Daily Management Review

WTO: Protectionism is stifling the global economy


06/21/2016


The Group of Twenty (G20) have introduced a record number of trade restrictive measures, according to the latest monitoring of the World Trade Organization (WTO).



Elliott Brown via flickr
Elliott Brown via flickr
During the last six months (from mid-October 2015 to mid-May 2016), the G20 states have adopted 145 new trade restrictions (an average of 21 least a month) against 100 measures aimed at trade facilitation (total 14 per month). Since 2009, countries have introduced 1583 trade limitations, while only a quarter of them (387) was canceled for the given period. These restrictions relate to 6% of G20 imports, or 5% of world imports.

"The growth of trade restrictions is the last thing the world economy needs today in view of the unstable GDP growth, which in 2016 is expected to grow by less than 3% for the fifth year in a row," - said WTO Director-General Roberto Azevêdo.

According to the WTO’s forecast, world economic growth in 2016 will amount to 2.8% (the same as in 2015). According to Azevêdo, measures to restrict trade, as well as surges of negative rhetoric, can have "further cooling effect on trade flows."

According to the monitoring’s data, the increased number of trade limitations is associated with countermeasures aimed at trade protection. Most of them falls on the anti-dumping duties, especially in sectors such as metals (steel) and chemicals.

WTO recalled that back in 1930, such a pace of introducing new trade restrictions caused the "Great Depression" in the United States. Consequences of the current restrictions could be even worse, says the Financial Times.

Earlier, Head of the WTO said that exporters can lose about $ 8 billion if the UK leaves the EU.

On Monday, the IMF also made a statement that countries should reduce trade barriers in order to maintain world economic growth. As the IMF economists said, their study showed that removal of the remaining tariffs will lead to the world economy’s growth in the range of 0.3 percentage points in Japan to 7% percentage points in South Korea.

Recent trade restrictions action, documented in the WTO, include measures such as restrictions on export of various products and introduction of new quotas and tariffs. Among them is restoration of a 2% tax on all imports of goods, produced outside the Mercosul trading zone, in Argentina.

The vast majority of measures, that is, 89 of the 145, are anti-dumping duties supposed to prevent unscrupulous behavior on the part of trading partners. Of these, 40 related to trade in the market of steel and other metals.

The G20 group comprises nineteen world's largest economies - Argentina, Australia, Brazil, Britain, Germany, India, Indonesia, Italy, Canada, China, Mexico, Russia, Saudi Arabia, US, Turkey, France, South Korea, South Africa, Japan, - as well as the European Union. They account for 90 percent of global GDP.

source: ft.com






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