Good news about the world economy is scarce. Even on trade, Pascal Lamy, director-general of the World Trade Organization, recently rang alarm bells, noting that more than 100 trade-restrictive measures were implemented by the Group of 20 leading nations in the previous seven months.
But these warnings should not obscure the near miracle that is the bigger picture: the absence of serious protectionism in industrial countries in the past decade despite the impact of a huge structural trade shock from emerging markets, especially China.
Recent trade talks have focused on the new initiatives involving the US and Asia (the Trans-Pacific Partnership), the US and Europe (the Transatlantic Trade and Investment Partnership), or on the slow progress in the Doha round.
But all these have overlooked the biggest trade policy story – both a puzzle and a miracle – exemplified most dramatically by the US. Imports from China surged from 0.5 per cent of US domestic demand in 1990 to 5.2 per cent by 2010. Yet apart from isolated anti-dumping and countervailing actions, such an unprecedented surge did not elicit a significant protectionist response.