Slumping economic conditions across the globe have led to fear of growing protectionism and increased trade barriers have created a simmering trade war between nations. The US and Europe imposed a bevy of protectionist regulations in a bid to protect their own economic interests, while key developing nations like China have raised their own trade barriers in response.

One of the most feared economic consequences of the global fi- nancial crisis has been the protectionist juggernaut by governments. As the global economy begins to emerge from the worst economic crisis since the Great Depression, there is a growing concern that rising protectionist spiral could short-circuit the nascent global economic recovery. Despite repeated promises by the global leaders to minimize trade barriers, protectionist measures have been rising. According to a report released by Global Trade Alert (GTA), a trade policy think tank based in Europe, the accumulated number of protective trade measures across the world increased from 85 in July 2009 to 297 as of December 9, 2009. In the second quarter of 2009, though many economies have turned the corner, protectionist pressures have not softened. the GTA report reveals that the protectionist dynamics were worst in the first three quarters of 2009, but protectionism hasn't yet reached the scale of the 1930s —but water doesn't have to boil to scald.

To discriminate against foreign producers, protectionist measures like higher tariffs, import quotas, exchange controls, immigration restrictions and export subsidies are being planned by governments around the world to secure their own economic interests. Even the US, the global free-trade champion has imposed 46 separate protectionist measures on goods and services trade with the outside world. The EU implemented 90 and countries like China and India introduced 51 and 29 of such measures. The GTA report says this tendency is particularly worrisome. Global trade flows have already suffered their sharpest drop since the 1930s and trade analysts expect global trade would fall more than 10% this fiscal with both supply and demand hit hard by the recent global financial crisis. The trade volume will decline mainly on account of shrinking economies, lack of trade finances and protectionism measures by governments.

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