Phil Thornton
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The financial crisis and the worldwide economic recession have sparked an outbreak of protectionist reforms that some analysts believe could threaten global trade.
Now a group of trade economists is fighting back with the launch of a database that provides real-time information on state measures taken during the global downturn that are likely to affect foreign commerce.
Global Trade Alert (GTA), which was launched in June, had identified 67 discriminatory measures by July 8, of which 47 had been implemented with 20 waiting in the wings.
Discriminatory measures include rises in tariffs that importers must pay or bans on products. Examples include a ban by Saudi Arabia on imports of cars older than five years and a 39 per cent increase in tariffs on Russian oil exports to Belarus.
Last week the number of discriminatory measures on the database had hit 100. Even at this early stage the data have revealed patterns that often contradict many states’ official rhetoric about protectionism.
A key finding is that China is actually on the receiving end of a large number of protectionist measures, despite having implemented very few. The July report showed that China had announced two measures, of which one had been implemented that affected 15 trading partners.
However, China is by far the most affected country, with 36 measures being put in place by 21 countries that will have an effect on its trade. Of the 36, 25 were considered discriminatory.
Simon Evenett, a professor at the University of St Gallen, in Switzerland, and a co-founder of GTA, said: “China is more sinned against than has sinned.
“It could be that the Chinese measure is an enormous measure that is economically significant but the numbers speak for themselves,” he said.
The Chinese picture contrasts with that of the US, which has proposed 21 measures potentially affecting 96 countries, of which six have been implemented. The US has only had 24 measures imposed on it.
David Rae, editor of Procurement Leaders magazine, said that large EU economies such as the UK, France and Germany have all had 18 or 19 measures taken against them that are described as discriminatory.
Two measures which have directly affected the UK include the introduction in June in New South Wales, Australia, of a “local jobs first” programme. The UK is also affected by a “Buy Canadian” measure, introduced this month, for new Coast Guard vessels that says that the “work will be conducted in Canada, and where possible, by shipyards located within the regions of the vessels’ home-ports”.
Professor Evenett said that by enabling ministers to exert peer pressure on protectionist governments the database could help to avert a repeat of the Great Depression. According to an analysis by Commerzbank, the German bank, the US Smoot-Hawley Tariff Act of 1930 raised about 900 import tariffs. Harald Jörg, an analyst at the bank, said: “This provoked extensive countermeasures from important trading partners such as Canada and many European partners.”
Professor Evenett agrees that early analysis of the data showed that no large economy had embarked on across-the-board rises in trade tariffs. “The only ones that have raised tariffs or restricted trade are small developing countries like Ecuador, Ukraine and Argentina. They are the biggest culprits,” he said.
GTA plans to produce its next report ahead of the meeting of the leaders of the G20 countries in Pittsburgh in September. Professor Evenett said: “We will do a country-by-country assessment so they won’t be able to hide behind the statistics.”
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