The World Trade Organization put out a new report this week that forecasts a global trade decline of 9 percent in 2009.  The decline comes following a siginificant dropoff of trade and Real GDP of members of the Organization for Economic Cooperation and Development (OECD) that began last year (see below):  

Source: OECD National Accounts.

With the G20 summit starting next week, the report again calls on global leaders to resist the inevitable temptation during an economic downturn to use protectionist measures to fight domestic problems. In the report, WTO Director-General Pascal Lamy says says that global trade has been "an ever increasing part of economic activity," for the last three decades and he stresses its importance now:

"Governments must avoid making this bad situation worse by reverting to protectionist measures which in reality protect no nation and threaten the loss of more jobs. We are carefully monitoring trade policy developments. The use of protectionist measures is on the rise. The risk is increasing of such measures choking off trade as an engine of recovery. We must be vigilant because we know that restricting imports only leads your trade partner to follow suit and hit your exports. Trade can be a potent tool in lifting the world from these economic doldrums. In London G20 leaders will have a unique opportunity to unite in moving from pledges to action and refrain from any further protectionist measure which will render global recovery efforts less effective."

At VoxEU, Andreas Freytag and Sebastian Voll--both economists at Friederich-Schiller University in Jena, Germany--write that the "newly industrialized and transition economies" that will participate in the G20 summit need to resist protectionist measures, but they might be able to use the threat of protectionism to get greater influence in global trade policy.  These countries have been a major part of global economic growth, they write, and they now have an opportunity to gain political stature if they respond in the right way:

To grab this opportunity, the transition economies must realise its exact nature – demanding more responsibility and decision-making power requires acting responsibly. In international trade, this first and foremost means refusing protectionist measures – both explicit tariffs and devaluations as well as hidden measures via subsidies and standards. After all, the economic success of recent decades in both transition and economies and the OECD has roots in the efficiency gains induced by global economic integration in trade and FDI.

You can read the WTO report here.

And Freytag and Voll's full article here.