Long a byword for stability and reliable value in hard times, the Swiss franc has recently been going up and down like a yo-yo. So the central bank has started selling its own francs to set a floor at 1.50 to the euro.

Other countries manipulate their currencies as a way to help their economies all the time. Selling your own currency into the markets lowers its price, which can help keep export prices low and make imports more expensive. That is what U.S. Treasury Secretary Tim Geithner accused China of doing during his Senate confirmation hearings earlier this year.

Manipulating the currency, whether to try and boost export trade like China or to stabilize a worryingly volatile currency like Switzerland has just done, is a subtle way to protect your own economy without using tariffs.

And suddenly, these non-tariff barriers to trade have become the new nightmare of economists and government officials who see them as a disguised form of the protectionism that caused such damage to world trade in the 1930s.

The latest U.S. climate bill is a case in point. Amid the celebrations over the passing in the House of Representatives of the Waxman-Markey bill that imposes a cap-and-trade system to limit American emissions of carbon dioxide, some small print got overlooked.

That was probably because the small print was inserted at the very last minute before Friday's vote. It requires the president, from 2020 onward, to slam special import taxes onto goods arriving from countries that have not enacted and enforced similar cap-and-trade provisions to curb their own emissions. A future president would have no choice but to do this; it would be the law. And only Congress could authorize the president to waive the rule in a particular case.

Rep. Sandy Levin, D-Mich., one of the legislators behind the special clause, said during the final debate on the bill Friday, "We can and must ensure that the U.S. energy-intensive industries are not placed at a competitive disadvantage by nations that have not made a similar commitment to reduce greenhouse gases."

Now that the clause is in the bill, the White House is getting worried by the implications.

In interviews over the weekend, President Barack Obama told reporters: "At a time when the economy worldwide is still deep in recession and we've seen a significant drop in global trade, I think we have to be very careful about sending any protectionist signals out there. There may be other ways of doing it than with a tariff approach."

The White House learned a lesson from the stimulus bill that was passed earlier this year with a special "Buy America" provision that provoked alarm among trading partners. It would also have been illegal under World Trading Organization rules, laying the U.S. government open to fines and other legal remedies from countries that could claim discrimination.

So the White House inserted a line in the bill that said purchasing with federal funds had to be compatible with WTO regulations. But that did not stop individual municipalities and U.S. states from applying the "Buy America" rule, which in turn provoked a "Boycott America" campaign in some affected Canadian townships, even though the United States is by far Canada's most important trading partner.

It also provoked a "Buy Chinese" rule for Beijing's own stimulus spending, although officials stress that it is compliant with WTO rules and that the products of a foreign-owned factory in China are treated as Chinese.

Governments these days tend to be literate in economics. Ministers and their senior officials know what damage tariffs and trade restrictions did to the global economy in the 1930s. They also know the WTO rulebook, which makes it difficult to impose tariffs, but can be legally fuzzy on other ways of achieving the same goal through labor, environmental or product safety standards.

Under the pressure of recession, governments are playing dangerously with trade. At last November's first G20 summit in Washington, participants pledged to complete the Doha Round of trade liberalization and oppose any new protectionist measures. Within weeks this promise was broken. The World Bank has registered 89 new trade restriction measures since October and 23 more since the April summit of the G20. Brazil approved new common external tariffs for Mercosur. China tightened its dollar peg and launched new tax breaks for exports. India imposed new duties on iron and steel products. Russia imposed new auto tariffs.

As WTO Director General Pascal Lamy noted in his annual report for 2009: "While we may be seeing the bottom of the economic crisis, we have not yet seen its full social impact, which will inevitably trigger negative political pressures on the trade front. I personally believe, and I want to share this very openly with you, that the 'stress test' of the multilateral trading system is still to come."

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