Saturday, April 11, 2009

Global Trade Falling and Protectionism on the Rise

NY Times - Trade Is Falling Fast Across the Globe
Washington Times - Trade Barriers Up, Global Study Says

Global trade is declining at a rapid pace not seen for several decades. Data from 15 of the world's largest exporters indicates their total value of exports in February 2009 was about one-third lower than in Feburary 2008. China, a recent export titan, saw its exports drop by 41 percent during that period. The current fall in global trade volume is more severe than that during the Great Depression era of the 1920s and 1930s.

Not all of the news is bad, however. United States exports, although falling year-over-year by 22 percent, actually rose a small amount between January 2009 and February 2009. It was the first month-over-month increase for U.S. exports since they reached a high of $121 billion in July 2008. And China's large stimulus program appears to have encouraged imports, especially from Australia.

Along with the overall decrease in global trade volume, major economic players have been putting up trade barriers at an increased pace during the global financial crisis. Although the G20 summit participants recently agreed not to resort to protectionist measures during the time of financial crisis, countries such as the U.S., China, Brazil, India, South Korea, and the E.U. bloc have been most active in devising new trade barriers.

The trade barrier study, by Grail Research, noted that non-tariff and non-traditional barriers were the weapon of choice. These barriers are less directly confrontational but also more difficult to track and quantify.

1. What are the benefits of trade barriers to countries during a time of global recession?
2. Will increased global trade be the cause or effect of global economy recovery?

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