MNI: ECB Coeure: Protectionist Policy Unlikely to Achieve Aim

By Christian Vits

     FRANKFURT (MNI) - Protectionist measures and higher tariffs are not likely

to achieve what they are intended for, European Central Bank Executive Board

member Benoit Coeure said Friday.

     "Automation implies that protectionist policies aimed at preventing -- and

reversing -- job losses among low-skilled workers in manufacturing are unlikely

to achieve their aim," Coeure noted in a speech in Skopje, Macedonia.

     "This is because reshoring, forced or not, is ultimately the outcome of

regained competitiveness and changes in relative factor intensities," he added.

"Production then becomes more capital and skill-intensive and is unlikely to

create many new jobs for low-skilled workers."

     Higher tariffs are also less effective than they were in the past, given

that intra-firm trade has grown substantially, Coeure stressed. "As a result,

higher tariffs may well reduce domestic profitability."

     The recent rebound in trade mainly reflects cyclical factors, according to

Coeure. Accommodative monetary policies worldwide have succeeded in boosting

growth and investment and, with them, global imports.

     "Structural headwinds remain, however," he said. "Maturing global value

chains, geographical shifts in trade and an accelerating push towards more

automation make it less likely that trade can again expand at the pace observed

during the pre-crisis boom."

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

--MNI Frankfurt Bureau; +49 69 97782671; email: christian.vits@marketnews.com

[TOPICS: M$X$$$,M$$EC$]