It is said that those who don’t read history or, having read it, don’t learn the lessons it has to teach, are destined to make the same mistakes again. The causes and consequences of the Great Depression that ravaged the global economy in the 1930s is a much studied subject.

One of its students is Ben Bernanke, the current head of the United States Federal Reserve system, the Fed. He studied the Great Depression as a student and wrote his doctoral thesis on the subject. He understands that the economic downturn in the 1930s would not have been as severe had the trading nations across the world not resorted to protectionism to protect their domestic industries. “Beggar my neighbours” policies hurt all countries, including those that adopted them.

Bernanke should have a loud voice in the policymaking circles as Washington, under the leadership of the soon-to-be-sworn-in President Barack Obama, intensifies its efforts to deal with the worst crisis the country and the world have faced since the 1930s. Would the Fed Chairman be able to persuade not only his colleagues in the future administration in the American capital but also those in other capitals that protecting domestic producers is not the way to handle the current difficulties?

He will have to move fast since the world has begun to adopt protection as a way of helping domestic producers navigate the crisis. This stance is being adopted by both developed and developing countries. Many countries are choosing this route despite the commitment made by leaders of the world’s large economies that they will eschew such a course.

At their Washington summit on November 15, 2008, the G-20 leaders promised to stay away from adopting protectionist measures to deal with the economic crisis that was affecting them. They recognised that untended, the crisis would do a lot of damage and take the global economy to places that were hard to imagine.

The process of globalisation had brought about a fundamental change in the structure of the global economic system. How these forces would affect the economy if they were allowed to proceed in the direction in which they were moving was a hard question to answer. That said, one thing was certain. Given the way one part of the global economy interacted with other parts and the speed with which these influences were transmitted, policymakers needed to avoid making mistakes. Going in the wrong direction would be hard to correct.

U-turns are hard to execute in a highly connected world. Trade is one area where serious mistakes could be made. Recognising that this could happen persuaded the G-20 leaders to adopt some strong language in their communiqué. They declared that trade distorting measures would be avoided for at least 12 months. The leaders also vowed that they would reach a breakthrough this year – the year 2008 – on the stalled global trade talks.

The Doha round of trade discussions was launched in November 2001 with two objectives: to lower further the rates of tariff in world trade and to structure the world trading system in a way that the developing world would draw benefits from the exchange of goods and commodities.

The previous round of trade talks had not helped the developing world as much as they had benefitted rich nations. A number of trade distorting measures were adopted by the United States and the European Union to protect their agriculture, the sector of vital interest to the developing world. This was particularly the case for countries such as Pakistan that could, by adopting the right set of policies, use agriculture to achieve a number of developmental objectives.

Agriculture should have become the base of the economy, helping it to sustain a high rate of GDP growth, increase the trade-to-GDP ratio, alleviate poverty and improve personal and regional income distribution.

The nations represented in the G-20 meeting at Washington did not stick to the pledges they made. For instance, on November 18, only three days after Prime Minister Manmohan Singh signed the Washington declaration on behalf of his country, India levied a 20 per cent duty on imports of soya bean oils to protect domestic farmers as international commodity prices dropped.

In December, Indonesia slapped restrictions on 500 products demanding special licenses and new fees on imports. Soon after, Russia hiked tariffs on cars, poultry and pork. Russia is one of the world’s largest importers of poultry products. Its imports from the United States alone amount to $750 million a year.

Argentina and Brazil raised tariffs on textiles and leather goods. China has also begun to offer incentives to its exporters as its exports decline. For the first time in several years, the value of China’s exports declined in November 2007 compared to the same month last year.

These restrictive policies or policies promoting exports were not only adopted by emerging markets. Rich countries also began to move in this direction. France launched a state fund to protect domestic companies from foreign takeover. In the middle of December, the US government decided to provide $17.4 billion to prevent the destruction of its automobile industry. This action was viewed by some auto-producing countries as an attempt to disadvantage foreign relative to domestic producers.

Why should these developments be of consequence for Pakistan? An important element in the country’s strategy to deal with the economic crisis it faces is to develop its export sector. One way Pakistan could climb out of the economic rut in which it has fallen is to restructure its economy by emphasising the development of agriculture and by increasing the export of agricultural products, in particular those that are domestically processed.

The state should lend a helping hand in moving agriculture in this direction. The arrival of large retail companies is creating the infrastructure the country could use to develop exports of specialised products. Pakistan could create a presence for itself in several markets by developing products for exports. These could include poultry products for sale to the markets in the Middle East, Central Asia and Russia; edible oils to India; processed food to the Asian ethnic markets in the countries that have large Pakistani populations such as the United States, Britain and the Middle East; fruits and vegetables to the same markets serving the Pakistani diasporas. China also offers the opportunity for Pakistani exports.

However, the success of this strategy depends on an open global trading system. Unfortunately, the continued openness of the system is now threatened. The sectors in which it has potential are precisely the sectors that have come under pressure because of the worsening economic situation in the global economy.

What are the options available to Pakistan to protect itself from the likely consequences of the rise of protectionism in the global system? The country does not have much of a voice in international economic affairs. For instance, it is not a member of the G-20 that is likely to be the forum where many decisions concerning the future of the global economic order will be taken. To gain admission to this forum should be high on the list of Pakistan’s diplomatic priorities.