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Protectionism a Threat to Global Recover...
Protectionism a Threat to Global Recovery, Say Emerging Market Policymakers
Policymakers from eight developing countries all reported declines in both export and imports in recent months due to weak demand from the global market.
Podcast: Protectionism a Threat to Global Recovery, Say Emerging Market Policymakers?
April 6, 2009––As G20 leaders prepared for the April 2 London Summit at which they agreed on new measures to tackle the global economic crisis, developing-country trade policymakers and private sector representatives participating in a global dialogue agreed that mounting protectionism poses a grave threat to economic recovery.Â
In a videoconference hosted by the World Bank Institutethat linked analysts from eight developing and transition countries, a strong consensus emerged on the need for cooperation and support for regional arrangements to counter the damaging impacts of the crisis on jobs and wages.
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The policymakers all reported declines in both export and imports in recent months due to weak demand from the global market, leading to falling domestic employment and wages.
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“No one country can get out of this crisis alone,” said Jin Kyo Suh of the Korea Institute for Economic Policy. “International cooperation will be very important to find a way out.”
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Danger of Protectionism
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The government officials and private sector leaders, from Brazil, India, Malaysia, Poland, South Africa, South Korea, Sri Lanka, and Thailand, agreed on the need to conclude the Doha trade round in order to move forward, and to resist domestic pressure to “slide backwards” into protectionism. Â
Columbia University Professor Jagdish Bhagwati, who provided an overview of the trade impact of the global crisis, urged the panelists to press on with settling Doha in some way, and said “especially now, it’s important to defend the open system, and prevent it from closing down.”
Bhagwati is a senior fellow in international economics at the Council on Foreign Relations. As one of the world's leading trade scholars, he has made major contributions not only in the science of trade theory, but also in the practical aspects of trade policy making. He is the author of In Defense of Globalization, and most recently Termites in the Trading System.
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Bhagwati warned that protectionism is rising, especially in industrialized nations. “Home country first” policies are harmful, he said, as they spark trade wars. The key question for G20 leaders should be how to forestall and stop trade wars, as they threaten to reverse gains in reducing poverty.
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Developing countries need to collaborate on a regional basis to address the crisis, Bhagwati said, noting that region-based strategies offer them “more bargaining power” in their effort to contain the growing protectionism among developed countries. ASEAN, as a group, can play a bigger role in containing protectionism, he said.
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Trade Finance
South Africa estimated 250 thousand job losses by the end of 2009, and cited the importance co-determining its trade policy with labor and business.
Trade finance was cited as a growing problem in all countries, and leaders welcomed Gordon Brown’s $100 billion proposal for financing exports. This plan would support the role of multi-lateral banks and the IMF to help countries with low reserves. Â
More than 50 policy makers and others from ministries of finance and foreign affairs participated in the two-and-a-half-hour conversation. The conversation was held through video conference organized by the Poverty and Growth Program at the World Bank Institute, as part of the ‘Global Dialogues,’ a series of videoconference dialogues for practitioners and experts from around the world to exchange information and analysis on the national and international effects of the global economic slowdown. Â
All countries faced large job losses associated with declining demand for their export products.
These Global Dialogues are being delivered through the Global Development Learning Network (GDLN), a partnership of more than 120 recognized global institutions, which collaborates in the design of customized learning solutions for individuals and organizations working in development.
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