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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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