The 2008 financial crisis has had far-reaching implications on global trade. The first casualty of the crisis was trade finance-the credit required to move 90 percent of traded goods across borders. Rates on trade finance loans shot up by three hundred percentage points in the fall of 2008, prompting the World Trade Organization (WTO) to convene a special meeting and the World Bank to create a trade finance fund. Once it hit the real economy, the crisis undercut the demand and supply of goods in global trade. It now promises to shrink global commerce by 2.8 percent in 2009, the first decline since 1982.

But besides ravaging trade flows, the crisis risks damaging the global trade policy agenda. It has given renewed charge to long-standing questions about the benefits of globalization, fueled public outrage at international financial firms, and aggravated weariness about income inequalities-which are often seen as driven by globalization and trade opening. Even more distressingly, dragging the world economy into a recession, the crisis has resulted in mass layoffs and bankruptcies. Trade is a natural punching bag when jobs are lost and business activity dies; trade policy offers multiple weapons-tariffs, quotas, non-tariff barriers, safeguards, subsidies, and the like-for rapid deployment.