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In Bad Economy, Countries Contemplate Protectionist Measures

Across the globe, many countries are taking protectionist measures to buffer national economies from the ongoing economic downturn. Experts debate the potential effects of a trend toward protectionism.

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    It's not only between the U.S. and Canada that trade is becoming a critical issue. In hard times — and in some cases, in response to worker protests — governments around the world are acting or threatening to act to prop up their own companies and workers. Are such moves appropriate? Or do they signal a shift toward protectionism?

    We talk about all this now with Fred Bergsten, director of the Peterson Institute for International Economics, and Thea Lee, policy director and chief international economist at the AFL-CIO.

    Welcome to you both.

    FRED BERGSTEN, Peterson Institute for International Economics: Good to be here.


    Fred Bergsten, let me start first. To what extent do you see the trade issue becoming a source of friction as the global economy weakens?


    I think the trade issue will become a major source of friction, both among economic relations, but between countries more broadly.

    Over 30 countries have put in new trade barriers just since the Group of 20 had its summit meeting here in Washington back in mid-November. Most of those are minor to date, but it's clear that, as the recession deepens and broadens, this is going to be a very, very profound issue.

    Countries around the world are going to be tempted to try to export their problems to their neighbors, try to close their markets and create jobs at home at the expense of others.

    The problem, of course, is that it won't work. As the president says today in Ottawa, this is a global crisis. All countries are suffering downturns.

    So any country that tries to export its problems, export its unemployment, create jobs at the expense of others is going to face instant retaliation by others, and the whole trade system will spiral downward. It just won't work, but it could become a major friction point between a lot of countries.

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