Sunday, 22 March 2009

Protectionism - or not?

Over the weekend, an article on the FT's website particularly caught my attention ("Renault revives protectionism fears" by Nikki Tait, Ben Hall & Peggy Hollinger).

I thought it was very interesting on a number of levels.  I'm sure we can all understand the need for politicians to be seen to be addressing unemployment in their own country. There is no difference, from what I can see, between the actions of Renault, supported by M. Sarkozy, and Mr. Brown's "British jobs for British workers" statement (one that I'm sure he wishes he had made now, but it's too late for that).

It was equally interesting to see the cross-border politics which appears to be going on. Firstly there is the rather expected response from the EU who certainly give the impression that they knew nothing about it and who warned France that protectionism would imperil EU loans. The Slovenian response (Renault are transferring production on one model from Slovenia) was very measured - they certainly hadn't been caught unaware. "It's all completely normal" is the quote attributed to the Slovenian prime minister. Finally there was the international statement from M. Sarkozy that France "would not take a single job from our Slovenian friends". Interestingly this statement was not well publicised in France so far as I have seen (I'm in France at the moment).

Digging a little further, it is apparent that the Slovenian plant is running at full capacity and so Renault are transferring production on one model back to France allowing the Slovenian plant to continue - at full capacity - working on another. 

This all sounds very sensible - and not at all like protectionism.

The final interesting point for me is how a completely normal business action is shown in a number of lights. In France, the government are quite happy for their voters to think that the move is protectionism since that will be popular. The EU are happy to be seen to be working against protectionism, and the Slovenians are happy that they have a car plant working to full capacity.

So - no protectionism at all then? Not at this point, but of course the possibility remains, and the Slovenian prime minister is right to be a little worried. Protectionism should be expected on a national level. After all, this is all that individual companies are doing as they shed contractors (Our jobs for our staff...?). At a national level, the impact can be very damaging - spoiling international relations for many years. So the EU should remain vigilant, but expect that individual countries will what to spin a story in different ways for different audiences. 

My statement about there being no protectionism in this case may be mistaken. Perhaps, however, it is more "EU jobs for EU workers". 

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