EU decoupling from US? Asia, Europe must not give into protectionism: Former Italian PM Letta

Even as U.S. President-elect Donald Trump practices economic patriotism, Asia and the European Union (EU) must not respond with protectionist policies of their own, former Italian prime minister Enrico Letta warned on Friday.

"I strongly believe protectionism is the wrong answer, we need to manage the social consequences of globalization but we have to continue with progress as well," he told CNBC on the sidelines of the Lee Kuan Yew School of Public Policy Conference in Singapore.

As the current dean of the Paris School of International Affairs at Sciences Po, Letta said Europe and Asia must continue inking bilateral trade agreements, such as the EU-Vietnam and EU-Indonesia deals currently underway, to strengthen their relationship amid expectations for the U.S. to isolate itself from global trade.

"The big problem of globalization today is how to manage the subsequent social and demographic transitions, it is a welfare problem."

In regards to the future of his home country, Letta said Italy's outlook depended on the EU's unity.
"When European integration is weak, Italy suffers. Italy is a country that needs the euro and a strong commitment to completion of the EU."

With elections due in France and Germany, as well as greater detail on Brexit, 2017 will mark "a turning point" for Europe, he continued. If these events confirm Europe's ability to stick together, Italy will do well, he said.

Read more: Asia, Europe must not give into protectionism: Former Italian PM Letta

ECB FOCUS-Europe rates to lead U.S. as global power shifts

After following the Federal Reserve's lead for over a decade, the European Central Bank is poised to launch a series of interest rate hikes before the U.S. central bank for the first time in the ECB's history.


The change from the traditional pattern reflects the ECB's greater preoccupation with inflation pressures, as well as its higher level of discomfort with the emergency bond-buying programmes run by central banks.


But the "decoupling" of ECB and Fed policies is also the result of an historic shift in the global economy: the increased influence that Asia, rather than the United States, is having on the euro zone's economy.

"I think we are in a new world where global interest rate cycles are not initiated by the US Fed," said Jens Sondergaard, senior European economist at Nomura.


For more: ECB FOCUS-Europe rates to lead U.S. as global power shifts | Reuters