ECB’s Benoit Coeure calls for removal of non-tariff barriers for trade with Europe
The removal of non-tariff barriers to trade could give a big boost to trade, according to an influential European central banker.
Benoit Coeure, a member of the executive board of the European Central Bank (ECB), said “gains from trade are likely to be quite large” if countries can remove impediments to free trade.
In a speech marking 25 years since the Maastricht Treaty created the EU, he said: “Trade is often hindered by more subtle forms of protectionism, including national regulation aimed at protecting domestic industries and state aid provided for similar reasons. The removal of these barriers, as in the European case […] might lead to large efficiency gains.”
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While most economists point to the benefits of globalisation, protectionist politicians around the world, including US President Donald Trump, have taken advantage of discontent over the effects of international trade.
Politicians and policymakers are facing a growing backlash against globalisation, with politicians like Marine Le Pen in France threatening to leave the euro and stop the free movement of people, one of the central pillars of the EU. Le Pen has campaigned on an explicitly protectionist platform.
Coeure said: “I believe that reducing real and financial integration via harsh protectionism is tantamount to destroying machines, as the Luddites did during the industrial revolution.”
In a strong defence of globalisation, Coeure said the EU is the “most elaborate attempt ever to mitigate the inevitable political trade-offs arising in a globalised world,” an attempt which had been “largely successful”.
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Coeure also raised the possibility of a financial transactions tax as a potent political symbol which would increase acceptance of globalisation.
“Given that it is easy to understand and intuitive to many citizens, it could increase the political legitimacy of financial globalisation, thus making it more enduring and, to some extent, more equitable,” he said.
The idea of a tax on financial transactions, most famously proposed by US economist James Tobin, has been vetoed by the UK government in the past, but the countries involved in pushing the policy have renewed efforts in light of the UK’s imminent exit from the EU.