Two years ago, as the U.S. economy fell into recession, I was asked by a reporter about the likelihood of a new wave of trade protectionism breaking out. Not a chance, I predicted confidently, though I was careful to add: "If U.S. unemployment gets to 10%, then all bets are off. But we're a long way from that."
Not so long, it turns out. Since then, unemployment in the United States has doubled, and the official rate is near 10%. Yet, astonishingly, there has still been no surge in trade protection in the United States or anywhere else.
A definitive report released in March 2010 by the World Trade Organization found that in the past six months the number of new import-restricting measures by G20 countries, which represent nearly 90% of the world's economy, had actually slowed significantly from the previous six months. Such measures are affecting less than half a percent of world imports.
Trade protectionism has been the dog that didn't bark in the current crisis. In the past, soaring rates of unemployment were inevitably accompanied by new trade-restricting measures aimed at protecting jobs that might be threatened by imports.
The cautionary story of the Great Depression is well-known, but even the deep recession of the early 1980s triggered an array of import restrictions that restrained trade growth for a decade.