By Claire West
In a report released today, the EU identifies a staggering increase in protectionism around the world with 123 new trade restrictions introduced over the last eight months — a rise of just over 25%.
This brings the total number of restrictive measures in place today to 534. In its ninth report on potentially trade-restrictive measures, the European Commission points to a failure by the G20 countries to reducing trade barriers. G20 members have to do more to prevent the introduction of new barriers to trade, and to rectify protective measures introduced since the break-out of the crisis.
"Clearly G20 Members need to seriously step up their efforts to fight protectionism. I am very concerned to see the sharp rise in trade-restrictive measures in the last few months alone", said EU Trade Commissioner Karel De Gucht. "Let us remind ourselves that the G20 pledged to end such practices and that protectionism benefits noone. It sends the wrong signal to global trading partners, it sends the wrong signal to investors and it sends the wrong signal to the business community which relies on a predictable business climate."
The main conclusions of the report:
- Between September 2011 and 1 May 2012, on average more than 15 new measures were introduced each month as compared to less than 12 new measures per month the year before: the pace of introduction of new restrictive measures has accelerated. Overall, 123 new trade-restrictive measures have been introduced in the last eight months.
- The state of G20 countries' compliance with regards to the removal of existing measures remains clearly insufficient. Between September 2011 and 1 May 2012, the roll-back of measures slowed down: only 13 measures have been removed, compared to 40 measures between October 2010 and September 2011. Overall, only about 17% (89) of the measures have so far been removed or lapsed since October 2008.
- At the global level, trade is showing signs of good recovery, even with a short-lived contraction observed mid-2011. Despite their growing economic weight and increasing role in the global economy, emerging economies continue to resort to the highest number of trade-restrictive measures, often as part of new national industrialisation plans.
- Restrictions affecting foreign direct investment, such as Argentina's decision to expropriate 51% of YPF shares owned by the Spanish company Repsol, substantially impact EU investors' confidence to invest abroad as it increases unpredictability.
- Russia deserves close scrutiny as one of the most frequent users of trade-restrictive measures that may not be in conformity with its obligations as an upcoming member of the WTO.
- The EU calls on G20 Members to implement the pledge more effectively by reinforcing transparency and enhancing the timely and full notification of all measures, which would enable closer monitoring of protectionism. It will address this issue at the upcoming G20 Mexico Summit on 18 and 19 June 2012.
What are trade barriers?
- Import and export restrictions in the form of higher import or export duties or lower export quotas applied at the border of a country.
- "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.
- Barriers in the area of services and investments often discriminate against foreign providers of services or foreign investors.
Some examples of existing trade-restrictive measures
- Argentina recently extended new burdensome administrative pre-registration procedures to all imports of goods.
- India - a significant producer of cotton — imposed an export ban on raw cotton
- Russia is currently preparing legislation containing preferences for domestically produced cars in public procurement.
Which countries are being monitored?
The report covers 31 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, Thailand, Turkey, Ukraine, USA, and Vietnam.