9 September 2010
Global trade fell by 12.5% in 2009, a collapse explained by factors such as a decrease in demand and the drying-up of trade finance. Although protectionism was not a major factor in this fall in trade, governments have faced pressure to implement protectionist policies and measures as a way of 'saving' domestic jobs and enterprises in the face of the economic crisis.
However, such measures would be counter-productive. Direct trade-restricting measures have the most negative impacts on growth and employment. An increase of $1 in tariff revenues results in a $2.16 fall in world exports and a $0.73 drop in world income.
This study argues that open markets will be necessary for a sustained economic recovery. It recommends that governments continue to resist protectionist pressures and work towards a level playing field for trade.
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