Protection has been rising for almost two decades, parallel with the experience of the interwar period. The MFN pledge has again lost its binding force, and restrictive measures could be applied to imports from particular countries. A general rise in the levels of protection sustained over a long period is almost always discriminatory. A striking difference exists, however, between the new protectionism practiced since the end of the 1960s and the virulent protectionism of the 1930s.
Protectionism in the 1930s was unsystematic, improvised, and at the end, a result of panic. Some thirty countries retaliated against the U.S. Smoot-Hawley Tariff Act in the summer of 1930, and the proliferation of protective measures was not arrested until late in the decade. Many restrictions were imposed for the purpose of negotiation and export promotion, allowing import permits to be exchanged for export orders. Governments, central banks, and private cartels engaged in negotiation of foreign trade, often at cross purposes. The recovery from the Great Depression was so slow and halting because the growth that did occur was largely import-replacing. The chaotic trade conditions in the last years of peace encouraged the speedy crystallization of plans for an international trade order in the following decade.
The new protectionism is a very different animal. It has been growing gradually. Industries have used intelligent, long-term planning in creating an expanded system of protection. The expansion proceeds sectorally; instead of an effort to reduce all imports as much as possible, we are witnessing the construction of industrial protection systems, each tailored to the special needs of the industry in question, each administered by a highly specialized bureaucracy, often co-opted into public service from the respective industry association. The system coordinates several instruments--trade restrictions, subsidies, explicit or tacit exemptions from competition or antitrust laws, and elements of direct government regulation. The protectionism of the 1930s was openly adversary; the new one, however, builds on negotiation, indeed, is in a perverse way the result of international