A joint report from the World Trade Organization and the Organization for Economic Cooperation and Development warns that members of the so-called G-20 are continuing to impose new trade restrictions amid a still-uncertain global economic situation and that “the promised removal of existing restrictions is very slow.” The report calls on these countries to “redouble their efforts to resist protectionist pressures” and “the temptation to move toward more nationalistic and inward-looking policies,” which not only “will not solve their problems” but also risks “generating tit-for-tat reactions by their trading partners.”

The report expresses concern about a “revival of protectionist rhetoric” in some countries. For example, some G-20 leaders have made statements in favor of import substitution policies as the pillar of economic growth in their countries, a stance that is “generating regional and global trade tensions which have largely been absent since the coordinated policy responses to the global financial crisis were launched.” Some G-20 governments have raised import barriers, such as procedural or administrative actions to slow down border clearances, to protect domestic industries from what they may consider to be unfair competition. There has also been a reported increase in restrictions placed on government procurement activities in some countries. “With tight government budgets, high unemployment, slower growth, and the prospects of further multilateral market opening seemingly slipping away,” the report states, “the threat of protectionist pressures looms even larger.”

This increase in rhetoric has been accompanied by the “unabated” implementation of new trade restrictions. The report states that since mid-October 2011, 124 new trade restrictive measures have been recorded, affecting around 1.1% of G-20 merchandise imports or 0.9% of world imports, and that the main measures are trade remedy actions, tariff increases, import licenses and customs controls. In addition, these new restrictions seem to no longer be aimed at combating the temporary effects of the global crisis but rather at trying to stimulate recovery through national industrial planning. Many of these plans also envisage the granting of tax concessions and the use of government subsidies as well as domestic preferences in government procurement and local content requirements.

The report also points out that with the addition of these most recent barriers “the accumulation of trade restrictions is now a matter of concern.” Specifically, the trade coverage of the 802 restrictive measures put in place since October 2008, excluding those that have been terminated, is estimated to be almost 3% of world merchandise trade and almost 4% of G-20 trade. This accumulation is aggravated by the relatively slow pace of removal of existing measures, which is not only fairly low (18% as of this report) but is also slowing down.

Source: STR Trade Report