WTO Warns of Growing Stockpile of Trade Restrictions

15 December 2016

WTO members reviewed the global trade body’s annual report on the state of the international trading environment last week, which reiterated past warnings of a “worryingly high” level of trade-restrictive measures.

According to the report, WTO members implemented 182 trade-restrictive measures between mid-October 2015 to mid-October 2016, representing a slight decline from the last reporting period. However, Director-General Roberto Azevêdo warned that this does not necessarily represent a “downward trend” overall, and added that the overall stockpile of these measures remains high.

“The last thing the global economy needs today is trade restrictive measures,” Azevêdo said. “They can have a further chilling effect on trade flows, with knock-on effects for economic growth and job creation.”

The findings are consistent with the WTO’s report on trade measures among G-20 economies, which similarly raised concerns over the growing trade restrictions stockpile. (See Bridges Weekly, 17 November 2016) The G-20 economies implemented roughly half of the total trade-restrictive measures by WTO members.

The report also shows that of the nearly 3000 trade-restrictive measures implemented by WTO members since 2008, barely a quarter have been removed. The slow pace of removing these measures, combined with continuing creation of new ones, remains a long-term challenge for the global trading environment.

Meanwhile, the trade-facilitating measures adopted by WTO members outnumbered the restrictive ones during the 12 months reviewed, representing a continued increase since late 2014. The report credited some of the trade facilitation measures to the implementation of the Information Technology Agreement (ITA) expansion, a plurilateral agreement which commits participating members to eliminate import tariffs on products with over US$1.3 trillion annual trade.  (See Bridges Weekly, 3 November 2016)

Regarding services trade, the WTO report noted liberalisation efforts in sectors such as air and maritime transport, telecommunications, and construction. In terms of trade transparency, the WTO introduced a new online alert system for member states to notify each other ahead of introducing new sanitary and phytosanitary (SPS) measures – those which involve food safety or animal and plant health – and technical barriers to trade (TBT).

More generally, however, Azevêdo encouraged WTO members to continue submitting updated information for these types of review exercises, noting that replies were received by 84 members – just over half of the organisation’s members – as well as some observers.

“Transparency requires constant commitment and engagement. I encourage other members to take part as well,” he said.

The report also frames these developments in the broader context of slow trade and economic growth. Earlier this year, the WTO downgraded its global trade forecast for both 2016 and 2017. (See Bridges Weekly, 29 September 2016)

“The trends in the implementation of new trade measures by WTO members have to be considered against the uncertain global economic outlook,” the report says. “If the forecast for 2016 is confirmed, this would mark the slowest pace of trade and output growth since the financial crisis of 2009 and the first time in 15 years that the ratio of world trade growth to world GDP growth has fallen below 1:1.”

The rise of such restrictions has also been flagged as worrisome by trade experts given the growing anti-globalisation sentiment in some advanced economies and sluggish growth of the global economy more broadly.

“In the context of a challenging economic scenario, I think we should keep in mind the role of the multilateral trading system in providing a stable, predictable, and transparent trading environment,” said Azevêdo, suggesting that members could use the upcoming ministerial conference in Buenos Aires, Argentina, next December as an additional incentive for removing restrictions.

ICTSD reporting.

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