CHICAGO — As governments do more to try to coax the world economy out of recession, the danger of protectionism is becoming more real. It is emerging in ways that were unforeseen by those who founded our existing global institutions.
Unfortunately, the discussion between countries on trade nowadays is very much a dialogue of the deaf, with countries spouting platitudes without agreeing on enforceable and verifiable commitments. There is an urgent need to reform global institutions — and more dramatically than envisaged by the Group of 20 thus far.
Protectionism is not just about raising tariffs on imports; it is any government action that distorts the global production and allocation of goods, services and capital to favor domestic producers, thereby reducing overall efficiency.