Tuesday

25th Apr 2017

Trade protectionism still on the rise, EU research finds

  • Trade protection is still on the rise, an EU report has found. (Photo: dawvon)

A total of 170 new measures increasing trade protectionism were slapped on goods and services from the EU, according to new research.

The findings in the European Commission's annual report on trade restrictions published on Monday (17 November) cover more than 30 of the EU's main trading partners.

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Russia, China, India and Indonesia were the main culprits, the report claims, adding that only 12 pre-existing trade barriers were struck down between June 2013 and 2014.

More than 850 separate trade defence measures, ranging from new import duties and tariff barriers to taxes and procurement rules favouring domestic firms have been adopted across the world since the 2008-2009 financial crisis sparked a sharp rise in trade restrictions as governments sought to protect their own firms.

Restrictions on imports and exports were the most used instrument, through numerous tariff increases, new import licencing procedures, reference values or minimum transaction prices, or banning trade altogether.

Russia was guilty of imposing the most import duties on EU products, the report found, while the US was most likely to tailor its rules on public procurement to shut out foreign companies from public tenders.

The EU executive argues that trade protectionism is self-defeating, particularly among emerging market economies such as Brazil, Argentina, and India.

"Hundreds of protectionist measures still obstruct world trade, and their number continues to rise," the report states.

"It is again mostly emerging economies which resorted to instruments protecting their markets, although they also benefit to the highest degree from a world economy open for trade in goods," it adds.

Since the collapse of the Doha round of multilateral trade talks aimed at lower trade barriers around the world convened by the Geneva-based World Trade Organisation (WTO) in July 2008, the EU has sought to champion free trade, opening trade talks with a series of countries.

The most significant negotiations with G20 countries are with Japan, the US, China and Canada.

However, despite its free trade mantra, the EU has also been embroiled in a much-publicised trade battle with Russia, with Brussels and Moscow applying tit-for-tat sanctions in July.

An EU ban on financial services used by some Russian banks and on sales of high-end technology to Russian oil firms, imposed because of Russia's role in the Ukraine crisis, prompted Moscow to hit back by imposing a ban on imports of many types of EU agricultural produce.

EU trade officials have also filed a series of complaints to the WTO in protest against Russian import duties on products including cars, paper products, and palm oil.

For its part, Moscow has also filed WTO complaints against the EU's energy rules and levies on steel and fertiliser products in the past 12 months.

Analysis

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One trade expert has described the EU-Russia sanctions war as economic “mutually assured destruction”, but strategic considerations continue to trump financial problems for both sides.

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EU competition commissioner Neelie Kroes and Czech Prime Minister Mirek Topolanek on Tuesday lashed out at protectionism, implicitly targeting France. Ms Kroes said leadership did not mean "bribing multinationals" and "stealing jobs from one's neighbours."

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