Key economies still establishing barriers to trade

G20 MEMBERS have continued to implement protectionist measures, affecting countries such as the Philippines, despite promises to keep markets open amid weak economic recovery, a London-based think tank said.

Global Trade Alert, in a report issued ahead of a G20 leaders’ summit in Seoul that starts on Thursday, said the world’s major economies implemented 511 policies that harm foreign commercial interests as of November 1, up from a midyear tally of 400.

Seventy-eight comprise measures such as state subsidies, increased tariffs and government preference for locally made goods that directly affect the Philippines.

Global Trade Alert warned that patterns of protectionism had yet to wind down with up to 120 moves reportedly being implemented each quarter.

“For the first time, the total number of harmful measures implemented by G20 governments during the crisis and subsequent recovery have exceeded 500. The cross of this dubious threshold casts further doubt on the quality of G20 leadership in protectionism,” the 8th Global Trade Report states.

“Just because a currency-induced trade war has been averted does not excuse G20 governments form their sustained, lower-profile steps that disengage their economies from world markets. Together, the G20 has repeatedly failed to deliver on their ’No Protectionism’ pledges.”

The report claimed that of over roughly 1,000 “beggar-thy-neighbor” measures implemented worldwide, G20 governments were behind 60% of these policies. The European Union was said to have imposed the most number of discriminatory measures.

China, while a G20 member, was the most common target.

The Philippines, meanwhile, was said to be affected by 78 discriminatory policies adopted by 17 G20 members: key trade partners the United States and China as well as Argentina, Australia, Brazil, Canada, France, Germany, India, Indonesia, Italy, Japan, Mexico, South Korea, Russia, South Africa and the United Kingdom.

A check with the Global Trade Alert online database found that these measures include a recent Russian decision to hike tariffs on imported rolled iron products, India’s export incentive program, and higher Indonesian duties on cosmetics and medicine.

Bailout policies were the most used, followed by tariff hikes, export restrictions, and limits on migration and investment according to the report. These commonly sought to protect the following industries: financial services, transport, basic metals, agriculture, chemicals, meat, metal products, and grains.

This comes even as many non-G20 countries have “engaged in a burst of tariff-cutting over the summer of 2010 and in recent months”, the report adds.

“Most of the tariff cuts are by developing countries in equipment, parts and components … It seems there is plenty some of the non-invitees to the Seoul Summit could teach the invited.” –J. HERMOSA, Senior Reporter, Businessworld