We underscore the critical importance of rejecting protectionism and not turning inward in times of financial uncertainty. In this regard, 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 is surely a good policy. But the problem is whether the governments are effectively able to do that against own domestic political pressure? While they might not raise the tariff, which is a blatant WTO violation, it seems that the more subtle subsidies and bailouts are now gaining popularity --which is just another kind of protectionism. The US, for instance, now debated on whether or not to save those inefficient Detroit's big boys.
Thursday, November 20, 2008
Not Tariff, but Subsidy and Bailout
Dede of Diskusi Ekonomi is apparently more optimistic than I on recent G20 meeting. Take international trade issue, he wrote that one of the important meeting's results was the agreement for not to adopt protectionism. Here is the official statement #13: