WTO Members Resisting Protectionism

The World Trade Organisation has published its annual report on developments in the international trading environment, which comprehensively tracks measures implemented by nations over the past twelve months that restrict or liberalize global trade.

WTO research undertaken during 2011 shows that on the whole governments have largely continued to resist protectionist pressures, although an upward trend was observed this year in the imposition of new trade restrictions.

During the period under review, 339 new trade restrictive measures (and those that have the potential to restrict or distort trade) were recorded, which is 53% more than in the previous period. In particular, the number of new export restrictions has increased sharply. Although accounting for only 19% of total restrictions during the monitoring period, export measures were the fastest-growing component.

Moreover, there is a growing perception that trade protectionism is gaining ground in some parts of the world as a political reaction to current local economic difficulties. There are various signs of a revival in the use of industrial policy to promote national champions and of import substitution measures to back up that policy.

WTO Director General, Pascal Lamy warned in the report that: “Unilateral actions to shield domestic industries, although appealing from a narrow short-term perspective, will not solve global problems; on the contrary, they may make things worse by triggering a spiral of tit-for-tat reactions in which every country will lose. These developments are adding to the downside risks to the global economy.”

The sectors most affected by new trade restrictive measures are: base metals and products (iron and steel); machinery and mechanical appliances; organic chemicals; meat products; plastics; transport equipment (motor vehicles); and cereals. Most of these sectors were already relatively heavily protected before the global crisis.

While the number of trade restrictive measures introduced during 2011 have increased, new restrictive measures introduced during the period between mid-October 2010 and mid-October 2011 cover around 0.9% of world imports, a reduction on the 1.2% coverage recorded in the previous twelve-month period.

Some countries have also adopted measures to facilitate trade, especially by reducing or temporarily exempting import tariffs, terminating trade remedies actions, and streamlining customs procedures. Trade facilitating measures implemented during this period account for 48% of the total number of trade-related measures recorded by the WTO over the period.

In the area of trade in services, members are maintaining the general thrust of their policies and levels of market openness, according to the WTO. Save for a few instances in which the original restrictive effect of policies has been attenuated and work-permit requirements for certain categories of workers have been removed by a few countries, restrictive measures introduced in the last couple of years are still in place.

Regional Trade Agreements (RTA) activity continues to be strong. As of end-October 2011, 390 RTAs had been notified to the WTO, of which 211 are in force. The WTO Secretariat estimates that there are around another 100 agreements in force which have not yet been notified to the WTO. The majority of RTA notifications during this period involved one or more partners in the Asian region. Asia, Europe, and Latin America appear to be relatively more active than other regions in respect of agreements that have recently entered into force.

Source: Tax News

.