Introduction

Trade relations among the world's major industrial nations have taken a turn for the worse during the past two decades and are now threatened by new and more dangerous forms of trade restrictions, collectively known as the “new protectionism.” This phrase, coined in the mid 1970s, refers to the revival of “mercantilism” whereby nations, particularly the industrial nations, attempt to solve or alleviate their problems of unemployment, lagging growth, and declining industries by imposing restrictions on imports and subsidizing exports. The instruments by which imports are restricted are also somewhat different from and less transparent than traditional import tariffs, and are called non-tariff barriers (NTBs). These refer to “voluntary” export restraints, orderly marketing arrangements, anti-dumping measures, countervailing duties, safeguard codes, and so on. Thus, at the time when tariffs were being reduced as part of the successive rounds of trade liberalization sponsored by the GATT (General Agreement on Tariff and Trade) and they are presently very low on most industrial goods, the number and importance of NTBs have grown rapidly since the mid 1970s and they have now become more important than tariffs as obstructions to international trade. As much as 50 percent of world trade is now affected by this new protectionism.

This new protectionism now represents the greatest threat to the fairly liberal world trading system that has been so painstakingly put together over the past half a century and which has served the world so well since the end of the Second World War.