Protectionism is alive, well and growing fast
By Jeremy Warner
January 6, 2012
There was a discussion on BBC Two’s Newsnight on Thursday night in which two of the panel of “experts” on the world economy, Jim O’Neill, chairman of Goldman Sachs asset mananagement, and the Economist’s Zanny Minton Beddoes, expressed some satisfaction in the supposed fact that the economic crisis of the last four years hadn’t resulted in a steep rise in protectionism. This they took as evidence that despite the crisis, the building blocks for global growth based on increased trade were still intact.
This is indeed the received wisdom, but it is in fact very far from being the case. It is perfectly true that there hasn’t as yet been anything that resembles the famous Smoot-Hawley Tariff Act of 1930, widely but wrongly cited as a major cause of the Great Depression, yet there has been a very substantial rise in protectionism.
According to Global Trade Alert, which monitors trade tensions, protectionism is actually at its highest level since the immediate aftermath of the Lehman crisis in 2009. The reason it has gone largely unnoticed is that protectionist measures tend to take new and ever more subtle forms, many of which are not caught by existing World Trade Organisation prohibitions. In any case, take a look at this article from the University of St Gallen’s Professor Simon Evenett.