Commission monitoring report on protectionist measures taken by key trading partners: worst-case scenario avoided
According to a new monitoring report published today by the European Commission, the European Union's major trade partners have taken more than 220 potentially trade restrictive measures between October 2008 and October 2009. Measures range from classical trade barriers such as import bans or tariff increases to more sophisticated measures such as "buy national" policies. Classical barriers alone potentially affect roughly 5% of EU exports. In the report, the European Commission calls for continued openness and engagement at a time of economic turmoil.
EU Trade Commissioner Catherine Ashton said: "This report underlines that we need to remain vigilant, even if the worst-case scenario of a protectionist downward spiral has been avoided. The EU for its part will stick to its G20 pledge to refrain from protectionist measures. We remain committed to open and fair trade.''
This monitoring and reporting exercise is part of a wider effort to keep markets open and trade flowing, which is becoming a key factor driving global recovery. The report finds that the current world trade system has passed one of the most serious stress tests in its entire history. However, it also warns that persistent high unemployment and budget deficits could become a source of new protectionist pressures.
Background
At the Washington Summit in November 2008, the G20 committed to a self-imposed standstill in terms of new barriers to investment or to trade in goods and services, new export restrictions or WTO inconsistent measures to stimulate exports. The London summit in April 2009 reinforced this commitment, notably by providing an explicit mandate to the WTO to monitor and to report publicly on the evolution of the situation on a quarterly basis.
The EU is firmly committed to this pledge. In order to underpin this commitment the European Commission has been monitoring potentially trade restrictive measures from among its forty main trading partners since the outbreak of the crisis. The European Commission's reporting complements the monitoring exercise done by the WTO.
The main conclusions of the new EU report are as follows:
While global trade has started to stabilise since the summer, trade volumes in August 2009 were still 18% below their peak in April 2008. But it appears that the sharp drop in world trade was above all a reaction to the financial crisis and not driven by trade policy initiatives.
This being said, 223 potentially trade restrictive measures have been reported between October 2008 and October 2009.
The use of classical border measures such as import bans or tariffs in response to the crisis has been clearly contained because of existing WTO disciplines. This being said, classical border measures potentially still affect 5,2% of EU exports.
At the same time, other types of "behind-the-border" trade restrictions have multiplied in the areas where WTO rules are less stringent, such as government procurement.
On balance, a protectionist worst-case scenario has been avoided as the measures taken so far are rather limited in scope. This is partially the result of the firm commitment at the level of G20.
There is a risk that certain measures will remain in place as the crisis retreats, in particular for countries that stay outside the WTO framework. Moreover the risk of a domino effect cannot be discarded.
In view of these risks, the EU will continue to contribute actively to the global monitoring exercise with a view to keeping markets open.
For more information on EU trade policy including on market access and monitoring of protectionist measures, see http://ec.europa.eu/trade
Published on: 2009-11-06
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