G-20 vows against protectionism not always kept

— -- As President Obama and other leaders of the G-20 nations prepare to meet today in Pittsburgh, it's worth recalling what became of their previous promises.

At earlier summits, G-20 leaders solemnly vowed to refrain from worsening the crisis by erecting new trade barriers — then returned home and promptly began erecting new trade barriers.

Since November's Washington gathering, G-20 members have enacted about 100 separate trade-restricting provisions. Last week, for example, the U.S. announced a 35% tariff in response to what it called a damaging surge of Chinese-made tires.

"On average, a G-20 member has broken the no-protectionism pledge every three days," concludes a study by the Centre for Economic Policy Research in London. Still, the largest impact on world trade has come from the credit crunch and recession. This summit, expected to center on a U.S. proposal to rebalance the global economy, is likely to yield a renewed endorsement of open markets. "We're going to keep this under control," says Uri Dadush, of the Carnegie Endowment's international economics program.

But some worry that major nations may yet stumble into a costly trade spat. "It's going to get nasty. ... You're talking about a war that could potentially involve more than just goods and services," says David Smick, who heads a global investment consulting firm in Washington, D.C.

Example: China's Assets Supervision and Administration Commission last month warned six foreign banks that its state-owned companies might refuse to honor derivatives contracts that had produced unexpected financial losses.

The global economy is stronger than when the G-20 last met in April. Michael Mussa, former chief economist of the International Monetary Fund, expects solid growth of 4.2% next year. "Deep recessions are followed by steep recoveries," he says.

Asia's turnaround has been impressive. China is expected to grow 8.2% in '09 before rising to almost 9% next year, says the Asian Development Bank.