distorting effects. These potential losses go beyond the first order concern of the size of lost imports associated with targeted products and the losses to domestic consumers and using industries that suffer due to reduced access to imported varieties and higher prices. An established body of economic research identifies a number of unintended and adverse consequences associated with national resort to these trade remedies. We use this literature to guide our more detailed investigation of individual cases. We provide examples from crisis period cases in which firms may be using such remedies to generate anti-competitive effects imposing an additional burden on consumers. This may especially be the case in concentrated sectors such as chemicals and in steel in which recent M&A activity and legacy of foreign direct investment creates an environment in which multinational firms and their subsidiaries have access to trade remedies _in multiple jurisdictions_ and the possibility of abusing them to segment markets.

The data on the crisis use of trade remedies also suggest that current protectionism, while limited, could quickly lead to escalating protectionism through at least three possible channels. The first of these is simple tit-for-tat retaliation. The second occurs after one country imposes a trade remedy on a product, and a second, third, fourth (etc.) country follow up by using their own import restrictions to target the same products due to the fear of a “trade deflection” surge of exports of the product into its own market. Finally, a newly imposed upstream trade barrier on imported inputs raises the cost to downstream users, creating competitiveness concerns that can generate additional downstream industry demands for cascading protectionism. The possibility that the major G-20 economies are currently invoking policies that may increase the probability of a spiraling, 1930s-style resort to Great Depression protectionism is therefore still a primary concern during the global crisis.

# **2 Monitoring the Combined Use of Trade Remedies**

Economic evidence from historical data (e.g., Knetter and Prusa, 2003; Irwin, 2005) finds a strong link between an _increase_ in use of trade remedies during economic downturns associated with recessions and exchange rate shocks The effort to track, assess, and examine the impact of the spread of protectionism during the current global economic crisis is complicated. First, the use of “traditional” trade remedy instruments of antidumping (AD) and global safeguards (SG) has spread to new countries.<sup>2</sup> Second, many countries are also adopting and implementing use of other “new” trade remedy instruments such as China-specific transitional safeguards (CSG) and countervailing duties (CVD) under “anti-subsidy” laws.<sup>3</sup> Of the four policy instruments that we include in our analysis, the

> 2 For surveys see Blonigen and Prusa (2003) for antidumping, and Bown and Crowley (2005) for safeguards.

> 3 India’s activity in 1Q 2009 provides an illustrative example: India initiated 3 AD investigations, 3 CSG investigations, 2 SG investigations, and its first ever CVD investigation, also one in which it targeted China.

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