The breakdown of international trade is key threat to the global economy in 2009, says Chris Mayer. Several countries have already taken action to protect domestic industries, including the US with its auto bailout. If this trend continues, Chris says the global downturn could become even deeper than imagined.

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.

Over in the UK, where the economy is already shrinking, Ben Traynor looks ahead to the world after this downturn. He sees three major changes to the future global economy: 1) A larger role for governments. 2) Less efficient capital allocation. 3) More protectionism, especially in the US, with disastrous consequences for the dollar.

Japan and the US said they would use the World Trade Organization to overturn European Union tariffs on consumer technology items such as computer screens, multifunctional printers and TV set-top boxes capable of accessing the Internet.

“The EU should be working with the United States to promote new technologies, not finding protectionist gimmicks to apply new duties to these products,” US Trade Representative Susan Schwab said to Thomson Reuters.