Trade barriers will come to hurt us all eventually

livemint.com:

World Trade Organization (WTO) rules designed for barrier-free trade, which may explain the citation of ‘security’ as a motive—it’s a carve-out that could allow such curbs. Possible exposure to Chinese spyware has been hinted at. While both geo-strategic and job creation ends may possibly be served this way, we must also weigh the costs.

The seven items identified for licensing accounted for about $8.8 billion of imports in 2022-23, about three-fifths of it from China. This sum was swelling. Yet, even if it poses a security threat, it would call for technical bug-control and not blunt tools.

Trade barricades mark an inward policy turn, a reminder of our closed economy pre-1991. That vaunted model of autarky failed. One thing or another always had to be imported.

Under today’s self-reliance thrust, too, once licensing plays out and this shake-up settles, the e-devices being made here would need to be assembled from foreign kits to begin with. But while this could create jobs, it would also burden Indian buyers with costlier work tools, pushing up basic costs in an economy fast going digital. After all, a trade shield works by letting local output find captive takers at higher prices than what global competition would set.

However, what if local assemblers need protection and props only briefly, while global value chains bend away from China, to emerge as the world’s next big laptop-making hub? Industrial policy did play a recent role in the rise of Apple and Samsung as handset export stars. The Centre looks keen to use the same playbook. By this strategy, once an actual edge in overseas markets is achieved, public funds can be relieved and low prices regained.