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G20 Countries Resist Protectionism

by Ulrika Lomas,, Brussels

10 March 2010

The Organization for Economic Cooperation and Development (OECD), World Trade Organization (WTO) and the United Nation's Conference on Trade and Development (UNCTAD) have reiterated their calls on leaders of the G20 countries to resist protectionism or the prospects for economic recovery may be wiped out.

In their second combined report on G20 Trade and Investment Measures, the three organizations found that most G20 members are holding to their commitments to open trade and investment in the wake of the global economic crisis. However, they say protectionist pressures may continue to gather force in the face of job losses and high unemployment.

The OECD, co-author with UNCTAD of the report’s chapter on investment, says there was no open discrimination against foreign investors in the six months to mid-February 2010, but warns that discretion in the application of the many state support and rescue programmes for troubled firms may be used to favour domestic companies and disguise protectionism.

The report cautions that the holdings acquired by governments as a response to the crisis may jeopardize governments’ impartiality in policy making and law enforcement. Government ownership and rescue of firms may also distort and protract restructuring of economic sectors, the report notes. Lastly the report lauds recent G20 investment measures that have continued to point towards greater openness and clarity for foreign investors.

OECD Secretary-General, Angel Gurría, said: “Openness to international investment is a precondition for strong global economy, job creation, and innovation. The OECD will continue to monitor investment policy developments closely.”

The leaders of the G20, which comprises the world’s largest economies, committed to resist protectionism and promote global trade and investment at summits in November 2008, in April 2009 and again in September 2009. They mandated WTO, OECD and UNCTAD – the leading international organizations in the area of international trade and investment policies – to monitor policy developments and report publicly on these commitments.

This second report to G20 leaders covers measures taken or announced by G20 members between September 2009 and mid-February 2010. The previous report was issued ahead of the G20 Summit in Pittsburgh in September 2009.

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