Growing Global Web of Trade Helping to Blunt Protectionism: Conference Board

(Canadian Business – The Canadian Press)

The economic interdependence fostered by global trade may have sharpened the bite of the recession but is also working to quash protectionist responses, according to a report from the Conference Board of Canada. “The highly integrated nature of global production” could be a pillar of the world’s economic recovery if political policy-makers don’t stand in its way and move to impose measures to protect their own, the think-tank said Thursday. “The prevalence of global supply chains pulled Canada and the world more deeply into recession than would otherwise have been the case,” the board said in its report.

The private-sector forecaster cited Research In Motion’s BlackBerry smartphone as an example of how disruptive new barriers might be, since it’s produced in many locations and “encounters multiple borders.” “Component parts come from Asia, Europe, and the United States,” the board stated in its report. “The device is manufactured in Hungary and Mexico. Research and development and global after-sales service are based in Canada, and the units are sold around the world.”

“Any new trade barriers will not only reduce the flow of final goods exports, but will have a domino effect on all of the related intermediate inputs.” Read more here.