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G-20 Accused Of 'Saying One Thing, Doing Another' On Protectionism

  • Kathleen Moore

Keeping foreign goods at a safe distance?

Keeping foreign goods at a safe distance?

Last November they said there would be no new trade barriers.

In London in April, they solemnly promised, "We will not repeat the historic mistakes of protectionism of previous eras."

Since the onset of the global economic crisis, G-20 leaders have made repeated promises to reject protectionism.

But a new report says that, in fact, protectionism is on the rise -- and that G-20 states are among the main offenders.

"Every three days one [G-20] country breaks its commitments of last November and the commitments they made in London again," says Simon Evenett, a professor of international trade at Switzerland's University of St. Gallen and the report's chief author.

"As this crisis has gone on protectionism has developed its own dynamic with companies wanting protection or bailouts from governments and getting them, and I have to wonder how much restraint is being exercised by G-20 at the moment."

Leading 'Offenders'

The report, by the monitoring group Global Trade Alert, lists more than 190 measures recently implemented around the world that discriminate against foreign commercial interests.

Of those, G-20 countries account for some 120.

In the latest example, Washington imposed import tariffs on Chinese tires, while Beijing responded by condemning the move and announcing a probe into U.S. chicken imports.

Other examples include Russia's temporary import tariff on laundry equipment; Beijing's decision to favor Chinese-made goods in government procurement; or, outside the G20, Ukraine's temporary increase in its tariffs for imported footwear.

Those countries are among the worst offenders in Evenett's report.

"Russia has imposed the most discriminatory or protectionist measures -- 20 in total -- and Ukraine has imposed measures that affect 60 percent of all the major product categories that they trade. [In] terms of most sectors affected, it's Algeria. In terms of most countries which are being negatively affected, China is the worst offender with 163 countries."

'Ceding Ground'?

Of course, making promises at an international summit is one thing. Sticking to those pledges might be another, as politicians come under pressure back home to protect jobs amid rising unemployment.

But protectionism carries real economic danger, says Evenett.

It exacerbated the Great Depression in the 1930s as countries raised tit-for-tat tariffs to protect their home markets. International trade shrunk dramatically, curbing growth and fueling unemployment.

No one is suggesting today's measures even approach that scale.

But the risks are acknowledged in a joint report issued ahead of the G-20 summit in Pittsburgh by the World Trade Organization (WTO), the UN's trade body UNCTAD, and the Organization for Economic Cooperation and Development (OECD).

It says G-20 members could "continue to cede ground to protectionist pressures," adding that this would put "sand in the gears" of international trade.

Some further sanding of the gears appears inevitable.

Even if G-20 leaders renew their antiprotectionism pledge this week, Evenett says there are more than 130 protectionist measures "in the pipeline," just awaiting implementation.