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o. 02/2010 TRADE, GLOBALISATION AND EMERGING PROTECTIONISM SINCE THE CRISIS Fredrik Erixon and Razeen Sally Fredrik Erixon (fredrik.erixon@) and Razeen Sally (razeen.sally@) are Directors and Founders of ECIPE ABSTRACT The global economic crisis, and governments’ responses to the crisis, did not precipitate a descent into 1930s-style protectionism. That is a relief. But it provides no refuge from policy measures that will slow down globalisation and growth in the next decade. “Creeping protectionism” is increasing, and the crisis has reinforced trends visible before the start of the crisis. New patterns of protectionism are similar to developments in the 1970s and 1980s rather than the 1930s. Domestic “crisis interventions”, especially in capital and product mar- kets, and the return of Big Government, will spill over to external policy, with more defensive trade policies as a consequence. JEL Code: F01, F02, F13, F59 Keywords: Economic crisis, trade, trade policy, protectionism, Keynesianism info@ Rue Belliard 4-6, 1040 Brussels, Belgium Phone +32 (0)2 289 1350 ECIPE WORKING PAPER 1. INTRODUCTION* Two thousand and nine was a crisis year for international trade, which suffered its steepest decline since the 1930s. Protectionism returned, reversing an almost three-decade trend of trade liberalisation. But, contrary to expectations, it has not returned with a vengeance, rather creeping to the surface in subtle ways. Time, therefore, to take stock of trade policy after the crisis, and consider its outlook at the begin- ning of this century’s second decade. How serious is the new protectionism? Can it be contained? How are the major players -- the United States, the European Union, China and the WTO -- re- sponding? And what are the i