Strategic Panorama 2009 - 2010 - IEEE

Federico Steinberg Whesler
«buy national» or «buy local» clauses tied to fiscal stimulus packages). For
their part, developing countries, which have fewer resources, are resorting
chiefly to import restrictions, both tariffs and other kinds.
Notwithstanding this resurgence in trade nationalism, the World
Trade Organization (WTO) has described the measures adopted as «low
intensity protectionism», as in most cases they are compatible with the
commitments countries have both in the framework of the WTO and
under other international trade treaties. Therefore, although it is still early
days to claim victory, it can be said that most countries are succeeding
in stemming the protectionist temptation. This fact is of huge importance
because the experience of history shows that the maintenance of free
trade is essential to the stability and security of the international economic
system.
Even so, it should be recognised that international trade has been
one of the main victims of the world crisis. In 2009 international trade
will have contracted by 10% (14% in industrialised countries and 7% in
developing countries) and more in manufactured goods than in services.
Such a contraction has not been witnessed since the 1930s. The last time
international trade decreased was in 1982, and that was by less than 2%.
But if some of the data reported are confirmed, it is possible that international
trade will bounce back to strong growth by 2010, first in Asia and
later in the rest of the world. This would mean that, unlike in the 1930s, the
international community will have withstood the protectionist temptation.
Trade will have fallen on account of the slump in demand and shortage of
financing and not because of competitive devaluations and a rise in tariffs
and other trade barriers, which are difficult to reverse once recovery is
achieved.
It is important to resist the protectionist temptation because although
protectionism did not cause the Great Depression, it exacerbated it. The
rise in tariffs coupled with competitive devaluations prevented international
transactions from cushioning the effects of the recession that followed
the crash of 1929. Indeed, just as trade increases the size of the «cake» of
world output because it gives rise to a more efficient allocation of resources,
the tariff war reduces it. The escalation of protectionism which took
place between 1929 and 1932 led to a 33% slump in international trade in
real terms and a 14% fall in every country’s GDP. The international community
learned the hard way that governments’ well-meaning attempts
to protect employment and stem the fall in activity resulted in higher
unemployment and poverty, which was furthermore a breeding ground for
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