


06/2009
After a long period of successful unilateral and multilateral dismantling of protectionism, the current crisis appears to herald the beginning of new restrictions on international trade. Industrialised countries have begun to subsidise their national champions and risk the breakup of cross-border value added chains.
Emerging markets and developing countries have started to raise border charges which they have not bound multilaterally and subsidise their exports. Other trade-impeding measures find new compatriots. Both free mobility of capital as well as free labour movement are at risk. Retaliatory spirals can no longer be dismissed as unrealistic once politicians defend national companies on national territories in order to help national workers.
How can the race to offer subsidies they offer be contained? Is an OECD code of rules the appropriate response following the examples of other policy areas? Should multilateral trading rules against export subsidies and, conversely, export restrictions be sharpened and, if so, how? Are there better measures available against unfair trading practices than countervailing measures and anti-dumping tariffs which are now increasingly enforced? Can more flexibility on labour markets, including new models of task-oriented learning, be helpful in dampening the sector-specific supply and demand shocks for workers? And should domestic adjustment measures not focus on protecting the income-generating potential of workers rather than the production of specific products?