WASHINGTON -- The United States and other big countries still are promoting the virtues of free trade, but they are moving to protect vulnerable industries at a pace that undermines their rhetoric.
The downturn in the global economy and the collapse of prices of many commodities are contributing to a notable increase in protectionist actions -- and retaliatory responses -- by governments around the world. Setting the tone, some analysts assert, is the United States, traditionally the bandleader for trade expansion.
"The more the big economies like the United States and the European Union appear protectionist, the more developing countries feel justified in doing the same thing," said Cliff Stevenson, chief economist with Mayer, Brown, Rowe & Maw, a global law firm based in London. "The danger is there will be a domino effect."
When President Bush meets with European leaders Thursday, he will try to head off a trade war over his 30 percent steel tariffs. Foreign leaders already are spoiling for a fight over $50 billion in U.S. farm subsidies taking shape on Capitol Hill. Some members of Congress want to attach new protective measures to "fast-track" trade legislation making its way through the Senate.
But the United States has plenty of company. From Brazil to India, governments are responding to growing pressure to come to the aid of industries that wind up on the losing end of trade liberalization. Increasingly, they are seeking relief under "anti-dumping" rules that prohibit predatory pricing by exporters and "safeguard" provisions that give hard-hit domestic producers a timeout from global competition.
According to an analysis by Stevenson's law firm, protectionist activity reached "unprecedented levels" last year, with 24 countries initiating a record 348 anti-dumping investigations, 53 safeguard actions and 27 anti-subsidy inquiries.
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