Global Trade Barriers Continue To Rise, EU Warns

by Ulrika Lomas, Tax-News.com, Brussels

22 June 2009

Trade restrictive measures continue to be on the rise, including in some G20 members, according to a new report by the European Commission.

The report, issued by the Trade Commissioner’s office, shows that measures being used by individual countries to restrict trade are growing more complex and are, in many cases, associated with fiscal stimulus measures.

The information used in the report has been primarily gathered by European Commission Delegations and Market Access Teams in G-20 countries and other key markets through local monitoring exercises, as well as from business sources providing specific contributions. It provides an overview of the data received since mid-March 2009.

The Commission stated in the report that, while there is no evidence yet of a “generalized race towards protectionism,” the emergence of new trade restrictive or distortive measures confirms that “extreme vigilance” is required.

Despite the pledge by G20 leaders at the London summit in April to resist protectionist pressures, the Commission’s report found that some G20 members “continue to impose trade restrictive measures within the framework of their governmental policy.”

“These actions clearly go against the G20 commitments not to resort to direct or indirect protectionism and show the need for further peer pressure to ensure full respect of the G20 commitments,” the report stated.

Since the last report in March, the Commission said that two countries – Russia and Indonesia – have been “most active” in terms of introduction of new trade restrictive measures.

“In Russia trade restrictive measures are increasingly part of the government's policy strategy with increased import duties on a wide range of products, including certain steel products,” the report stated.

“Indonesia has introduced several restrictive trade measures, including a potential local content requirement for public procurement of goods, mandatory certification for sugar and credit restrictions for the export of some raw materials such as palm oil, minerals, coal, coffee, cocoa and rubber,” the report added.

According to the report, over the past months, several other countries have announced or implemented new protectionist measures, many of which are the consequence of fiscal stimulus packages. These countries include Argentina, Belarus, Brazil, China, Egypt, India, Israel, Pakistan, Peru, South Korea, Turkey, the US and Vietnam.

“Although most of these measures aim at economic recovery and promotion of trade, some of them may lead to trade restrictions adopted in more subtle forms,” the report observed. “This is the case in particular when stimulus packages contain discriminatory elements, for instance in the area of subsidies or local content requirements for government procurement purposes.”

A mandate has been given to the World Trade Organization secretariat to carry out surveillance of new trade and trade-related measures to be backed by quarterly technical reports.

“There is thus a sense of urgency at global level to resist any trade restrictive tendencies that may be prompted by the economic crisis,” the Commission said. “At a time of rapid change and economic turmoil, Europe needs to make the case for openness and engagement, not isolation and retreat.

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