Bridges Weekly Trade News Digest • Volume 13 • Number 10 • 18th March 2009
World Bank Warns of ‘Worrisome’ Rise in Protectionism
Discuss this articleShare your views with other visitors, and read what they have to say
Seventeen of the 20 nations that comprise the G20 group of economic powers have enacted restrictive trade measures since they made a joint pledge to resist such policies in November of last year, a report from the World Bank concluded this week.
Counting back from the onset of the financial crisis in September, countries around the world, including the G20, have enacted a total of 78 new trade restrictions, the report said.
Underscoring the fact that trade barriers can come in many forms, only one third of those measures came in the form of a tariff increase. Non-tariff barriers included non-automatic licensing requirements in Argentina, tightened import standards in China and India, and export subsidies in the EU, which the report called “particularly egregious.”
The report, titled “Trade Protection: Incipient but Worrisome Trends,” also detailed recent auto industry subsidies, which amount to US$ 48 billion worldwide. The US accounts for more than one third of the total, but Argentina, Brazil, Canada, China, France, Germany, Italy, Sweden and the UK have also provided direct or indirect subsidies for their car makers, the report said.
While the effects of such measures on trade flows are still relatively minor from a global perspective, they have significant impacts on exporters in particular sectors, the World Bank warned. And as the fallout from the economic crisis continues, world leaders may be tempted to take even greater measures to protect domestic industries.
“Leaders must not heed the siren-song of protectionist fixes, whether for trade, stimulus packages, or bailouts,” said World Bank President Robert Zoellick. “Economic isolationism can lead to a negative spiral of events such as those we saw in the 1930s, which made a bad situation much, much worse.”
The study called on the G20 nations to commit to reporting new trade restrictions to the WTO at three-month intervals, instead of yearly. It also urged an increase in Aid for Trade for developing countries, and swift progress in the stalled Doha Round of trade talks at the WTO.
WTO Director-General Pascal Lamy is also expected to release a report on recently enacted protectionist policies. His review is due out next week.
To access the World Bank report, click here.
ICTSD reporting.
Add a comment
Enter your details and a comment below, then click Submit Comment. We’ll review and publish the best comments.