Seven Countries Home to World’s 10 Worst Cases of Protectionism Subverting Innovation - Global Trade Magazine
  January 19th, 2016 | Written by

Seven Countries Home to World’s 10 Worst Cases of Protectionism Subverting Innovation

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  • Countries that try to expand through protectionist policies may, in the long run, undermine their own interests.
  • ITIF analyst: “Every nation wants to be a leader in innovation because it is the main driver of economic growth.”
  • ITIF president: “We are seeing a disturbing trend where innovation mercantilist policies are becoming the norm.”

In their bid for a greater share of the global innovation economy, seven countries—including China, India, and Canada—sought advantage in 2015 by embracing some of the world’s most glaring examples of protectionist and trade-distorting public policies, according to an analysis by the Information Technology and Innovation Foundation (ITIF).

The ITIF report explains why countries that try to expand their technology production through protectionist and trade-distorting policies hurt U.S. economic growth, damage the entire global innovation system, and may, in the long run, undermine their own interests.

“Every nation wants to be a leader in innovation because it is the main driver of economic growth in the 21st century,” said Nigel Cory, a trade policy analyst at ITIF and author of the report. “But using negative-sum, protectionist policies to get there hurts global innovation. In the long run, it may even damage the very countries embracing these practices because they miss out on the opportunity to raise productivity in all sectors instead of in just a few high-tech ones.”

ITIF’s 2015 list of the worst innovation mercantilist policies includes:

Canada, where there has been continued misuse international intellectual property law to undermine pharmaceutical patents.

China, which introduced, especially requirements for “secure and controllable” equipment, which effectively exclude foreign technology products. China has also used its semiconductor industrial policy to unfairly support domestic firms while discriminating against foreign firms.

India introduced local content requirements as part of its National Telecom Machine-to-Machine Roadmap as well as for solar power projects.

Indonesia introduced local content requirements for smartphones and forced local data storage.

Nigeria implemented local content requirements for information, communications, and technology products and forced local data storage.

Russia implemented forced local data storage requirements and local production of pharmaceuticals and medical devices.

Turkey, according to the ITIF report, “tried to misuse World Trade Organization safeguard protection measures in order to protect a nascent smartphone manufacturer.”

In the report, ITIF urges U.S. policymakers to more strongly push back against innovation mercantilist policies.

“We are seeing a disturbing trend where innovation mercantilist policies are becoming the norm rather than the exception, and the global trading system is doing little to try to roll back these destructive practices,” said Robert D. Atkinson, ITIF’s founder and president. “If we are going to boost global innovation, a commitment to roll back foreign innovation mercantilism has to be at the top of the agenda.”