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The world is going through harsh times due to the international and geopolitical situation, which has become very volatile with the ongoing war between Russia and Ukraine, antagonism between the US and China, tensions in the Taiwan Strait and the rise of populist governments in several countries.
It is with some concern that we note the beginnings of what is becoming a protectionist tendency in many countries, primarily in the US, but also in Europe. This tendency is manifesting itself in a number of ways and is mainly the product of the geopolitical turmoil which has characterised the last couple of years, triggering an escalation of all sorts of sanctions between nations as a tool of neo-protectionist policies.
Whether they are economic, commercial or of another kind, sanctions taken by one country against another inevitably result in the latter taking retaliatory measures, thus triggering a vicious and dangerous circle. While technological transfer can be rightly restricted for national security reasons, sometimes the real motivation behind such measures may be different. For example, the US has recently restricted semi-conductor transfers to China and some European countries have followed suit.
While the official reason might be military, those who espouse protectionist ideas are happy with the precedent set because semi-conductors, sometimes known simply as ‘chips’, are an integral part of many production processes. There are those who believe that slowing the transfer of technology will help protect traditional industries from outside competition and that the penetration of foreign products should be limited or at least slowed down.
Others are fans of “re-shoring”, which consists of bringing production closer to home, or “friend-shoring”, i.e. locating production in allied countries. But can the world thrive under protectionist policies? “To believe that we can go back to a world where you just do everything by yourself, for yourself, in the geographical location that you’re in… that is not how sophisticated industry works,” Mercedes-Benz chief Ola Källenius, recently told the British newspaper The Financial Times.
Building just one Mercedes car involves manufacturing on “literally all five continents,” he said. Protectionism is, in fact, the antithesis of free and fair trade, and ultimately reduces wealth and increases poverty. Protectionists have consistently been shown to be on the wrong side of History. In the case of the automotive industry, politicians should instead be helping industrialists prepare for the energy transition, meaning an expanded electric car market. Rather than closing doors to new technology, nations should be encouraged to compete with emerging players such as China and South Korea.
Free trade and openness to new technology is also, it should be underlined, the right answer to our environmental challenges. This is again the case of the automotive industry, where attempts to slow the pace of the transition towards electric vehicles will also put a brake on the energy transition and the establishment of the low- and zero-carbon community for which we are all striving. Since the end of WWII, free trade has helped the world prosper and reduced the risk of armed conflicts. In the case of Europe, strong commercial relations between nations have allowed the continent to experience the longest period of peace ever. Restoring free trade should be a must for politicians as it will be a prelude to prosperity among nations and will ultimately open the way to that much-desired peace. Elsewhere in this edition of G-News, you can read about our new “G5” vessel class, our investments in new and existing terminal assets, our participation in the LETExpo fair, the latest awards presented to our sister companies and our support for the people affected by the recent earthquake in Turkey and Syria. Enjoy the issue!