Analysis | Brussels, 19 October 2011
EU report highlights concerns over rise in protectionism across G20
In a monitoring report issued today the European Commission finds a lack of progress in the reduction of trade barriers within the group of G20 countries. It concludes that G20 members have to do more to stick to their initial commitment to refrain from introducing new barriers to trade since the break-out of the crisis. The report counts no less than 424 restrictive measures to open trade since the start of the Commission’s monitoring in October 2008. In the past 12 months alone, 131 new restrictions have been introduced while only 40 have been removed.
EU Commissioner Karel De Gucht said: "Protectionism poses a real threat to the economic recovery. I am concerned to see that the overall picture has not improved and that more trade restrictive measures have been introduced by our trading partners. The EU will therefore, in bilateral and multilateral talks, continue to remind its partners to stick to their commitment to reduce trade barriers."
The main conclusions of the report:
- Between October 2010 and 1 September 2011, 131 new trade restrictive measures have been introduced by the EU's trading partners. This brings the total figure of measures in force since the beginning of the crisis to 424 (as compared to 333 the year before).
- The strong economic recovery in many countries - notably in emerging economies - has not translated into a reversal of this tendency, given that about 17% (76) only of all measures have so far been removed or lapsed. The state of G20 countries' compliance with their roll-back commitment is clearly below the expected.
- New industrial policies of several G20 members raise concerns about open trade and investment, as they are often based on import substitution, local content requirements and restrictions in public procurement. In emerging countries, a lot of trade restrictive measures have been locked in as part of national industrialisation plans.
What are trade barriers?
Trade barriers can range from import and export restrictions in the form of higher import or export duties or lower export quotas applied at the border of a country, to so-called "behind-the-border" measures, such as technical barriers to trade in the form of conformity assessment and certification requirements which are applied in a stricter way on imported goods or which go beyond international practices and requirements. Argentina, for example, continues to determine prices for imported goods which are a reference for customs valuation and therefore import duties; India - a significant player on the steel market - increased an export duty on iron ore; Indonesia continues to adopt mandatory national standards which differ from international ones and require that conformity assessments be performed by Indonesian laboratories; several countries consolidated restrictions to their public procurement market by favouring domestic bidders. In the past twelve months, Brazil introduced a stringent tax regime for cars with insufficient local content, thus infringing the national treatment principle.
Which countries are being monitored?
The report covers 30 of the EU's main trading partners, including the G20 countries: 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, and Vietnam.
About the report on the monitoring of potentially trade restrictive measures identified in the context of the economic crisis
This report is the eighth in the series of periodic reports prepared by Directorate General Trade of the European Commission to assess trade-restrictive developments in world trade. Reporting activities were launched in October 2008 after the outbreak of the economic and financial crisis, with the objective to take regular stock of compliance of G20 countries with the commitment not to resort to trade restrictive measures and remove those in place without delay, made initially at the G20 Summit in November 2008 in Washington.
At the London Summit in April 2009, G20 members committed to rectifying measures that have already been taken since the beginning of the crisis. Successive summits, including the latest G20 summit in Seoul in November 2010, extended the commitments until 2013, confirmed the engagement to roll-back measures in place and provided an explicit mandate to the WTO, OECD and UNCTAD 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 report published by Directorate General Trade, which it considers the main monitoring tool to assess the risk of trade protectionism and ensure vigilance among policy-makers, complements the monitoring exercise done by the WTO in cooperation with UNCTAD and the OECD.
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