{ "id": "R40461", "type": "CRS Report", "typeId": "REPORTS", "number": "R40461", "active": false, "source": "EveryCRSReport.com, University of North Texas Libraries Government Documents Department", "versions": [ { "source": "EveryCRSReport.com", "id": 351775, "date": "2009-08-26", "retrieved": "2016-04-07T02:19:33.536356", "title": "The Global Economic Downturn and Protectionism", "summary": "In today\u2019s severe global economic downturn, concerns are being raised that countries may try to improve their own trade positions in order to help domestic industries at the expense of others by imposing measures that artificially increase their exports or restrict imports. Such efforts are considered by some to be a form of \u201cprotectionism\u201d and are often referred to as beggar-thy-neighbor policies.\nThis report develops three scenarios to approximate different dimensions of the relationship between the global economic downturn and protectionism. The scenarios are not predictions, but descriptions of how and why pressures for protection could be manifested and transmitted under different circumstances and assumptions. \nUnder a low impact scenario, existing World Trade Organization (WTO) rules and obligations, bolstered by a high level of global interdependence, discourage trade restrictions and trade diverting measures from being proposed. If implemented, the measures conform to WTO rules and/or have a limited impact on trade flows. Recent reports issued by the WTO and World Bank provide preliminary support for this scenario.\nUnder a medium impact scenario, WTO rules are violated or are disregarded due to the exigencies of the economic crisis and demands to provide financial rescue plans for the banking and auto sectors. As a result, trade and investment flows over time could be diverted or fall outside WTO surveillance, thereby weakening the global trading system. \nUnder a high impact scenario, WTO rules are violated, major trade conflict occurs, and the world trading system is undermined. This threat arises from the longstanding presence of large trade imbalances driven by distorted global consumption and savings patterns\u2014patterns that were an underlying cause of the global economic downturn. Given the prominent role that China and the United States play in the global imbalances, two flashpoints for any outbreak of protectionism can be identified. The first could stem from U.S. public concerns that other countries are gaining a \u201cfree ride\u201d in terms of international efforts to increase aggregate spending and get the world economy growing again. The second could arise if China and other surplus countries try to avoid massive factory closings and layoffs by exporting their overcapacity to the United States and Europe with trade policy measures such as export subsidies and currency depreciation. \nThree broad policy challenges for Congress are derived from the analysis. The first deals with international surveillance of fiscal stimulus programs. The second relates to multilateral surveillance of trade pressures and barriers proposed and adopted during the economic crisis. The third pertains to the joint management of U.S. trade relations by Congress and the administration, particularly as it bears on responding to constituent requests for protection, facilitating the adjustment of current account surplus countries, and formulating trade liberalization priorities.", "type": "CRS Report", "typeId": "REPORTS", "active": false, "formats": [ { "format": "HTML", "encoding": "utf-8", "url": "http://www.crs.gov/Reports/R40461", "sha1": "c3779463f8d99dccb871d1b8623ed517bcc5dee5", "filename": "files/20090826_R40461_c3779463f8d99dccb871d1b8623ed517bcc5dee5.html", "images": null }, { "format": "PDF", "encoding": null, "url": "http://www.crs.gov/Reports/pdf/R40461", "sha1": "3e868b775a8e320e6e09f2f66c3cf5f4de2c52e9", "filename": "files/20090826_R40461_3e868b775a8e320e6e09f2f66c3cf5f4de2c52e9.pdf", "images": null } ], "topics": [] }, { "source": "University of North Texas Libraries Government Documents Department", "sourceLink": "https://digital.library.unt.edu/ark:/67531/metadc689157/", "id": "R40461_2009Mar23", "date": "2009-03-23", "retrieved": "2015-08-03T15:06:47", "title": "The Global Economic Downturn and Protectionism", "summary": "This report develops three scenarios to approximate different dimensions of the relationship between the global economic downturn and protectionism. The scenarios are not predictions, but descriptions of how and why pressures for protection could be manifested and transmitted under different circumstances and assumptions.", "type": "CRS Report", "typeId": "REPORT", "active": false, "formats": [ { "format": "PDF", "filename": "files/20090323_R40461_4af23b0cd0ad4f12f8da5e0b796f67bea60efaa5.pdf" }, { "format": "HTML", "filename": "files/20090323_R40461_4af23b0cd0ad4f12f8da5e0b796f67bea60efaa5.html" } ], "topics": [ { "source": "LIV", "id": "Trade", "name": "Trade" }, { "source": "LIV", "id": "Protectionism", "name": "Protectionism" }, { "source": "LIV", "id": "Economic policy", "name": "Economic policy" }, { "source": "LIV", "id": "Business cycles", "name": "Business cycles" } ] } ], "topics": [ "Economic Policy", "Foreign Affairs", "Intelligence and National Security", "National Defense" ] }