The World Trade Organisation (WTO) has asked the G20 economies to lead by example in the fight against protectionism by rejecting new trade-restrictive measures and rolling back existing ones. Protectionist and trade restrictive measures by G20 countries touched a new high between mid-October last year and mid-May this year, the WTO has observed.
G20 economies applied 145 new trade-restrictive measures, equating to an average of almost 21 per month, a significant increase over the 17 per month recorded in the previous reporting period. "This is the highest monthly average registered since the beginning of the monitoring exercise in 2009, which helps explain that the overall stockpile of restrictive measures introduced by G20 economies grew by 10% during the review period," the WTO said in its report that was released last Tuesday.
The main factor behind the rise in trade-restrictive measures was an increase in the number of trade remedy investigations by G20 economies. Anti-dumping actions account for the majority of restrictive measures imposed, with most of the investigations concentrated in sectors such as metals (particularly steel) and chemicals. G20 members also imposed more distortive measures in the form of government support for sectors such as infrastructure, agriculture and export-specific activities.
Terming this trend "worrying", WTO Director General Roberto Azevedo reportedly said, "A rise in trade restrictions is the last thing the global economy needs today, with GDP growth sluggish and 2016 expected to be the fifth year in a row that trade has expanded by less than 3%". Of the 1,583 trade-restrictive measures, including trade remedies, recorded for G20 economies since 2008 by this exercise, only 387 had been removed by mid-May 2016. The total number of restrictive measures still in place now stands at 1,196. These trade-restrictive measures, combined with a notable rise in anti-trade rhetoric, could have a further chilling effect on trade flows since the prospects for world trade in 2016 and beyond remain uncertain. The recent WTO trade forecast predicted merchandise trade volume growth of 2.8% in 2016, unchanged from 2015.
The organisation noted that although some G20 economies have been eliminating trade restrictions, the rate by which this is done remains too low to dent the stockpile of such measures. Of the total number of trade-restrictive measures recorded for G20 economies since 2008, the share of eliminations, or roll-back, make up less than 25% whereas the restrictions cover over 6% of all G20 imports and 5% of global imports. The report also found that during the reporting period a total of 100 measures aimed at facilitating trade were taken—a monthly average of 14 measures. According to the organization, this represents an increase compared to the previous reporting period, but remains below the average trend observed since 2010.