New VoxEU book on the crisis and protectionism:

When incomes, investment and jobs are under threat, national governments try to cushion the blow – in part by erecting new trade barriers. This time is no exception. According to the latest data from the WTO and ITC, the number of antidumping cases jumped 40% in the first half of 2008 and many nations have already raised tariffs in 2008.

The magnitude of the new protection is modest. However, as the recession spreads and deepens globally, this could change – especially if world leaders lose control of the situation; protectionism and competitive devaluations could trigger a vortex of beggar-thy-neighbour policies.

The universal respect of WTO rules and 60 years of tariff negotiations make a repeat of the 1930s tariff war unlikely. But a WTO-consistent protectionist cycle is a real possibility. Indeed, just such a thing happened on a small scale in the last major financial crisis – the 1997 Asian crisis.

Featuring Richard Baldwin, Jagdish Bhagwati, Ann Capling, Wendy Dobson, Peter Draper, Simon Evenett, Gary Hufbauer, Douglas Irwin, R V Kanoria, Robert Z. Lawrence, Patrick Messerlin, Kevin O’Rourke, Arvind Panagariya, Yung Chul Park, Hadi Soesastro, and Jeffery Schott.