# INTRODUCTION AND SUMMARY

## _Ranmant proteciontsm or rising bmnorts?_

i. Ingrained protectionism in the developed North is still sometimes used in developing countries as an argument against the benefits of free trade _("they would not be doing it i it were not good for them - and f it is goodfor them, It should be goodfor us")_ and as a deterrent to its practice _(free trade may be best for all; but the North is not practicing it, and It takes two to tango ")._ In recent years, marny developing countries have in fact liberalizee their trade policies, and moved towards greater reliance on exports; they must have had faith in the penetrability of trade barriers. However, the dirge lamenting the demise of free trade and the growth of industrial country protectionism has been taken up by professional economic analysts, notably those of international organizations. The same song also accompanies the slow-down in the economic growth of industrial countries, and its attendant ills: urimployment, lagging wages, growing discontent. To deal with these, further trade liberalization is the main advice, often the only advice, of many economists, ii. This paper examines the behavior of industrial countries' imports in the 1980s, in comparison with earlier periods, and in relation to the evolutions of domestic aggregates like GDP and manufacturng production. Trade policies are not examined directly, but through their impacts on trade. The paper fmds tibat import growth into the industrial countries accelerated during the very decade when their domestic growths slowed down. It concludcs that, with the possible exception of Japan, and the certain exception of agriculture (an important sector, but one that .evertheless represents well below 3 percent of industrial country GDPs) the free trade paradigw. describes reality best - not protectionism. Developing countries have been among the prime beneficiaries of this liberal trade environment. Industrial country protectionism cannot be blamed for the global economic ills of the 1980s. Its further reduction or even elimination would not provide much room for speedy improvement. Indeed, far from being able to regain macroeconomic dynamism through furter trade liberalization, industrial countries need to redeem dynamism through other means in order to preserve the liberal trade regimes they have already achieved.

## _The European Communit: a wide open "fortress"._

iii. The crescendo of voices deploring growing protectionism has concentrated much of their vigor on the European Community (EC), as epitomized by comments about emerging "Fortrcss Europe". If indeed European protectionism is vigorous, growing and effective, its impact should be reflected in the actual evolution of trade. In an environment of rising protectionism, imports should fill, in absolute value or at least in relation to income. If protectionism centered around the construction of a common market, participants should increasingly trade with each other, and rely less on other imports. If, as is often said, developing countries are particular targets of protectionism, their share in the common market should fall even faster than import shares in general.

iv. The Common Agricultural Policy (CAP) has indeed protected European agriculture from imports; the EC's food and other agricultural imports rose much less than intra-EC trade in the same