The recent G20 summit communiqué included a commitment by world leaders not to impose protectionist measures. The ink was barely dry before a number of countries took measures to protect domestic companies. Russia imposed a number of import tariffs. India slapped restrictions on steel. France created a fund to protect French companies. The US and the European Union are contemplating state aid for the domestic auto industry. Earlier, China had increased its value added tax rebate for exports and is now publicly worrying that the renminbi is, yes, overvalued.

As the financial crisis has morphed into a crisis in the real economy, the world is facing a sharp and perhaps prolonged economic slump. In these circumstances, resurgent protectionism is a real threat, especially since pre-existing anxieties about globalisation are widespread. Restrictions on trade and investment would deepen the recession and undermine efforts to reduce poverty.