On the brink of collapse in 2008, two American icons – General Motors and Chrysler – turned to Uncle Sam for billions of dollars to stay in business. But as assistant professor Christina Benson finds in her latest research, by protecting domestic automakers to save U.S. jobs in the short run, Washington may have created bigger headaches for the American economy in the not-so-distant future.
Benson, an assistant professor of business law in the Martha and Spencer Love School of Business, had her paper “Industry Bailouts: Will Protectionist Potholes Put a Dent in Trade and Competitiveness?” published this fall in Competition Forum, a peer-reviewed publication of the American Society for Competitiveness.
Benson argues in her work that the automotive bailout is a form of protectionism that violates World Trade Organization policy. Washington, she said, may have inadvertently increased tensions with key trading partners and hampered the competitiveness of the domestic industry.
“The United States ought to be setting a good example and not being the leader of protectionism,” Benson said. “That being said, the auto sector is a really tricky one.”
If the United States leads the protectionist pack, other nations may follow suit, she said. Washington’s efforts to stabilize homegrown businesses could prompt foreign governments to slap tariffs on items shipped overseas from the United States, which would make it harder for American industries to recover from the recession.
“In the end,” Benson said, “what I worry about is whether this government bailout is going to make GM a lean, mean fighting machine or whether it’s going to prop up age-old problems and exacerbate them, making [domestic industries] less competitive.”
Benson received her bachelor’s degree in communications, her M.B.A. and her law degree with honors all from the University of North Carolina at Chapel Hill. She would later serve as consultant to the Rules Division of the World Trade Organization Secretariat in Geneva in 2000 and, after that, as an attorney in international trade and litigation for various firms, including White & Case LLP, Arent Fox PLLC, and Hunton & Williams LLP.
In those roles she provided advice to Toyota, among other clients, which brought her into close proximity with how World Trade Organization rules apply to the automotive sector.
The initial version of Benson’s research was presented at the annual National Conference of the Academy of Legal Studies in Business on Aug. 7, 2009, in Denver, Colo. As she turns to the future, Benson is considering a piece on proposed climate change legislation and the proliferation of “buy American” provisions.
– Written by Daniel Koehler ’12 and Eric Townsend, Office of University Relations