Daily Management Review

US and China raise trade barriers to new heights


The introduction by the US and China of protective duties on mutual deliveries led to a sharp increase in the volume of imports subject to new trade restrictions. In just the past six months, this figure has increased six times, to $ 481 billion, the World Trade Organization (WTO) calculated. Measures that facilitate trade, while affecting the supply of only $ 216 billion.

From mid-May to mid-October 2018, the G-20 countries introduced 40 new trade restrictions, including increasing duties, banning imports and restricting exports (an average of eight measures per month versus six for the previous six months and five during 2017). According to the WTO report published yesterday in Geneva, the volume of imports affected by these measures was a record since the start of monitoring in 2012 and amounted to $ 481 billion - six times more than in the previous six months, and is equivalent to 3.53% of G20 imports.

33 measures were taken to facilitate trade (81 in 2017), including reduction or abolition of duties and lifting of export restrictions (an average of seven per month - as in the period from October 2017 to May 2018). In total, this affected imports by $ 216 billion, or 1.59% of the G20 countries' imports (2.5 times more than in the previous period). Among other trade measures, three-quarters accounted for anti-dumping investigations - the total effect of 85 such actions amounted to $ 25 billion (from the suspension of 60 measures - $ 6 billion). Most measures were initiated by the United States and India (43 new investigations each), China (23) and Argentina (18). 

Further escalation of restrictions threatens significant losses for economic growth, employment and consumer prices all over the world, the WTO believes. The organization’s members are recommended to change the situation. The volume of trade in goods in the first half of 2018 increased by only 3.4% versus growth by 5.4% in July — December 2017 (in money, total exports grew by 13%, but this is primarily due to the increase in oil prices). According to the forecast of the WTO, this year the increase will be 3.9% against 4.7% in 2017, next year it may slow down to 3.7%.

Note that in the near future, the WTO dispute resolution mechanism may be virtually blocked. In the past six months, on average, there were 39 lawsuits pending before the arbitrators (the process for most of them takes more than a year). During this period, 11 decisions were rendered, the appellate body issued three decisions, and 11 more cases are pending. The United States is currently preventing the appointment of four new judges of the appeals body (consisting of seven people), demanding reform of the WTO. Of the remaining three judges, the two terms of office expire in December 2019, and if the crisis is not resolved before this point, the work of the body will be de facto stopped.

source: reuters.com