Restore Credit and Resist Protectionism
Abstract:
The Group of Twenty (G-20) major nations accounting for 90% of the world's gross domestic product, 80% of its trade and two-thirds of its population will meet in London beginning April 2, 2009. They plan to discuss the cooperative steps necessary to bring the current economic crisis to a speedy end. If history is any guide, measures to roll back creeping protection and move the process of trade liberalization forward ought to be high on their agenda.
The Smoot-Hawley Tariffs Act of June 1930, which quadrupled the then-effective tax rate on several thousand imported items to 60% and brought swift retaliatory response from the major U.S. trading partners, accelerated the spiraling down of trade flows worldwide.
According to the State Department, between 1929 and 1932, the U.S. exports to, and imports from, Europe fell 67% and 71%, respectively. This rapid decline contributed to the deepening of the economic depression.