Trade barriers raised despite G20 pledge, report shows

03/10/2009 | Phil Thornton

More than 100 discriminatory anti-trade measures have been imposed against China since world leaders’ pledge last November to fight protectionism, according to independent research given to Emerging Markets.

More than 55 countries have implemented protectionist measures against China since the G20 Summit deplored anti-trade policies, making the country the most frequent target of anti-trade policies.

In total, countries have announced almost 430 protectionist measures between last November’s summit and the end of September this year. Of the 280 that have been implemented, 240 were either blatantly discriminatory or likely to harm foreign trade.

G20 member countries themselves have imposed 172 discriminatory measures – two-thirds of the global total and more than one every two days, according to Global Trade Alert, an independent academic and policy research think-tank.

The latest figures from GTA show that protectionism has assumed worldwide proportions, affecting 95% of product categories, 80% of economic sectors, and almost every trading jurisdiction.

Simon Evenett, professor of international trade at the University of St Gallen in Switzerland, who coordinates the GTA database, said the economic crisis had triggered an “overwhelming tendency” to reduce cross-border trading opportunities.

“Very few tariff lines, economic sectors and trading partners have not been affected by some form of discriminatory policy instrument since November 2008, indicating the worldwide reach of current protectionist dynamics,” he said.

He said that, on top of the measures implemented, a further 134 measures announced but not yet enacted were likely to harm foreign commercial interests.

“These measures will start to influence global commerce even if governments were able to resist announcing any more initiatives that discriminated against foreign commercial interests,” he said.

Evenett said that the severity and speed of the financial crisis as opposed to a “traditional” business cycle downturn had highlighted weaknesses in the current system of dispute resolution through the World Trade Organisation.

“If binding rules were violated during a systemic crisis, what value would policy-makers attach to dispute settlement findings?” he said.

Rather than seeking to impose further sets of binding rules, the solution in future crises may be more informal understanding between governments to eschew protectionism, he said.

The G20 leaders reiterated their pledge not to resort to protectionism despite the evidence that they have already broken their own pledge. “It is imperative that we stand together to fight against protectionism,” they said after their meeting on September 25.

The International Monetary and Financial Committee, the main policy-making committee of the IMF, is expected to echo that call when it releases its communique tomorrow.

The report echoes the findings from the World Trade Organisation’s annual report, published over the summer, that found that use of protectionist measures such as anti-dumping (AD) duties was on the rise.

In 2008 the number of AD initiations increased by 28% compared with 2007. Eighteen WTO member countries initiated a total of 208 new investigations, compared with 163 initiations reported for 2007. The number of new measures applied also increased by about the same rate in 2008.

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