The blame-game following the global meltdown has zeroed in on free trade. Despite normative explanations of greed and extravagance causing the downturn, the buck appears to have stopped at free trade.

Nearly 80 years ago, the global financial crisis set the stage for a global trade crisis. Republicans Smoot and Hawley drafted a Bill that was legalised as the Smoot-Hawley Tariff Act on June 17, 1930. The Act raised tariffs on around 20,000 US imports. The retaliations that followed forced world trade to shrink by more than 60 per cent over the next five years. It took the Bretton Woods Agreement, IMF, Gatt, and multilateralism to put global trade back on rails. In the process, two critical decades were lost. Decades where freer trade could have alleviated supply shortages, created jobs and raised incomes.

As 2009 gets older, outlook for trade prospects are turning bleaker. Disappointments are mounting over unfulfilled promises. Foremost among these is the failure to get the Doha Round going. This was one trigger which could have set the trade ball rolling. However, that hasn?t happened despite two months having passed after the G-20?s pledge to carry forward the Doha Development Agenda.

One can hardly avoid sympathising with Pascal Lamy, the WTO Director General. Notwithstanding his untiring efforts, the Doha Round talks have failed to take off. This shows that, in spite of what the G-20 declared in Washington last November, the political will for chugging off the trade engine is lacking. Mr Lamy concedes that only President Barack Obama can get things going. The US needs to show the way by shunning protectionism and encouraging trade. Otherwise, the danger is that world trade prospects are likely to get worse.

The US President certainly has his job cut out. By assuring Americans that free markets and trade continue to remain paths to prosperity, he can try stopping a repeat of history. But will he? Early signals are not too encouraging. In his office-assuming speech, President Obama did touch upon markets. He pointed out that the power of market ?to generate wealth and expand freedom is unmatched?. But he also struck an equally cautious note by emphasising: ?…this crisis has reminded us that without a watchful eye, the market can spin out of control.? President Obama was clearly walking a middle path. This couldn?t exactly have been music for Mr Lamy?s ears. He would have wanted the US President to take a clearer call on trade.

Statistics back Mr Lamy. World trade has grown exponentially under Gatt and WTO. The US itself has secured substantive gains from trade. In 2008, despite the crisis, US trade of goods and services is expected to rise by $300 billion. The new international economic order is the outcome of a highly trade-knit world. Asia?s current eminence in the global economy could not have taken place without trade. The economic balance of power in an inward-looking world would have been very different from what it is now.

An expanding global economy had analysts singing paeans for free trade. Now, with the tide reversing, trade has become the scapegoat. Many free market advocates are also gunning for protectionism. Protectionism suits populist agendas.

For the sake of global growth and recovery, it?s important to look back at the basics. Trade creates far more gains than pain. The gains and pain can be maximised and minimised respectively through consultations. The forum is already there. WTO is waiting with bated breath. The agenda for talks is set. The gains from implementation of the Doha agenda, by conservative counts, will not be less than $100 billion per year.

The world?s confidence in trade must revive. Somebody is required to stoke the fire. Mr Obama is certainly best placed to do so. But he also needs to be convinced about what is to be done. Asia can?t afford to remain passive at this juncture. After all, Asian economies are the ones that have benefited most by trading with the US. They need to up the ante for free trade. Is Beijing listening?

The author is a visiting research fellow at the Institute of South Asian Studies at the National University of Singapore. These are his personal views