07/09/2016
Most people are aware to some extent of the huge disruption to air travel occasioned by 9/11, and the continued effect of ever-increasing security measures to counter the spread of international terrorism. In many ways, the destruction of the Twin Towers changed air travel forever.
What is less well known are the effects on international trade â and not just with the United States. In fact, the short-run effects on foreign (non-US) economies were not great but the quest for greater security threatened to impose long-term cost on the world economy both in terms of a decline in productivity growth and, possibly, greater impediments to the free movement of goods, services, and capital.
As it was, the
direct impact on trading costs of security-inspired measures was estimated to be roughly equivalent to the reduction in tariffs on industrial goods of 2.5 percentage points agreed to under the Uruguay Round of Multilateral Trade Negotiations.
In response to this, the nations of the world, and blocs such as the EU, have been working together in an attempt to square the circle â providing an adequate level of cross-border security while maintaining the free flow of goods, and keeping costs to the minimum.
This has spawned the "Authorised Economic Operator" (AEO) concept, which has become one of the vital lubricants keeping the wheels of global trade turning. Not least, this has spawned still more of those non-existent trade deals between
China, the
United States and the EU.
I've been working on a new Monograph on this, and thought I might be ready to post this evening. But that was not to be - I've run out of time. Hence, consider this a holding post - I'll be returning to the subject very shortly, discussing the broader implications for Brexit.
