Protectionism on the Rise in G-20 Economies, WTO Warns
Trade restrictive measures in the G-20 coalition of major advanced and emerging economies have hit their highest monthly average since the WTO first started tracking them seven years ago, economists from the global trade body said this week.
The WTO’s semi-annual report, issued on Tuesday 21 June, comes amid growing concern over weak trade growth and persistently low economic growth figures, which have taken centre stage in major international meetings held from Paris to Washington over recent months. (See Bridges Weekly, 9 June 2016 and 21 April 2016)
“A rise in trade restrictions is the last thing the global economy needs today, with GDP growth sluggish and 2016 expected to be the fifth year in a row that trade has expanded by less than three percent,” said WTO Director-General Roberto Azevêdo.
As in previous reports, trade remedy investigations continued to make up the bulk of the restrictions tallied by the Geneva-based organisation, including probes relating to steel. That sector has been the subject of growing attention in recent months, amid falling prices and massive global overcapacity. (See Bridges Weekly, 9 June 2016)
According to the 21 June document, between mid-October of last year and mid-May 2016, the group’s members have put in place 145 new trade restrictions. Another related problem is the growing accumulation of such measures over the past several years.
“It is positive that some G-20 countries are eliminating trade restrictions, but the rate by which this is done remains too slow to change the trend which saw the overall stockpile grow by 10 percent,” the report warns.
The WTO report was issued jointly with a review by the UN Conference on Trade and Development (UNCTAD) and the Organisation for Economic Co-operation and Development (OECD) on investment restrictions, as on previous occasions.
The latter exercise found that most G-20 investment measures taken in that same timeframe have helped improve the openness of those economies to foreign direct investment.
“This does not mean, however, that investment abroad has generally become easier or more attractive,” the report said, noting that there are a host of factors to consider, including that some measures that are difficult to trace as a result of limited public documentation.
Key meetings ahead
The report comes just one month ahead of a meeting of G-20 trade ministers, scheduled from 9-10 July in the Chinese city of Shanghai.
The G-20 leaders’ summit is then scheduled for September in Hangzhou, China. Members of the coalition regularly reaffirm at such meetings their past pledges to hold a “standstill” on any new trade and investment restrictive measures, along with promising to roll back those that have emerged since the global economic and financial crisis began. (See Bridges Weekly, 19 November 2015)
The focus of this year’s summit will be on “breaking a new path for growth,” according to Chinese officials, specifically on the “mid-long term impetus of global growth.”
In their 21 June report, WTO economists stressed the importance of this forum continuing to take a strong stance on the issue of protectionism, calling for the G-20 economies to provide “leadership” in both reducing the stockpile of measures and avoid taking new ones.
“The recent increase in the number of trade restrictions introduced by the G-20 economies requires closer scrutiny in upcoming monitoring reports,” said the report.
Speaking to journalists last month, Chinese Foreign Minister Wang Yi said that one of the “major results” that the Chinese G-20 presidency is aiming for is to prepare strategies aimed at boosting global trade growth.
“This year China has promoted trade and investment to be put onto the G-20 agenda and has built the G-20 Trade Ministers Meeting, Trade and Investment Working Group, and other institutionalised platforms for this purpose,” said a statement issued following Wang’s remarks.
“The strategy for global trade growth aims at taking facilitation measures to reduce trade cost and increase trade financing as well as other actions through the coordination of trade and investment policies so as to reverse the downward trend of trade growth,” the statement added.
Another goal is to set out a series of “guiding principles for global investment policies,” particularly in light of the growing number of bilateral accords in this area, setting the stage for a longer-term process for a “multilateral global investment rules framework.”
Other issues slated to be on the docket in September include creating action plans for implementing the 2030 Agenda for Sustainable Development; setting priorities and principles for structural reforms; taking steps to reform the international financial architecture; continuing anti-corruption work; working to foster entrepreneurship; and supporting the prompt enactment of the Paris climate accord.