Barry Eichengreen and Doug Irwin look at the drivers of Depression-era protectionism:

The Great Depression was marked by protectionist trade policies and the breakdown of the multilateral trading system. But contrary to the presumption that all countries scrambled to raise trade barriers, there was substantial cross-country variation in the movement to protectionism. Specifically, countries that remained on the gold standard resorted to tariffs, import quotas, and exchange controls to a greater extent than countries that went off gold. Just as the gold standard constraint on monetary policy is critical to understanding macroeconomic developments in this period, national policies toward the exchange rate help explain changes in trade policy. This suggests that trade protection in the 1930s was less an instance of special interest politics run amok than second-best macroeconomic policy management when monetary and fiscal policies were constrained.

The CEPR & World Bank have a new book on trade policy and the crisis edited by Simon Evenett, Bernard Hoekman, and Olivier Cattaneo.

They are mostly warning that countries should guard against protectionism, though we haven’t seen any serious outbreak yet:

Some countries have utilized the ‘policy space’ they have to raise tariffs, but projections – based on past behaviour – are that any such increases are likely to remain limited: In a sector that in the 1970s and 1980s became a bastion of protectionism, textiles and apparel, policy remains very open. Another illustration of the relevance of WTO rules is that countries that are not members are among those that have made the most intensive use of measures to restrict trade and/or investment – e.g., Algeria, Russia.

Whether more positive actions – complete the Doha round, look at climate change initiatives, fund trade policy monitoring efforts, etc – are politically feasible remains to be seen.

The CEPR & World Bank have a new book on trade policy and the crisis edited by Simon Evenett, Bernard Hoekman, and Olivier Cattaneo.

They are mostly warning that countries should guard against protectionism, though we haven’t seen any serious outbreak yet:

Some countries have utilized the ‘policy space’ they have to raise tariffs, but projections – based on past behaviour – are that any such increases are likely to remain limited: In a sector that in the 1970s and 1980s became a bastion of protectionism, textiles and apparel, policy remains very open. Another illustration of the relevance of WTO rules is that countries that are not members are among those that have made the most intensive use of measures to restrict trade and/or investment – e.g., Algeria, Russia.

Whether more positive actions – complete the Doha round, look at climate change initiatives, fund trade policy monitoring efforts, etc – are politically feasible remains to be seen.

For La-Z-Boy, antidumping payouts are the difference between $3 million in the red and $5 million in the black.

It’s World Trade Week in the UK. Unfortunately, I flew Heathrow to JFK yesterday, so I was unable to attend. At yesterday’s conference, Peter Mandelson introduced and Simon Evenett explained a new watchdog website devoted to monitoring protectionism – Global Trade Alert. Reuters reports:

British Business Secretary Peter Mandelson said the Global Trade Alert site would act as a watchdog to deter governments from protectionist measures that he warned would only make the recession “longer and more painful.”

“Everyone is watching everyone else and there is a lot to be said for peer pressure,” he said. “(The) trading system faces a huge crisis of demand and of credit, but the real long-term risk to its health lies in protectionism.”…

The website, http://www.globaltradealert.org, will be co-funded by the British government and run by the Centre for Economic Policy Research, a London-based thinktank. About 700 researchers working mainly in European universities will gather evidence.

It’ll be interesting to see how the UK government monitors itself. As for those 700 researchers, that’s the total number of economists affiliated with CEPR. I don’t think they’ve all been reassigned to Global Trade Alert. 🙂

Chad Bown is keeping an eye on global trends in the use of trade remedies.

Compared to the same time period in 2008, the first quarter of 2009 saw an 18.8% increase in initiated investigations in which domestic industries request the imposition of new import restrictions under trade remedy laws. While the list of new investigations is dominated by India and Argentina, other G-20 members that also initiated at least one new investigation during the first quarter of 2009 include Australia, Canada, China, the European Union and its member states, Mexico, South Africa, Turkey and the United States. China`s exporters were the dominant target for these new investigations that may result in import restrictions, facing over two thirds of the new investigations.

Does China’s stimulus package have the equivalent of a “Buy Chinese” provision? US firms are complaining.