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.

Related stories

  • Georgian jewel shines bright against Russian darkness

    Georgia’s radical approach to economic thinking is working. But it remains dangerously exposed to the whims and wiles of its more powerful and belligerent neighbor

  • Ukraine taps private sector and Georgia to reform conflict ...

    President Petro Poroshenko and premier Arseniy Yatsenyuk have dipped into Georgia’s deep pool of reformist talent in an effort to rebuild Ukraine’s war-ravaged economy. However, even with a vast IMF package and other financial assistance, many have trouble seeing how Ukraine is ever going to return to growth while it is in conflict with the Russia-backed rebels in the east

  • UniCredit rebuffs Russian attack on 'profitable' Western banks

    The head of UniCredit’s CEE division tells Emerging Markets he intends to remain in Russia, despite claims by the head of the country’s sovereign wealth fund that he wants to cut Western banks’ market share by attracting Chinese lenders

  • Romania to avert deflation threat as prices go negative

    With Romania set for inflation to fall below zero, its deputy central bank governor insists that it will prevent deflation, as it continues to foster economic growth

  • Making the bond markets work for CEE infrastructure

    If the central and eastern European countries’ vast infrastructure investment gap is ever to be bridged, then private capital via the bond markets will have to be harnessed


Editor's Picks


In Focus

  1. Georgian jewel shines bright against Russian darkness

  2. Ukraine taps private sector and Georgia to reform conflict-ravaged economy