Key Points:

International trade could be key to dragging the global economy out of recession.

Boosting trade could help companies make more profit and so encourage them to invest.

Employers could start thinking about hiring staff rather than letting them go, consumers would feel more secure about their jobs and start spending money, more tax would be collected and so Governments could fund infrastructure and national projects.

Manufacturers and the high street did not create the economic crisis gripping the world, all roads lead to the failure of the financial system.

So on a very simplistic level fix the finance and the world can get back to growing.

A successful financial system is an essential tool for companies to invest and grow using access to good quality debt.

And so Governments and central banks around the world are desperately trying to get liquidity into the crippled system, pumping in hundreds of billions of dollars, bailing out struggling industries, partly nationalising banks and here in New Zealand giving banks guarantees for retail deposits and wholesale funding.

Apart from pumping vast sums of money into the system Governments and central banks are encouraging financial institutions to start lending again, to get the money moving and working rather than seeing all their hard effort simply pool inside risk-averse balance sheets.

Global trade could give the institutions some tempting opportunities to open their wallets.

The importance of trade was not lost on the leaders of the G20 rich and emerging economies when they met in Washington in November and agreed not to introduce any new protectionism for a year and to try to complete the Doha round of World Trade Organisation talks aimed at liberalising international trade by the end of 2008.

The trade talks had stalled in July and the pledge to try to get a deal done in only a few weeks was immense considering they started in Doha, Qatar back in 2001 - at which time they were supposed to take three years to complete.

So what happened?

Nothing it seems.

In fact just days after the G20 promise Russia raised tariffs on cars and India did the same on steel.

Trade Minister Tim Groser, a former World Trade Organisation chairman of agricultural negotiations, says Trade Ministers spectacularly under-achieved.

"They didn't even turn up in Geneva to try," he says.

"In fact as far as I know I may have been the only Trade Minister that did."

Finance Ministers have done their bit but Groser questions whether Trade Ministers are stepping up to the mark.

In fact actions by the European Union last week suggest trade is heading in the opposite direction to freedom.

The EU reintroduced "export refunds" for butter, cheese, whole and skimmed milk powder that had been suspended in June 2007.

EU Agriculture Commissioner Mariann Fischer Boel says the export subsidies, with other measures, will go a long way to stabilising the dairy market. Theirs perhaps, not ours.

Meanwhile, American farmers are lobbying for more support from their Government, with subsidised export scheme available but as yet unused.

In times of crisis it's only natural to want to protect your own industries but protectionism can bring short-term benefit at the expense of long-term misery.

Trade negotiations require countries to show a willingness to give up something in one area to gain somewhere else.

It can't be all win win, but in theory overall everyone is better off.

Unfortunately, it's easier to give something up and pat yourself on the back for the good deed when times are good. When times are bad instinct says raise the drawbridge.

Countries tried to protect their own economies in the 1930s and inadvertently helped turn recession into depression.

But we are better informed today, surely that couldn't happen now?

A year ago the idea that the world's financial structures could be so precarious would have seemed ludicrous.

Protectionism only helps until the next country goes one step further and if that next country was a target export market then you are arguably worse off than if you had done nothing in the first place.

For large trading blocs such as the European Union and the US, with their wealth and vast populations, internal demand can mitigate the external effects of protectionism, at least in the short term.

But most countries are relying on the powerful trading blocs to show leadership that will help the wider world and smaller countries, whether wealthy or poor.

In this instance Europe has failed the leadership test but the other big economic powers are not far behind.

Attention will turn to President Barack Obama for inspiration and fresh leadership but the US economy is under pressure and Republicans are generally more free-trade oriented than Democrats.

It will be interesting to see the US approach.