But will future policy liberalization occur? Or instead will we see real policy reversion, not just
a simulated exercise? The financial crisis that began slowly late in 2007, and erupted with a fury in
late 2008, has awakened protectionist sentiments around the world. The Doha Round of multilateral
negotiations has dropped far back on the “must-do” list. Policymakers seem more willing to accept
new episodes of protection than to energetically seek trade liberalization. On account of falling income
worldwide, trade flows are shrinking, sometimes quite sharply. Export declines since July 2008 of 20
percent or more are common in Asia. Protectionist initiatives, on top of crisis losses, would be a colossal
mistake. Going slow on policy liberalization is almost as bad.
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