WTO Report Raises Concern About Incremental Advance of Trade Barriers

As the Group of Twenty (G-20) Finance Ministers and Central Bank Governors prepares for its summit in London next week, the Financial Times reports that the World Trade Organization is urging nations to resist domestic political pressures toward protectionism in their responses to the global financial crisis.

“The danger today is of an incremental build-up of restrictions that could slowly strangle international trade and undercut the effectiveness of policies to boost aggregate demand and restore sustained growth globally,” the WTO said, according to the FT. While the WTO reported "no indication of an imminent descent into high intensity protectionism," it did note that the adoption of protectionist measures by member nations increased by 25% in 2008. It cited measures to restrict footwear imports, discourage steel imports and provide government aid to domestic auto industries.

Wharton faculty have also raised concerns about protectionist urges, particularly in the United States, where Congress added a "Buy American" provision to the Obama administration's $787 billion stimulus package. In a February article, "Trade Wars: Will Protectionism Win out over Recovery?" Wharton management professor Stephen J. Kobrin told Knowledge at Wharton that history points to an urgent need to defend free trade. "It's critical. It's pretty clear that protectionism exacerbated the Depression last time, and [economies] are more integrated now."