Claims that protectionism is intensifying are adding pressure on governments to close their borders to goods and risk fuelling the very problem they warn about, the World Trade Organisation said on Friday. In its latest survey on trade measures issued on November 18, the global trade watchdog concluded there had been no breakdown in the international trading system and its 153 members had resisted falling into protectionism.
But some independent economists have taken a bleaker view. A study this week by Global Trade Alert, a project funded by the World Bank and Britain's Department for International Department, said protectionist pressures were unrelenting with dozens of new measures announced in the past three months and more in the pipeline.
A senior official responsible for compiling the WTO's trade monitoring reports produced ahead of summits of the G20 leading economies said such claims encouraged companies to press politicians to restrict imports from foreign competitors. "Governments in our view have done a great job this year in holding the line - this sort of thing undermines them," said Richard Eglin, director of the trade policies review division.
"Our view was that governments, in the trade area, reacted in a mature and co-operative fashion," he told Reuters. As unemployment continues to rise in many countries despite a fragile recovery, policymakers must remain vigilant against protectionism, he said. Eglin said it was inevitable that governments had taken some trade-restrictive measures in the financial crisis as the political price for generally resisting protectionism, which economists say aggravated the Great Depression of the 1930s.
"The nature of the crisis was of such momentous proportions that it would be naive to believe that governments could act in a completely text-book sense," he said. Last month's WTO report found that trade measures announced since the end of October 2008 had covered at most 1 percent of world trade. The overall fall in demand and a shortage of credit were bigger factors in curtailing trade, it said.
Measures were concentrated in the automobile and iron and steel sectors, which in developed countries have been facing problems anyway. Outside such sectors the impact was marginal, Eglin said. After an initial knee-jerk tendency to raise tariffs or limit imports, most recent measures have taken the form of anti-dumping duties against imports deemed unfairly priced.
In many countries such remedies are not a sign of government protectionism, Eglin noted. In the United States, for instance, if a company calls for an anti-dumping investigation and makes a proper case, trade regulators are bound to initiate a probe and politicians cannot intervene to stop the due process. The number of anti-dumping investigations this year was less than half the 400 forecast by WTO analysts, he said.
Eglin said the measures taken by different countries had had virtually no impact on world trade flows and could not be argued to have made the crisis worse. In some cases they had hit bilateral trade relations, where a particular supplier was targeted, but such bilateral measures had not led to a 1930s-style tit-for-tat cycle. "The danger at the bilateral level was that it would lead to retaliation: it didn't," Eglin said.
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