Transcending barriers to global trade

By Anna Rooke, OurWorld Editor

According to business executives around the world, global barriers to trade are increasing.

A new survey by the Economist Intelligence Unit, commissioned by UK Trade & Investment, interviewed 286 executives about their perceptions of protectionism.

The report identifies some of the strategies that companies are employing to maximise growth opportunities in overseas markets.

Top business priority

The impact on economic growth of a rise in protectionism could be severe.

Economist Intelligence Unit forecasts show that barriers to globalisation could reduce annual world GDP growth by nearly one percentage point during the period 2011-2020.

“Protectionism will remain on the business agenda for the foreseeable future,” said James Watson, editor of the report.

Challenges not barriers

However, the report emphasises that protectionism can be overcome if businesses develop the right strategies.

‘For those determined to break into a new market, or grow an existing one, the barriers to trade and investment simply become challenges to deal with, work around, or potentially even exploit,’ says the report.

Localisation the top priority

The primary strategy for coping with protectionism is localisation.

By investing in local staff and producing goods locally firms can reduce trade tariffs and other barriers, and keep up to date with local regulations and loopholes.

Power of partnership

Forming a strategic alliance (50%) or joint venture (41%) with a local firm were the top two approaches taken by survey respondents.

Monitoring, lobbying and being flexible are among other responses to protectionism, fully expanded upon in the report.

UK Govt views on protectionism

On the release of this report, Ian McCartney, Minister of State and Trade said: "The UK government's position on protectionism is clear.

"We believe free and fair markets are the surest way of underpinning global prosperity, and that protectionism is not and cannot be an effective response to the challenges of globalisation.

"Except where there are security concerns, raising barriers to trade is ultimately counter-productive.

"Governments should have confidence in their ability to face the challenges head on and to make globalisation a force for good,” said Mr McCartney.