Slowing the Protectionist Juggernaut

February 13, 2009 9:45 AM

At the G-20 Summit, held in November 2008, leaders pledged to avoid protectionist policies.  Before the ink was dry, India and Russia put up new barriers. Since the turn of the year, Britain has engaged in financial protectionism, France has proposed restrictive auto measures, and the United States has enacted a Buy American rider on its stimulus package.  None of these actions may breach World Trade Organization (WTO) or other international obligations, but all of them defy the spirit of the G-20 proclamation.  The juggernaut of protection is rolling, slowly for now.  What can be done to keep the speed from picking up?

Here's one proposal, built on the force of "name and shame." A visionary private foundation might convene a blue-ribbon bench of respected trade economists and lawyers, independent of any government or the WTO. The bench would be drawn from eminent persons around the world.  It would be charged with grading new trade restrictions on an accelerated schedule. 

The bench is suggested as a crisis measure; it is not meant to be permanent.  Hopefully the economic slump will turn around in two years or sooner, and the protectionist juggernaut will come to a natural rest.  Therefore, the bench should have a defined life of two years.   

The bench of 12 qualified trade economists and lawyers would convene electronically, in panels of three, with the help of junior assistants, to ensure fast reports.  Case reports would be issued within 30 days. The chair person of the bench, the President of the World Bank, and the Director-General of the WTO, would all be empowered to assign cases for evaluation by the bench. 

Panels would evaluate measures against the standards of the WTO, any relevant Free Trade Agreement (FTA), the G-20 pledge of November 2008, and any subsequent G-20 pledge.  Reports would describe the measure and determine whether it violates the relevant standards. To repeat, the reports are meant to "name and shame"; they are not meant to be used as evidence in subsequent WTO disputes or other judicial proceedings. 

Speedy reports are more important than detailed legal analysis.  The idea is to slow the protectionist juggernaut, through the force of informed opinion.  Press citations of "protectionism" far exceed the extent of protective action. But smoke often precedes a blaze, and a relaxed attitude is wrong when the world economy is sinking and protectionist sentiment is soaring.  


References

Richard Baldwin and Simon Evenett, January 2009, "What should leaders do to halt the spread of protectionism?"

Simon Evenett, January 2009, "Keeping Borders Open During the Global Downturn: What are the Options?"

World Trade Organization, January 2009, "Report to the TPRB from the Director-General on the Financial and Economic Crisis and Trade-Related Developments" (JOB(09)/2.