Major trading powers are continuing to impose protectionist measures in defiance of a promise by G20 leaders to keep markets open, according to a report by independent economists.
The report, by Global Trade Alert (GTA), to be issued later this week to coincide with the G20 summit in Toronto, finds that such policies in 2009 turned out much worse than was known at the time of the Pittsburgh summit last September.
“The costs of the ineffectual G20 pledges mount quarter by quarter,” Simon Evenett, an economics professor at St. Gallen University in Switzerland and coordinator of GTA, said.
The report finds that nearly 650 protectionist measures implemented since the first crisis-related G20 summit in November 2008, when leaders promised to avoid protectionism, remain in place.
The findings of GTA, which has consistently warned that protectionism is running at a far higher level than governments acknowledge, are not shared by all economists.
The World Trade Organization (WTO), for example, says that the rules-based global trading system, and memories of the 1930s Great Depression that was partly triggered by beggar-thy-neighbour policies, have kept protectionism in check.
In its own report issued last week for the G20 summit, the WTO said governments had largely resisted resorting to trade barriers.
It said the number of new trade measures was falling, with new measures since November 2009 covering only 0.4%of global imports — with a smaller reduction in trade of those goods. From October 2008 to October 2009, trade measures covered 1% of imports.
GTA on the other hand says this understates the problem.
“The contribution of the WTO has been overstated; its agreements have channelled protectionist pressures into policies not well covered by enforceable rules,” Evenett said.
Ranked by measures such as the number of actions taken, and the number of products, sectors and trading partners affected, Global Trade Alert found that the European Union was one of the most active protectionists.
Russia, Argentina and Nigeria also feature high in its lists. China, followed by the EU and United States, was the main target.
The report identifies 22 far-reaching “jumbo” actions hurting more than 15 G20 trading partners and affecting more than $10 billion in trade, that should be a starting point for any G20 exit strategy on trade.
“Few of these jumbo measures are policies for which there are strong WTO rules,” Evenett said.
The policies, covering $1.6 trillion or more than 10 percent of world imports, include measures such as China’s export tax rebates and US “Buy American” provisions in its stimulus package.