Threat of protectionism hangs over recovery

Alarming levels of trade protectionism among G-20 countries are threatening global economic recovery, trade and employment, a new report has found.

The research report, “G-20 Protection in the Wake of the Great Recession”, commissioned by the International Chamber of Commerce’s (ICC) Research Foundation and researched and written by the Peterson Institute for International Economics in Washington, found that all G-20 countries had implemented protectionist trade measures over the last two years.

By September 2009, the G-20 was responsible for 172 such measures being implemented, with hundreds more “in the pipeline”. If only half the upcoming measures were to actually take effect, the world could see a global cycle of protectionist retaliation not seen since the Great Depression, the report stated.

“During a time of economic recovery such as this, the world needs fewer barriers to trade, not more,” said Victor Fung, chairman of the ICC.

Other findings of the report were: Protectionist trade measures meant to protect jobs have had the opposite effect. This is because other countries either emulate or retaliate against them, resulting in lost export-related jobs that typically exceed those saved through protectionist actions.

For example, it is estimated that the 43,000 jobs that the US government claims to be saved by the “buy American” legislation could result in a loss of over 200,000 jobs because of foreign emulation or retaliation.

Russia, the United States, India, Argentina and Brazil are the five most protectionist countries based on measures implemented from 2008-2009 and those “in the pipeline”. The least protectionist countries are Mexico, Turkey, Australia, the Republic of Korea, South Africa and Saudi Arabia.

In closing, the report urged G-20 leaders to take initiatives to conclude the Doha Round; expedite the WTO’s dispute settlement mechanism; establish a regular G-20 trade ministers meeting; and appoint a G-20 group of internationally recognised trade experts, or “G-20 wise men”, to identify and publicly name the countries implementing new protectionist measures.

“The conclusions of this report should serve as stark reminders of the dangers of protectionism – especially at times of economic crisis – and why the world economy needs a comprehensive, multilateral trade agreement such as the WTO’s Doha Round to foster economic growth and stability,” Fung said.
(source:www.cargonewsasia.com)