Sins of trade protectionism

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A new collection of articles from Brookings provides policymakers some advice heading into the G20 summit on April 2. One of the articles - Tame Protectionism and Revitalize Trade - urges the G20 leaders to avoid making high-minded but empty commitments to free trade and instead take a defensive posture. Author Paul Blustein argues in particular that leaders need to avoid subsidizing industries that aren't systematically important. Or as he perhaps more colorfully puts it:

...the G-20 needs to...draw a distinction between “mortal” and “venial” sin—promising never to commit the former, while treating the latter as forgivable. To qualify for venial sin treatment, subsidies should meet a series of tests. The two most important are that 1) the industry being subsidized is systemically critical to the national economy, and 2) the subsidy being provided is clearly temporary, and will be withdrawn by a specified time period (say, two years).

Let's remember that during the last G20 summit leaders said that "within the next 12 months, we will refrain from raising new barriers to investment or to trade in goods and services, imposing new export restrictions, or implementing World Trade Organization (WTO) inconsistent measures to stimulate exports." This was quickly followed by trade barriers of all sorts - at last count 17 of the 20 countries in the G20 raised some sort of trade barrier. Perhaps if the empty language of high-mindedness won't work, then the tougher language of sin and redemption will?


Ryan Hahn

Operations Officer

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