Trade is experiencing a sudden, severe and globally synchronised collapse. Protectionist forces have already emerged, and as the recession gets worse, they will strengthen. The protection, however, is not 1930s-style tariffs. It is murky protectionism – seemingly benign, crisis-linked policies that are twisted to favour domestic firms, workers, and investors. A negative feedback between recession and protectionism is no longer an historical reminiscence of the 1930s; it is a possible – hopefully low probability – scenario in the months and years to come.
In this VoxEU.org eBook, leading trade policy practitioners and experts – including Australian Trade Minister Simon Crean and former Mexican President Ernesto Zedillo – put forth several concrete proposals for April 2009’s London Summit. These steps would let G20 leaders get out in front of the crisis and reduce the chance that an avalanche of murky protectionism could hinder the global recovery.