Trade and politics

Comments on Philippa Dee “Can the global financial crisis actually deliver Doha?” 23/07/2009, http://www.eastasiaforum.org/2009/07/23/can-the-global-financial-crisis-actually-deliver-doha/

It is true that trade improves the well beings of all trading nations. It is also true that when an economic hard time or crisis hits, the pressure becomes higher to sacrifice trade for domestic political purposes. So Jagdish Bhagwati has a point to make.

It, however, does not mean that it is less important for world leaders to make greater efforts to bring the Doha round to a successful conclusion. They need to show true and greater and stronger leadership, especially in this harder economic environment. Although politically less popular, improved international trade is good for more speedy recovery from the crisis.

What puzzles me is why trade has been affected much more severely by the financial and economic crisis. Trade in some quarters in some countries declined by 40 or even 50 per cent. Surely their economies would not have fallen by that much in those quarters.

Dee has argued the role of finance. Maybe that is the case that finance plays a greater role in international trade than in domestic trade, so when finance becomes difficult, international trade is hit harder.

I would appreciate that someone can explain the relationships between finance and trade, both external and internal.