proposed in 2016. Among the proposed reforms is one that risks endangering the right to asylum in the EU, with an obligation to verify first if asylum seekers could find protection outside the EU. Some EU countries have already voiced opposition to some of the reforms, notably the obligation to take refugees from other EU countries.
Humanitarian crisis faced by Refugees
Often times those who flee their countries may end up in refugee camps, temporary settlements made to receive those escaping their homes. These refugee camps can house thousands of refugees and are set up by the governmental organization such as the United Nations (U.N.) or an international non-governmental organization such as the Red Cross. However, those who fled to refugee camps are often subject to harsh living conditions as well and face many difficulties. Often times, these camps consist of refugees living in tents with limited resources. Food and water is unpredictable and those living in these camps usually cannot leave or find work outside of these camps.
EU response to refugees
While European and other nation states must follow the law on this issue however, rather than offering refugees and migrants the chance to avoid irregular border crossings, by creating safe and legal routes for people to move to Europe and improving conditions in refugee camps, Europe has focused on increasing border controls and stepping up returns.
No matter how much money European governments invest in international aid projects purportedly intended to address the root causes of displacement, the reality is that EU leaders have so far largely favored projects that create barriers for migration-and they have used international aid as leverage to get African governments to cooperate in their implementation.
The currently preferred method for solving the migrant crisis seems to be "externalization." This involves recruiting countries refugees and migrants come from or travel through to tighten border controls or to shift protection responsibilities to other countries.
So-called externalization policies increase the likelihood of human rights violations.
These policies can end up encouraging or supporting refoulement, collective expulsions, arbitrary detention, ill treatment and other serious human rights violations. Investing in such measures might not even achieve the desired result of reducing irregular arrivals. In the absence of alternatives, people fleeing conflict, persecution and poverty will still try to flee the only way they can, putting their lives in the hands of unscrupulous smugglers.
But radical change is needed. European leaders must end their focus on the short-term objective of reducing crossings. Instead, a bold plan is needed to support human rights protection in countries of origin and transit and to make safe routes available to refugees and would-be migrants.
Such measures would provide a safer and more orderly alternative to dangerous irregular crossings and in so doing, steer refugees and migrants away from criminal networks who leech off their desperation. Only then will the tragedy of lives lost at sea become a thing of the past and the rights of vulnerable men, women and children will be truly protected.
Way forward
Specifically, the EU and its member states should:
- Prioritize saving lives at sea through sustained search and rescue operations along the main migration routes in the Mediterranean. Renew efforts to obtain permission to operate in Libyan waters so that EU-flagged vessels can assist in search and rescue operations there.
- Ensure that any efforts to "externalize" migration management do not worsen access to protection and respect for human rights, including by:
- Designing, implementing, monitoring and reporting publicly on EU migration cooperation arrangements with third countries to ensure this cooperation does not trap people in abusive situations, prevent them from accessing fair asylum procedures, or lead to refoulement.
- Delinking development aid from migration control in those countries where this linkage appears to be in place.
- Ensuring that programs developed with security forces and other government agencies in countries of origin do not contribute to human rights violations.
- Ensuring that migration cooperation with Libyan authorities, including the training of Libyan Coast Guard and Navy officers, has a strong human rights component, with monitoring and accountability for any abuses and independent, impartial and transparent monitoring of conditions and treatment in Libyan detention centers to ensure that they meet basic standards. The EU should suspend the training program if abuses continue.
- Increase safe and legal channels into the EU to reduce demand for smuggling and dangerous journeys.
- Accelerating the pace of relocations and setting up a timeline for the implementation of the relocation targets. The European Commission should open infringement procedures against member states that are failing to comply with their relocation obligations.
- Ensure that all beneficiaries of protection already in the EU enjoy the right to family reunification without onerous conditions or waiting periods. There should be no distinction between subsidiary protection and refugee status with respect to family reunification rights.
- Governments also need to stop blaming refugees and migrants for economic and social problems, and instead combat all kinds of xenophobia and racial discrimination. Doing otherwise is deeply unfair, stirs up tensions and fear of foreigners, and sometimes leads to violence - even death.
Multilateralism is the process of organizing relations between groups of three or more states. Beyond that basic quantitative aspect, multilateralism is generally considered to comprise certain qualitative elements or principles that shape the character of the
arrangement or institution. Those principles are:
arrangement or institution. Those principles are:
• An indivisibility of interests among participants,
• A system of dispute settlement intended to enforce a particular mode of behavior.
Multilateralism has a long history, but it is principally associated with the era after World War II, during which there was a burgeoning of multilateral agreements led primarily by the United States. The organizations most strongly embodying the principle of multilateralism are to be found in trade (the World Trade Organization [WTO]), security (the North Atlantic Treaty Organization [NATO]) and environment (numerous multilateral environmental institutions also exist).
Brief History of Multilateralism
• Concert of Europe: The end of the Napoleonic wars in Europe saw the establishment of the Concert of Europe, with the great powers redrawing European borders peacefully at the Congress of Vienna.
• League of Nations: The First World War destroyed the European Concert and replaced it with League of Nations.
• UN, IMF & IB: The post-World War II world saw the creation of a new world order sustained by multilateral and supranational institutions such as the United Nations, the International Monetary Fund and the World Bank.
To better understand the nature of multilateralism, it is useful to contrast it with bilateralism. Bilateralism is the conduct of political, economic, or cultural relations between two sovereign states. It is in contrast to unilateralism or multilateralism, which is activity by a single state or jointly by multiple states, respectively. Some examples in different sectors are -
a) Security arrangement
• In security arrangements, the principles of multilateralism are best embodied in a collective security system such as NATO, in which a war against one state is considered to be a war against all states, ensuring that any act of aggression against a member of the collective system is met with a response from all members.
• By contrast, a bilateral arrangement only ensures that A comes to the aid of B in the event of an attack by C. It would not ensure that C receives similar protection from A in the event of an attack on C by B. In that instance, the system discriminates against C.
• Bilateral security arrangements are, therefore, like their counterparts in commercial policy is being inherently discriminatory, whereas multilateral arrangements have a more-inclusive character in which all participants are afforded equal treatment.
Dispute Settlement
• Having a system of dispute settlement enables participating countries to treat their interests as indivisible and to accept relations of diffuse reciprocity: they know that should the expected benefits not be forthcoming because of noncompliance by other participants, there is a mechanism through which redress may be sought.
• The above principles taken together form an "ideal type" of multilateralism. Although there was huge growth after World War II in the number of multilateral institutions, they have not always fully conformed to all aspects of this ideal model. Such institutions undoubtedly played a significant role in postwar global governance.
More controversially, it has been argued that multilateral institutions may be inherently more stable than other forms of organization in that the principles underlying them appear to be more durable than other arrangements and more able to adapt to external changes.
Thus, despite the perceived decline in the relative power of the United States after the 1970s, the multilateral institutions continued to play an important role in shaping the international system.
However due to 'Great Recession', Globalisation concept is at a crossroads.
The dynamics of freer circulation of goods, capital and people has lost steam. Trade protectionism is on the rise. Multilateral institutions such as the International Monetary Fund, the World Bank and the World Trade Organisation provide slow and often insufficient responses to contemporary challenges.
Reasons for failing Multilateralism
• Geopolitical competition. [E.g. USA vs. Russia = NATO & Warsaw Pact & Syrian Crisis]
• Faith in multilateral institutions has dropped because of rigid rules, and slow paced reforms.
WTO negotiations are stuck in gridlock.
Developing nations are not getting due membership in UNSC.
• Multilateral institutions have become prone to conflict instead of consensus.
• Bilateral and Regional groups are considered as offering better deals through access to deep market, while balancing free trade with social goals (Subsidy, poverty, etc.).
• Developed societies have changed, embracing individualism over social democracy [Joint family to Nuclear family].
• Negative consequences of Globalization - income inequalities between developed and developing, crony capitalism, WTO like organizations favoring developed countries over developing, etc.
Some examples are as follows:
UN (The most important Multilateral Institution) is undermined by
• The regional security pacts like NATO, Warsaw Pact, Shanghai Cooperation Agreement, etc.
• Russia's absorption of Crimea.
• U.S.A's military mobilization against Bashar Al Assad's Syrian regime without the approval of the UN.
• China's rejection of the Permanent Court of Arbitration's decision in the South China Sea case, despite signing up to the United Nations Convention on the Law of the Sea.
• United Nations Security Council failed to restrict terrorism by their use of the veto. In the most recent example of this power being exercised, Russia and China voted against a draft resolution that would have condemned a crackdown on anti-government protests in Syria and called on Bashar al-Assad, the Syrian president, to step aside.
• At the creation of the UN in 1945, the United States was the only nation in the world to own and test nuclear weapons. In 1970, the nuclear non-proliferation treaty was signed by 190 nations, including five nations that admitted to owning nuclear weapons: France, England, Russia, China, and the US. Despite this treaty, nuclear stockpiles remain high, and numerous nations continue to develop these devastating weapons.
WTO's (the most important multilateral trade organization) failure:
• WTO was driven to irrelevance by the collapse of the Doha trade round in 2008.
• Cluster of regional and bilateral trade agreements such as the Transatlantic Trade and Investment Partnership, Trans-Pacific Partnership, RCEP etc. are making WTO irrelevant.
• The lack of transparency is often seen as a problem. Politicians can negotiate for regulations that would not be possible or accepted in a democratic process in their own nations. "Some countries push for certain regulatory standards in international bodies and then bring those regulations home under the requirement of harmonization and the guise of multilateralism." This is often referred to as Policy Laundering.
• WTO is highly biased towards the developed and rich nations.
• WTO supposedly operates on a consensus basis, with equal decision-making power for all. Involvement of the poor countries is less in the decision making process and they have less bargaining power.
IMF failure:
• In its structural adjustment policies IMF has been guided by the supremacy of the free market in promoting economic growth. Thus, it indirectly promotes the interests of the developed countries ignoring the requirements of developing countries.
• IMF policy of providing financial assistance to the poor developing countries subject to the fulfillment of certain conditions by the latter has come in for severe criticism. In fact, capital market liberalisation proved to be disastrous for many countries because they were not ready and able to deal with the great volatility of capital inflows and outflows, as happened during East Asian crisis of 1990s.
• IMF policy of laying emphasis on elimination of subsidies, liberalisation of trade and capital market privatisation as conditions for providing financial assistance to the developing countries has not led to the solution of the twin problems of poverty and unemployment in the developing countries.
• AIIB and BRICS Bank are seen as rivals of IMF and WB.
Rise in "Our country First" concept
• Multilateral systems such as the EU or NATO, and other forms of international cooperation have been among the greatest successes since the Second World War, based as they are on the fundamental principles of democracy, peace, and collaboration among war-torn countries in Europe. However, now there has been rise of ‘Our country first’ concept.
• The "Our country first" approach is being pushed by many populist movements on a global level and it seems that governments are starting to reject their responsibilities towards the international community by undermining global cooperation.
• One of the most recent signals of this movement against multilateral cooperation is "BREXIT", or the UK's decision to leave the EU. Multilateral cooperation is also facing a challenge on a global level. Especially when it comes to engagement in sustainable development, the multilateral system seems to be mired in stagnation due to global political changes and movements.
• US president Donald Trump wants to reduce US funding of the United Nations by around 30 %. The US is traditionally the biggest funders of the United Nations, and last year spent two billion dollars on the World Food Programme (WFP), a quarter of the WFP's entire budget.
• The executive order to be signed by the US government will also impact the United Nations Populations Fund (UNFP), which mainly works with women and children.
• The biggest failure of global treaties is that poverty has never been the focus of global treaties that directly relate to women and children. Therefore, the question arises of what kind of effect this will have on the people affected. A lot of people will not accept poverty as their destiny and will make the journey to richer countries. This in turn creates anger and fear in the destination countries, which, combined with personal frustration regarding their national economy and politics, is a potent source of nationalism. Nationalism has been a key source of conflicts, especially in the twentieth century.
• However, it is unclear whether these populist movements will gain momentum and impact, or if they will spark counter-movements that will give the concept of multilateralism a new direction. This could happen if there is an active civil society that is able to effect change on local and global levels.
• But concerns remain - both that current trends could trigger a crisis in the multilateral system and over how global cooperation can be strengthened.
Example:
US pulls out of Paris climate accord to 'put American workers first'
US has announced that it will withdraw the US from the Paris climate change agreement.
The decision was condemned immediately by environmental campaigners and by the president's political opponents who said it heralded the death of America's position as a global leader.
It means the US stands alongside only Syria and Nicaragua as nations who are not part of the deal.
Environmental campaigners said the American absence will make it considerable harder for the remaining 190 or so countries to reach their agreed goals, given that the US is responsible for about 15 percent of global emissions of carbon and promised $3 billion to help other nations. This can be interpreted as an example of deglobalisation
Conclusion
The current context, characterized by a weakening of multilateralism, the return of protectionism and the rise of extremist political movements, undermines the advancement of that global consensus, poses a grave challenge to the world economy and threatens the attainment of the Sustainable Development Goals.
Today more than ever, we must promote and expand cooperation and integration on a multilateral basis. The 2030 Agenda and the SDGs are universal not only in that they aspire to include all the world's countries and that their attainment may develop inclusive society, they are also needed to improve the national efforts by global & regional cooperation.
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