Protectionism 2.0 – Or, the Rise of the New Mercantilists

by Braden Cox on June 21, 2007 · Comments

How do the direct and indirect trade barriers of some nations unfairly harm the ability of foreign (particularly American) IT companies to monetize digital innovations and distribute intellectual assets globally? That’s the focus of a new paper from Rob Atkinson and Julie Hedlund at ITIF, entitled The Rise of the New Mercantilists: Unfair Trade Practices in the Innovation Economy.

Today’s innovations have much shorter life-cycles, so companies need
broader, faster market distribution in order to earn returns on
innovation–money they invest in tomorrow’s innovations. These companies seek
sales and licensing markets all across our “flat world.” The ITIF report discusses how it’s not your father’s form of protectionism anymore (such as tariffs and direct subsidies). Companies also face protectionist trade barriers in the forms of lax enforcement of intellectual property piracy and counterfeiting, disparate competition regulations, government preferences and standards manipulation.

Now here’s the crux of the question: is this a new
form of protectionism – what my colleague Steve DelBianco and I call “Protectionism 2.0”? Or are these more subtle forms of trade barriers the result of legitimate public policy goals? Probably a bit of both, but one has to ask – if Microsoft were a German company would it be facing the full wrath of competition regulators? Or if Apple were Dutch, or Norwegian, or French – would it be scrutinized by regulators in those countries eager to break the link between iTunes and iPod?

Comments Posted in: Antitrust & Competition Policy, Miscellaneous

  • Yhanks you
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  • So "lax enforcement of intellectual property piracy and counterfeiting" is a "trade barrier"? Wow, I thought I'd heard some creepy Orwellianisms before, but this takes the prize.

    The so-called "intellectual property" [sic] IS the "trade barrier." The RIAA and all the other copyright Nazis are the "new mercantilists."
  • Every law and regulation gets enforced differently against locals and visitors. Speed limits, plant disease control regulations, building codes, professional licensing requirements, whatever. The more regulations there are, the more opportunities to apply them for political ends.

    So if you want a level playing field for locally produced and important products, why wouldn't it make sense to scale back government regulations such as copyright and patent?

  • SailorRipley
    "copyright theft"...is that when somebody for example steals the copyright to "The Shining" from Stephen King and starts collecting his royalties?

    are there hordes of people out there that get their copyright stolen and now the royalties of movies, music, books, etc are landing in the laps of criminals?
  • Mike, if people were specifically stealing American goods at the docks, you might describe that as a trade problem. But if a country just had a lot of theft in general, that would be a crime problem, not a trade issue. Nobody claims that the high crime rate in South Africa is a trade problem.

    Moreover, if you read the report, a lot of the "lax IP enforcement" problems they cite are things like France's attempt to open the iTunes platform. Whether you agree with that policy or not (I don't) that's clearly a regulatory issue, not a trade issue.
  • If a country routinely allows piracy, rather than having very liberal fair use rules, then that is majorly screwing over our businesses. It would be akin to our police and customs agents not lifting a finger if our domestic gangs robbed foreign manufacturers at the docks, stealing entire shipping containers of goods. Either way, the policy of not providing consistent protection has made it virtually impossible to sell the goods in a fair way.
  • Braden, I have to say I'm puzzled about how lax copyright enforcement is a trade barrier. Are these countries giving different levels of protection to domestic copyright holders than foreign copyright holders?

    If not, why is this a trade issue, rather than just a generic policy dispute? Lots of people argue it's unfair that some countries have laxer environmental and labor regulations than we do. Would you consider that a trade barrier as well?
  • bradencox
    No, there's no double-speak, particularly with regard to copyright theft - movies, music, books, etc. - and with software piracy. If a country has rules protecting IP (and those that participate in the WTO do) they should be enforcing them.
  • j
    It takes some pretty rich double-speak to refer to lax enforcement of government grants of monopoly as a "trade barrier".
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