EC competition chief warns of rising risk of protectionism

The EC official’s warning comes as risk managers in Europe and worldwide taking part in Commercial Risk Europe’s ongoing Global Risk Frontiers survey identify political and regulatory risk including protectionism as the number one threat facing business. During an opening speech given at the 12th annual conference of ICN, the international body devoted to competition law enforcement that is comprised of national and multinational competition authorities, Mr Almunia said that open markets, vibrant competition, and a global level playing field are ‘more important than ever’ as the world battles to emerge from the crisis. Mr Almunia pointed out in his speech at the conference in Warsaw, Poland on Wednesday that Pascal Lamy, Director-General of the World Trade Organisation, had earlier this month warned once again against the rising threat of protectionism. Mr Lamy said that the risks ‘may be greater now than at any time since the start of the crisis’.hideThe EC Vice President said that he fears that Mr Lamy has a ‘good point’. Mr Almunia pointed out that globalisation in recent times has led to a ‘spectacular’ growth in foreign direct investment, which passed from 6.5% of world GDP in 1980 to over 30% before the onset of the recent crisis. He also pointed out that world trade has risen on average by 5.3% a year for the past two decades. But five years into the crisis the expansion of world trade looks ‘decidedly subdued’ said Mr Almunia. Last year world trade grew by ‘only’ 2%. “The forecast for 2013 is a bit better, but it will only be a 3.3% increase,” pointed out the EC man. “The longer we spend in this crisis, the stronger will be the temptation for some to blame it on someone else; either our commercial partners or a demonised globalisation. The suffering inflicted by the recession in Europe and other economic difficulties elsewhere in the world is real. But trade barriers, misguided regulations, and attempts by governments to keep unviable businesses on life support are not the cure,” he told delegates. “In fact, measures like these will inevitably end up making matters worse; perhaps triggering the subsidy and regulatory races that have wrecked the world economy after the Great Depression. We must learn the lessons of history,” continued Mr Almunia. The EC vice president therefore called upon the governments of all the countries represented at the ICN meeting to keep ‘robust’ competition rules in these difficult times and support the agencies that implement them. “There are other ways to bring relief to households and firms without poisoning the wells of productivity and competitiveness, which we would pay for a long time to come,” he said. Mr Almunia said that all competition and trade bodies must become more vocal about the benefits of well-regulated markets in their jurisdictions. He urged competition agencies to reach out towards businesses to foster a culture of compliance and towards the civil society to muster support for their work. “Transparency and advocacy should become central to our action,” he said. “In a spirit of respect for our different legal and institutional traditions, these are some of the things we could all do to unleash the power of the markets at a time when it’s most needed,” concluded Mr Almunia.

EC competition chief warns of rising risk of protectionism

Want to read this article?

Read Next

Parent company risk could see captives miss out on proportionality under DORA

Europe plans cyber threat alert for health sector by 2026

US casualty rates continue to climb

Europe has weakest growth outlook for third consecutive year: WEF

Reinsurance rates fall for loss-free accounts as supply-demand shifts

Parent company risk could see captives miss out on proportionality under DORA

Europe plans cyber threat alert for health sector by 2026

US casualty rates continue to climb

Europe has weakest growth outlook for third consecutive year: WEF

Reinsurance rates fall for loss-free accounts as supply-demand shifts

Keep yourself informed

Sign up for Commercial Risk’s newsletters

Want to read this article?

Read Next

Parent company risk could see captives miss out on proportionality under DORA

Europe plans cyber threat alert for health sector by 2026

US casualty rates continue to climb

Europe has weakest growth outlook for third consecutive year: WEF

Reinsurance rates fall for loss-free accounts as supply-demand shifts

Related Articles

Keep yourself informed

Sign up for Commercial Risk’s newsletters