The leaders of business groups from Asia, Africa and Europe united in their condemnation of any return to protectionism and urged world leaders to use the London Summit on 2 April to keep global trade markets open.
Employers' groups from more than 20 countries held a summit at 10 Downing Street on Wednesday 18 March, hosted by the British Government's Business and Enterprise Department jointly with the CBI, the UK’s largest business organisation.

Watch vox pops from Laurence Parisot, Brian Molefe, Yu Ping and Jamshyd Godrej

Speaking on the fringes of the summit, Laurence Parisot, President of the French group MEDEF, said governments had done a 'tremendous job' since the crisis broke but urged them to 'make the best effort' to resist protectionism. 'We consider that protectionism is a threat and we have to resist [it].' She said economic nationalism was very different from the 1930s. 'It is not only tariffs and regulations for imports of goods and services. Sometimes we might consider a bail-out of an industry could be considered protectionism,' she said. 'That's why we have to be cautious and call on governments to make the best effort to resist protectionism. The crisis is unique because it happened to each of us all over the world at the same time. That's why we consider we have to handle the problem at the worldwide level.'

Brian Molefe, President of Business Unity South Africa, said it would 'disastrous' if countries reverted to protectionism. 'One of the challenges will be to translate that into real action so we hope the [London] Summit will find ways to make sure that we do have a retreat to the protectionism of the 1930s because as we know that was quite disastrous for the world economy.'

Yu Ping, vice chairman of the China Council for the Promotion of International Trade, described protectionism as a 'blind alley'. 'Whoever uses protectionist measures will not only harm others but in the end will harm themselves so we hope all countries will work together to fight protectionism,' he said.

He said that was important at this 'critical moment' in the downturn. 'We want to send a signal to the world that all governments are working together to ensure quick recovery of the world recovery and protectionist measures won’t help. We want a signal to the world that we are against protectionism and that the Doha development [trade] round is beneficial to a sound, healthy multilateral trade system.'

Jamshyd Godrej, chairman of the CII Mission for Sustainable Growth and Climate Change in India, said the main problem in his country was that India was reacting to protectionism among consumer countries. 'India has become much more open to opening up business globally,' he said. 'But I think protectionism is a problem in many of the consuming countries that are markets for goods from India and India is becoming protectionist as a result.'

The commitment to 'fight all forms of protectionism and to maintain open trade and investment' was right at the top of the communiqué issued by the finance ministers and central bankers of the G20 group of developed and emerging economies after their meeting in southern England on 14 March.

Leaders of the countries attending the summit have been consistent in warning against a return to the economic nationalism that many experts believe turned the Wall Street crash of 1929 into the Great Depression of the early 1930s. They have warned that a return to protectionism would make the current recession deeper and the recovery slower.

Writing in The Times of London, Lord Mandelson, the UK’s Business Secretary, said this week that the single most important message the business chiefs could send to the G20 political leaders was the importance of avoiding a retreat into protectionism.

Erecting defensive trade barriers would be to repeat the mistake of the 1930s, he added, when protectionism drove the world economy further into recession. The Business Secretary wrote: 'Representing 90 per cent of all global trade, the G20 should renew their Washington pledge of last November not to erect any new barriers to trade or investment.'

Another positive step has been steps to increase trade finance, the reduced availability of which has accelerated the decline in trade flows. Japan has committed $1bn to easing trade finance and the International Finance Corporation, part of the World Bank has already tripled to $3bn its support for trade finance.

In a piece for the website VoxEU, a London Summit website partner, Professor Barry Eichengreen, describes the 1930s as marred by a 'severe outbreak' of protectionism.' Many fear that, unless policymakers are on guard, protectionist pressures could once again spin out of control,' he says.

He says the message for today from the 1930s would appear to be 'to avoid protectionism, stimulate', echoing the call for 'coordinated and comprehensive action to boost demand jobs' that was issued in the finance ministers' communiqué.

'In addition to monetary stimulus, countries are applying fiscal stimulus to counter the Great Recession. Fiscal stimulus in one country benefits its neighbours as well,' Eichengreen says. 'When a country applies fiscal stimulus, other countries are able to export more to it, so they have no reason to respond in a protectionist fashion.

'Now, as in the 1930s, countries need to coordinate their fiscal and monetary measures. If some do and some don't, the trade policy consequences could again be most unfortunate.'

In a separate e-book published by Vox, Professors Richard Baldwin and Simon Evenett, warn of the dangers of ‘murky’ protectionism - forms of protection that discriminate against foreign firms, workers and investors, ‘often in subtle ways’. It sets out recommendations for the London Summit:

• stick to the non-discrimination principle when designing and implementing measures to promote economic recovery;
• putting in place the review mechanisms that will encourage the orderly, unwinding of temporary measures taken during the crisis;
• pledge to use whatever legal means they have at their disposal to retaliate against others for protectionist actions;
• an unequivocal commitment to do whatever is necessary to have Ministers deliver the so-called modalities on a global trade deal by early summer 2009;
• Ensure that policies to reduce carbon emissions is not protectionist.
  

The editors conclude: 'It is critical that G20 leaders get ahead of the crisis and agree cooperation that prevents murky protectionism and plummeting exports from threatening the global recovery.'

In an interview with this website's Yoosk channel, Youssef Boutros Ghali, the Egyptian Finance Minister, warned that there were now two types of protectionism: 'traditional' protectionism that involved the use or barriers and tariffs and 'financial' protectionism where countries favour their banks and demand they prefer domestic over international lending. 'That is a lot more pernicious and a lot more subtle and a lot more destructive because it disrupts capital flows around the world,' he said. 'This is the type we should be very watchful of and take measures to counteract.'
In an article for Vox, two World Bank economists, Elisa Gamberoni and Richard Newfarmer, provide a reality check. They find that several countries, including 17 of the G20, have implemented 47 measures whose effect is to restrict trade at the expense of other countries.

However they say that several factors have 'clearly muted' protectionist pressures and distinguish this global downturn from the pressures of the 1930s. Countries are far more interdependent and therefore reliant on both imports and exports and the system of floating exchange rates has prevented a wave of competitive devaluations.
This report also focuses on the need for completion of the so-called Doha round of trade negotiations. 'It underscores the importance of pushing forward with a rapid conclusion of the Doha round.'