Global trade protectionism on the rise, experts say

Since the 2008 financial panic reared its ugly head, global trade has taken a walloping that it has never fully recovered from. In response to tightening credit and plummeting demand, trade between nations fell dramatically even as oil prices, at the time, plunged.

Global Trade Alert, an international analytics firm that releases quarterly updates on the state of worldwide trade, reported earlier this week that trade volume – which fell by approximately 20 percent at the peak of the crisis – has barely made up the ground lost and continues to muddle along. The organization's latest study showed a 1.3 percent year-over-year growth margin for 2012, suggested a festering reluctance on the behalf of major countries to remove regulatory barriers that might be inhibiting more trade.

Simon Evenett of VOX, a policy analysis group, wrote on June 13 that some countries are adopting a more protectionist attitude in spite of the obvious perils of doing so. He reminded readers that similar events occurred during the 1930s, when many nations effectively sealed their doors to trade in response to the worsening Great Depression. Today's modern iteration, however, is far more dangerous. Evenett argued that some governments are acting in ways that are beneficial for them but actually harm competitors both economically and financially. 

"Nowadays, many governments are adept at tilting the playing field in a way that their trading partners, the media, and analysts find hard to track," Simon noted. "Over the past year, beggar-thy-neighbour policies have made a quiet but significant resurgence. The first estimates of the amount of protectionism imposed in Q4 2012 and Q1 2013 are the worst that the Global Trade Alert team has compiled since November 2008, much worse than in Q1 2009 when policymakers lost sleep about protectionism."

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