During the Great Depression, a spike in protectionism deepened the global crisis for many countries. Sara Nunnally says greater co-operation between Asian and Latin American states should prevent a similar mistake being made this year. It should also help keep some of these nations out of recession.

This from Taipan’s Emerging Markets blog:

Members of APEC, Asian-Pacific Economic Cooperation, ended their annual summits today in Lima, Peru. One of the main topics, besides the economic crisis, was free trade.

(By the way, APEC consists of member economies like China, Vietnam, the U.S., Canada, Russia, Peru, and Chile, among others.)

Free trade is a hot topic right now, with the dreaded “P” word floating about: protectionism. Protectionism is when governments restrict or restrain international trade. Most times the intent is to protect local markets from competition.

Like if the U.S. government says a tomato farmer in Mexico can no longer export his product to the States because its so much cheaper compared to an American farmer’s product.

The 21 leaders meeting in Lima have agreed to “avoid protectionist measures and keep trade free despite the economic climate,” reports the BBC. The members signed a final declaration backing free trade on Monday.

Free trade is only part of the equation, though, and governments have also agreed to support economic stimulus plans that will boost spending.

In fact, the APEC member governments are spending hundreds of billions of dollars on ways to stop the economic crisis, says the International Herald Tribune. Not all the cards are on the table, though, and there hasn’t been a clear-cut plan held up for the public’s eye. Not yet, anyway.

One thing is for sure… There will be a lot of international cooperation to spur investment and partner economies. For example, 40% of Chile’s exports went to the Asia-Pacific region in 2007. Mostly to China.

It’s no surprise that Chile was the first non-Asian country to sign a free trade agreement with China back in 2005. And China just last week signed an FTA with Peru.

These FTAs allow for easier, cheaper trade, which may ultimately keep some of these countries out of a recession.

By the way, we’ve just gotten a GDP report from Chile’s Central Bank. For the first nine months of 2008, Chile’s GDP growth rate was a brisk 4.2%. Now, that’s down from last year’s figure (at 4.7%), but still pretty darn good.

Next year, the country expects a bit of contraction, and only 2% to 3% growth, but that’s good enough to keep Chile out of a recession next year.

That’s also good enough to keep Chilean businesses fairly healthy.

Source: Investing in Latin America: Global Crisis Buffer