(TTBs) – the relatively substitutable import restrictions under antidumping, countervailing duty, global safeguards, and the China-specific safeguard policies – because these are the predominant means through which industrialized countries have implemented _new_ protection under the GATT and WTO since the 1980s.<sup>1</sup> Quantitatively, these restrictions have been economically important; e.g., the European Union and United States subjected 4-6 percent of their imported products at the 6-digit Harmonized System level to these policies at various points during our sample period (Bown 2011a; Prusa, 2011). We focus on five economies – the United States, European Union, Australia, Canada and South Korea – for three reasons. First, they are economically important - together they constituted more than 40 percent of world imports and more than half of world GDP in 2010. Second, we can accurately track and consistently measure trade policy changes over time and at high frequency (i.e., quarterly) due to the similarity of their trade policy institutions and international commitments. Third, these economies have high quality macroeconomic data at the quarterly frequency over a relatively long time series which facilitates an examination of business cycles.

Given the severity of macroeconomic shocks that took place during the Great Recession, an open research question is why was the trade policy response so mild relative to expectations? Our formal analysis tackles this question by proceeding in three steps. Our first step is to estimate a model of macroeconomic determinants of import protection for these five policy-imposing economies over the pre-crisis period of 1988:Q1 – 2008:Q3. Figure 1 shows for each economy the time series of real exchange rate fluctuations, changes to domestic unemployment rates, and counts of imported products subject to new TTB policies in the quarterly data over 1988-2010.

Our second step is to use the model estimates from 1988:Q1-2008:Q3 to generate out-ofsample predictions for trade policy responses during 2008:Q4-2010:Q4, given the macroeconomic shocks that arose during the Great Recession. The model predicts a surge in import protection for the United States and European Union in particular in 2009:Q3. In terms of trade values, back of the envelope calculations put the forecasted _new_ TTB import protection during 2008:Q4-2010:Q4 as

> 1 A reasonable question is the extent to which our singular focus on TTB policies fully captures the new import protection activity during 2008-2010 by the five economies in our sample. According to data from the Global Trade Alert, TTBs are by far the predominant trade policy instruments through which these economies directly erected new import-restricting trade barriers in 2008-2010. Appendix Table I lists the _only other_ examples from these economies that the Global Trade Alert characterizes as “red” – i.e., the measure has been implemented and almost certainly discriminates against foreign commercial interests - and is directed at imports. From this list, it appears that only a South Korean increase in tariffs on 16 different products in January 2009 would be characterized as a substantial protectionist import restriction that is not captured by our focus on TTBs.

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