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Use of Trade Restrictive Measures Declining but Caution Still Needed, Report Says |
The World Trade Organization, the Organization for Economic Cooperation and Development and the United Nations Conference on Trade and Development issued recently a report on the trade and investment measures that the so-called G-20 countries have taken in response to the global economic downturn. The findings of this report, which covers measures taken from Sept. 1, 2009, through mid-February 2010, include the following.
• The volume of world trade fell by an estimated 12% in 2009, but there is recent evidence of a resumption of growth in world trade and output, particularly an apparently strong recovery of trade growth in the Asia-Pacific region that has been led by China and some other East Asian economies. However, the sustainability of more general, global economic recovery remains uncertain, as at least some of the recent growth has been attributable to government stimulus spending and inventory re-stocking that are likely to be temporary.
• The trade and investment policy response to the global recession has so far been relatively muted, and there has been no indication of a significant intensification of trade or investment restriction over the past six months. However, past experience shows that prolonged periods of job losses and unemployment are one of the main catalysts for more restrictive policymaking, and unemployment rates are expected to remain high throughout 2010.
• Recourse to new trade restrictions by G-20 members was less pronounced than in the preceding six-month period. Although some members continued to implement new trade restrictive policies, the overall extent of these restrictions has been limited and an escalation of protectionism has continued to be avoided. There have also been more cases of trade opening measures and of the termination of investigations into “unfair” trade practices without the imposition of new trade remedy measures.
• Nevertheless, measures that potentially restrict trade, directly or indirectly, are still being put in place. Some G-20 members have raised import tariffs and introduced new non-tariff measures. The use of trade defense mechanisms continues as well, and while new antidumping investigations have declined there has been an increase in the number of new countervailing and safeguard investigations. There have also been reports of generally stricter application of regulations on sanitary and phytosanitary measures and technical barriers to trade.
• New trade restrictions tend to be concentrated in sectors that are already relatively highly protected, such as minerals, textiles and metal products. These sectors are also relatively labor-intensive and are therefore particularly vulnerable to pressures resulting from job losses and unemployment.
• The WTO’s multilateral trade rules and dispute settlement mechanism, the OECD’s investment disciplines and UNCTAD’s monitoring of national and international policies for foreign investment continue to provide a strong insurance policy against trade protectionism. However, risks of protectionism are still increasing and are likely to continue to do so until the economic recovery is well-rooted and job and business opportunities have started to grow again. |
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