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ME Channels / IMTS 2014

IMTS 2014: Trade Official: Globalization Requires a Free-Trade Alliance to Combat Protectionism


By Bill Koenig
Senior Editor

An Italian official says globalization is beginning to benefit developed economies, but the shift needs the help of free-trade agreements.

“The pace of the negotiations is not the right one,” Carlo Calenda, Italy’s deputy minister for economic development, said in an interview in Chicago. “We are facing in Europe and the US a lot of protectionist feeling.”

The United States is negotiating free trade agreements with the European Union and 11 countries in the Pacific-Asia region.

“We need to forge an alliance of free traders,” Calenda said.

Over the past two decades, Brazil, Russia, India and China, known as the BRIC nations, have drawn manufacturing investment as companies sought locations with lower costs.

The cost advantage for those countries is disappearing, the Boston Consulting Group said in a study released in April. Among the findings, Boston Consulting determined Mexico has lower manufacturing than China and Eastern Europe costs are on par with the United States.

“Many companies are making manufacturing investment decisions on the basis of a decades-old worldview that is sorely out of date,” Harold L. Sirkin, a Boston Consulting Group senior partner and a co-author of the study, said in a statement. “They still see North America and western Europe as high cost and Latin America, eastern Europe, and most of Asia—especially China—as low cost. In reality, there are now high- and low-cost countries in nearly every region of the world.”

There is now “the second phase of globalization” where mature economies can benefit, Calenda said. Also, customers consider more than just cost. “We have much experience where customers want higher levels of quality,” he said. “They’re willing to pay a difference if the quality is clear.”

BRIC countries want “to keep advantages within their borders,” Calenda said. Additional free-trade agreements “will create a lot of pressure on the BRICs.” Officials of countries involved in trade talks need to make the case for how trade pacts will help the economy and jobs, he said.

The US-EU talks are referred to as the Transatlantic Trade and Investment Partnership, while the US-Pacific negotiations are the Trans Pacific Partnership.

Calenda was in Chicago the same week as the IMTS show while the Italian Trade Agency hosted a dinner for people attending the event.

Italy is promoting its manufacturing industry, including machine tools. “The United States is where we have unexploited potential,” Calenda said. Efforts include a new advertising campaign intended to draw attention to Italian manufacturers.

Italian machine tool makers have “the ability to make tailor-made machines” for users, Calenda said. “They are able to meet the customers’ needs.”

The Italian Trade Agency dinner in Chicago highlighted EMO Milano, a trade show scheduled for early October 2015 which Calenda said “is a critical part” of Italy’s efforts “to get customers to come over” to see the nation’s producers of machine tools and metal machine tool makers.

“I think manufacturing will be in the center of our development,” Calenda said in a speech at the dinner. The trade talks, he said, would be part “of a new manufacturing renaissance.”

Published Date : 9/18/2014

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