For an export-dependent economy like ours, it is important that the forces of protectionism be kept at bay throughout the world. It is true that we become less vulnerable to such external forces once we are inside the European Union. We will have perfectly open access to the European markets that account for a huge part of our exports.
Also, we become party to all the trade agreements entered into by the EU. Moreover, whereas in isolation our bargaining strength in trade negotiations would be minimal, as EU members we become beneficiaries of the bargaining clout of the huge economic area.
The internal economy of a small country can never provide room for large production lines and economies of scale. So it made perfect sense to eschew protectionism and seek growth in a two-pronged approach.
First of all, we have chosen to join a far bigger single market. Secondly, we continue to pursue our development as a hub providing services to the larger Mediterranean region around us.
Protectionism is not helpful to open economies. In a number of countries, a relatively recent form of economically isolationist thinking is prompted in part by the outsourcing or offshoring of white-collar activities.
In the process of economic growth, sending jobs abroad is nothing new. The industrialised world has lost blue-collar activities to cheaper locations, and continuing growth in more expensive locations depends on the adaptability of resources to changing relative costs.
We see the same phenomenon at home. Higher living standards in Malta come from higher wages that also make labour-intensive activities less profitable in Malta, and that is why we observe a changing mix of manufacturing output. Changes in that mix are expedited in a global environment that today allows for quicker and cheaper shifts in productive capacity to far-away locations.
What is new is that in countries like the United States, the threat of job losses is spreading beyond blue-collar to white-collar professions. Growth in telecommunications capacity and the striking fall in telecom costs have spurred the offshoring of call centres jobs and other white-collar employment.
In particular, employment in services has traditionally been immune from foreign competition, and it is that immunity that globalisation seems to be increasingly breaching.
On Thursday, the Wall Street Journal reported that "the capacity of fibre-optic lines connecting telephone systems into India... increased almost sevenfold from 2001 to 2002...; this has brought lower prices and more room to transmit everything from free calls into customer care centres to e-mails and Internet traffic."
The writer added: "As a result, a telephone and data line under the Pacific Ocean capable of handling up to 128 voice calls at a time can cost just $11,000 a month - one-fourth its cost just two years ago..."
The paper quotes Thomas Malone of MIT: "The differences in labour costs between us and other, less developed countries have existed for a very long time, so that alone is not the cause of offshore outsourcing. The thing that's changed is the change in telecommunication costs.
"That's enabled companies to take advantage of labour costs that have existed for a long time." That in a nutshell is a description of the role of telecommunications in the radical changes brought about by globalisation.
In response to protectionist sentiments, legislatures in a number of states within the US are seeking to restrict firms that receive state contracts from offshoring their work. Such public procurement policies alarm supporters of free trade. However, in the words of the Wall Street Journal, the US Trade Representative, Robert Zoellick, said on Tuesday that India "can't complain much, because it didn't sign on to the WTO's government procurement code".
As one can see from this case, the rules governing international trade can be quite intricate, and they have very significant consequences on livelihoods all over the world.
Education
Education is a key determinant of a country's ability to adjust to new challenges, and to take full advantage of the opportunities offered by a changing international environment.
Speaking before the Committee on Education and the Workforce of US House of Representatives last Thursday, Federal Reserve Board chairman Alan Greenspan addressed the issue of the economic stress caused by foreign competition and technological change, the effects on income distribution and the pivotal role of education.
Greenspan's words are an eloquent echo of the recent and continuing debate in Malta on liberalisation and economic openness. In his words: "The issue is both important and sensitive, dealing as it does with the longer-term wealth of our nation and with the immediate welfare of so many individuals and communities.
"In the debate that has ensued, a large gulf is often perceived between the arguments of economists, who almost always point to the considerable benefits offered over the long term by exposure to free and open trade, and the obvious stress felt by those caught on the downside of turbulence created by that exposure. It is crucial that this gulf be bridged."
Mr Greenspan elaborated on the role of the educational system in preparing workers for economic change and global competition.
He warned against protectionist measures: "They would do little to create jobs; and if foreigners were to retaliate, we would surely lose jobs."
He noted: "We do have a choice. We can erect walls to foreign trade and even discourage job-displacing innovation. The pace of competition would surely slow, and tensions might appear to ease. But only for a short while.
"Our standard of living would soon begin to stagnate and perhaps even decline as a consequence. Time and again through our history, we have discovered that attempting merely to preserve the comfortable features of the present, rather than reaching for new levels of prosperity, is a sure path to stagnation.
"As history clearly shows, our economy is best served by full and vigorous engagement in the global economy. Consequently, we need to increase our efforts to ensure that as many of our citizens as possible have the opportunity to capture the benefits that flow from that engagement.
"...(O)ne critical element in creating that opportunity is the provision of rigorous education and ongoing training to all members of our society."
In his conclusion, Greenspan reminds us of the importance of broad access to education. "Historically, we have placed much greater emphasis on the need to provide equality of opportunity than on equality of outcomes. But equal opportunity requires equal access to knowledge.
"We cannot expect everyone to be equally skilled. But we need to pursue equal access to knowledge to ensure that our economic system works at maximum efficiency and is perceived as just in its distribution of rewards."
Here in Malta today most people take for granted the benefits of liberalisation and more open trade. Until recently, however, this was not the case, with the Labour Party fighting tooth and nail against liberalisation, and the GWU daily, l-orizzont, forecasting job losses of 8,000 and more.
Both these elements did not see the light of day but rather were defeated at the ballot box. Although this forced a reassessment on the part of the Labour Party, one gets the impression of lingering doubts from statements made.
This is perhaps not surprising, given the superficiality of certain arguments in the economic sphere used by the Labour Party. An example of this is Labour leader Alfred Sant's recent harping about job losses at MP clothing and other companies involved in the jeans sector.
The fact that job losses occurred is taken as proof of how right Dr Sant was prior to the referendum and the last election. Yet, his argument was that EU membership and loss of protection would lead to such job losses. However, as the companies themselves have stated, the problems arose because of lower foreign demand, increased competition and the dramatic fall of the US dollar, and with it most of the Asian currencies.
Surely Dr Sant cannot expect to fool the Maltese public in this way? Yet he keeps on repeating the same nonsense, week after week, without even attempting to rationalise what is happening. Clearly, leopards do not change their spots!
This is the challenge that the Labour Party is facing. It is being run in the same shameless and superficial manner as in the past few years, putting reason aside and focusing on artificial glitter, which has been exposed so many times for what it really is!