Publication

This paper discusses arguments in favor of trade restrictions in the EU as a response to globalization. Its economic analysis shows that trade and capital restrictions are not an appropriate response in Europe, even if globalization is a major factor underlying social exclusion. The author argues that better policies exist to achieve redistribution, which do not sacrifice the gains brought by trade and capital flows. According to him, in Europe, workers who are displaced for whatever reason are caught by extensive social protection systems. He suggests that fears that globalization may undermine the ability of governments to levy taxes and raise revenues and so compromise the welfare state in Europe have little foundation. The paper also looks at “fair trade” arguments for trade restrictions in the EU against countries where there is child labor, discrimination and lack of freedom of association.