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Next round of trade protection (Part II)

In this ear­li­er post, I looked at three of the ‘old stand­bys’ that are like­ly to pro­vide gov­ern­ments with all the ‘wig­gle-room’ they need to increase pro­tec­tion while remain­ing nom­i­nal­ly com­pli­ant with their WTO oblig­a­tions.

This time, two more oldies but good­ies that are still more like­ly, in my view, to fig­ure in the com­ing round of trade pro­tec­tion. These two threat­en high lev­els of ‘tai­lor-made’ pro­tec­tion for firms that are strug­gling through the reces­sion, but they do so at the cost of low­er lev­els of demand at home (so much for ‘stim­u­lus’!), increased pres­sure on com­peti­tors in oth­er coun­tries and a fur­ther cut in world trade vol­umes. Bad for almost every­one.

At the end of this post I start to look at some defens­es against the com­ing round of pro­tec­tion.

The next round of trade protection

Change in employment compared to earlier recessionsChange in employment compared to earlier recessions

Will there be one? You bet! The only ques­tions are: how soon and how big?

With employ­ment num­bers in both indus­tri­al­ized and indus­tri­al­iz­ing coun­tries falling, world mar­kets seiz­ing up as a con­se­quence of the cred­it squeeze, icons of glob­al­iza­tion like Dubai bleed­ing debt (and emi­grants) and gov­ern­ments rush­ing out ‘stim­u­lus’ pack­ages to prop up domes­tic demand, the scene is set for some un-neigh­bor­ly action at every inter­na­tion­al bor­der. Nev­er mind that some of these “neg­a­tives” are like­ly to be part of the cre­ative destruc­tion that brings new ideas, new mar­ket entrants and, even­tu­al­ly, new growth.

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