Some interesting comments in a report today about the World Trade Organization:
A growing number of countries have raised tariffs, imposed import restrictions or reinstated subsidies. They have also been quick to defend home industries by filing complaints with the WTO over dumping — the practice of flooding another country with goods at below-market prices. The WTO report also portrayed bailouts as potentially bad for trade because propping up operations of uncompetitive or insolvent firms “denies market share to more efficient producers including foreign suppliers.”
Such actions represent a new kind of protectionism that Lamy refers to as “low-intensity.” Most of the measures are legal under WTO regulations and don’t violate trade agreements that were designed to prevent the kind of full-on global trade war that many believe exacerbated the Great Depression. But they harm trade nonetheless, Lamy argues.
“It’s quite worrisome,” Hufbauer said. “The longer this recession goes on, the more we’re going to get of this.”
And the more protectionism we get, the longer the recession will last.
