Protectionist barriers are on the increase during the economic crisis, according to an EU report published today. In it, the European Commission calls on the EU’s trading partners to remove trade restrictions in order to boost economic recovery.
Contrary to the G20 commitment, hardly any measures have been removed despite signs of economic recovery in most countries, says the report. “There is a risk that trade restrictive measures introduced by our partners during the crisis will become part of the trade regime even when the economy picks up speed”, says Trade Commissioner Karel De Gucht. “What we need now is an exit strategy from protectionism.”
The European Commission has been issuing reports on the trade restrictive measures adopted by major trade partners since the beginning of the economic crisis. This monitoring mechanism has been important to prevent an escalation of trade protectionism during the downturn.
The recent report covers the EU’s thirty main trading partners over the period from October 2008 to April 2010. The protectionist measures range from classical trade barriers such as import bans or tariff increases to “buy national” and other behind-the-border policies. The report finds that many of the new barriers are rapidly becoming permanent features of the world trading system.
Background
At the Washington Summit in November 2008, the G20 committed to a self-imposed standstill in terms of new barriers to investment or to trade in goods and services, new export restrictions or WTO inconsistent measures to stimulate exports. The London and Pittsburgh G20 summits in April 2009 and September 2009, reinforced this commitment and provided an explicit mandate to the WTO to monitor and to report publicly on the evolution of the situation on a quarterly basis.
The EU is firmly committed to this pledge. Its own monitoring report complements the monitoring exercise done by the WTO.
The main conclusions of the new report are as follows:
- Despite an overall gradual improvement of the world economy, growth remains uneven, marking a clear difference between the situation of industrialised and emerging economies. There still exists a risk that increasing unemployment could fuel a second wave of protectionist policies in the course of 2010.
- Between November 2009 and April 2010, 73 further trade restrictive measures have been introduced, thus bringing the total figure of measures in force to 278. The tendency towards new protectionist measures noted in past reports remains unabated.
- Fewer than 20 measures taken in the context of the crisis have been withdrawn or have expired between November 2009 and April 2010. This figure is clearly disappointing and contrary to the commitment made by G20 leaders to “rectify” such measures. Continuing to add to the stock of protectionist measures without rectifying them puts the economic recovery at risk.
- The creation of the Customs Union of Russia, Kazakhstan and Belarus, effective from 1 January 2010, saw the consolidation of most of Russia’s duty increases introduced during the economic crisis. This remains by far the most striking example of entrenching the crisis-related measures in the permanent trade environment, with long-term implications for the resumption of trade flows with Russia.
- The recourse to ‘Buy National’ policy remains of concern. Moreover, in the field of government procurement there is still a tendency to adopt discriminatory measures.
- G20 members need to reaffirm their commitment to the removal of the measures in place. Vigilance and monitoring are no longer sufficient. Trade flows need to rebound in a balanced way across the globe to help the recovery gain ground.
- The report covers measures from the following countries/customs territories: Algeria, Argentina, Australia, Belarus, Brazil, Canada, China, Ecuador, Egypt, Hong Kong, India, Indonesia, Japan, Kazakhstan, Malaysia, Mexico, Nigeria, Pakistan, Paraguay, Philippines, Russia, Saudi Arabia, South Africa, South Korea, Switzerland Taiwan, Turkey, Ukraine, USA, Vietnam.
