Trade Barriers Going Up …

Trade Barriers Going Up …

The Wall Street Journal has an article today, February 6, 2009, front page, on the rush by states to enact new trade barriers in all sorts of ways.  The WTO is expressing great concern, indeed saying that it is unable even to keep up with tracking the barriers being erected.

The landscape is moving so fast that officials at the WTO, the world’s top trade-law enforcer, say they’re relying on news reports to keep up with the changes, as governments are often slow to report them. They are reconsidering their Jan. 23 report that concluded protectionist pressures were largely being kept at bay.

Apart from being dismaying news to pretty much anyone who thinks free trade is a good idea, and that protectionism was a huge part of the disaster in the worldwide Great Depression, it raises for me an old question.  I have written on collective action in connection with the UN, the US, and security.  I’ve argued, among other things, that there is a bit of a divide between scholars.  

On the one hand, there are those who treat cooperation games such as trade and the WTO regimes and international security as being on something of a continuum – meaning by that, you can loosely, at least, infer that a strengthening international system of cooperation on trade can be reflected in security areas.  On the other hand, there are people – I’m one of them – who think that it is a mistake to think that the success of the WTO can be extended over to security areas.  They are too dissimilar as cooperation games, in their incentives to free ride and defect, and the stakes and payoffs too different, to really shed light on one another – as being predictive, that is, about the future of governance in the international community.  

So I find myself astonished, as well as dismayed, to see that the trade structure seems to me somewhat weaker than I had long assumed.  It’s not that I think it will crack in the current crisis – it will pull through reasonably well, I believe and certainly hope.  But I am surprised at how quickly the beginnings of defections from the system have got underway.  I hope they will turn out to be precisely the sort of thing that an enforcement regime will be able to enforce, and, who knows, it might actually strengthen the trade structure in the end.  It is very early yet.  But I am surprised to see what appears to be fragility so quickly.

But some of the figures cited for global trade, apart from protection issues, are frightening:

Economists and trade analysts say the current rash of trade constraints could make it harder for global economic growth to recover from the current downturn. Global trade is expected to shrink by more than 2.1% this year after growing by 6.2% in 2008, according to the WTO.

And this on anti-dumping cases:

The WTO’s figures show that antidumping cases overall, in which nations contend others are disrupting markets by unloading goods below cost, are up 40% since a year ago. In October, as the extent of the global recession became more certain, WTO director Pascal Lamy ordered his staff to start tracking protective actions, say WTO officials.

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[…] will meet in Brussels Monday (Feb. 9, 2009) to head-off the rising wave of protectionism. A trade war could put the world into a deep depression and threaten cooperation on renewable energy. Ten EU […]