In The News

Obama Risks Flap on “Buy American”

Neil King Jr. February 9, 2009
Anyone who has read recent reports on the global economic crisis should understand that protectionism is dangerous and that protectionist legislation prolonged the Great Depression during the 1930s. Despite modern agreements that regulate open trade, some US workers and politicians can’t help but be tempted to direct public spending to domestic firms and workers. In preparing a multibillion...

Made in America

Nayan Chanda February 6, 2009
As jobs vanish by the hundreds of thousands, the desire to intervene from politicians is only natural, an attempt to restore economic order and prevent social unrest. In capitals throughout Europe, workers protest and vow to remove politicians who fail to provide immediate economic relief. The US is no different, as the president and Congress race to save jobs with a stimulus package now valued...

Is Protectionism Unavoidable?

Jeffrey E. Garten February 6, 2009
The warnings on protectionism are dire. Economists and historians repeatedly remind us about the danger of sliding into protectionism embodied in the notorious Smoot-Hawley Tariff Act of 1930. By raising import tariffs on thousands of goods, inviting retaliation, causing collapse of international trade, the act transformed a US recession into a Great Depression. Deepening anxiety about vanishing...

India's Diamonds Lose Their Luster

Neeta Lal February 5, 2009
Hit by gloomy news of global recession, consumers sharply curtailed purchases of luxury goods, putting millions of jobs in jeopardy. It took India four decades to position itself as a world leader in processing diamonds, reports Neeta Lal for the Asia Sentinel, but recession in the US reduced demand by 60 percent."The industry had been witnessing exponential growth for over two decades,...

N. Korea Plans Free Trade Zone on Island

Toru Makinoda February 5, 2009
North Korea, one of the most closed nations in the world, may soon have more contact with China, with plans for a free trade zone on Wi Hwa Island. Chinese would not need visas, and the trade zone could increase food and other shipments into North Korea. Analysts suggest that North Korea could be using such a zone to pressure South Korea into continuing its policies of conciliation, reports Toru...

Out of Gaps in Treaties, First Salvos of Trade War

Anthony Faiola February 4, 2009
A government can engage in protectionism by closing barriers and strictly limiting products that enter the country or taking steps to give its products a leg up. In 1930, US Congress limited imports, which prolonged the Depression, notes Anthony Faiola in an article for the Washington Post. Recognizing that free trade promotes widespread prosperity and diminishes conflict, governments formed the...

Another Fine Mess

February 3, 2009
As European banks receive another round of government assurances, the purpose of funding is to insure toxic assets and stimulate lending. Despite protests from some quarters of society, these bailout packages, by shifting default risk from the banks to the governments that back them, have kept fear of bank runs at bay, according to an article in the Economist. Still, not enough credit is flowing...