WTO Report says Restrictive Trade Measures Continue to Rise in G-20 Economies

Restrictive trade measures introduced by G-20 economies since 2008 continue to rise, according to the latest WTO report on recent trade developments issued on 6 November 2014. Given the continuing uncertainties in the global economy, the report stresses the need for countries to show restraint in imposing new measures and to eliminate more of the existing measures.

The report says that of the 1,244 restrictive measures recorded since the onset of the crisis in 2008, only 282 have been removed. Over the past year, the number of restrictive measures in place has increased by 12 per cent. However, the number of restrictive measures affecting exports declined significantly from mid-May to mid-October 2014. The report also underlines that the overall trade policy response to the crisis has been significantly more muted than originally expected.

Key Findings of WTO Report on G-20 Trade Measures

· This report shows that the stock of restrictive trade measures introduced by G-20 economies since 2008 continues to rise despite the pledge to roll back any new protectionist measures that may have arisen.

· Continuing uncertainties in the global economy underline the need for G20 economies to show restraint in the imposition of new measures and to effectively eliminate existing ones.

· Of the 1,244 restrictive measures recorded by this exercise since the onset of the crisis in 2008, only 282 have been removed. The total number of restrictive measures still in place now stands at 962 – up by 12% from the end of the reporting period in November 2013.

· G-20 economies applied 93 new trade‑restrictive measures during the period between mid‑May and mid-October. This equates to over 18 new measures per month, which is unchanged compared to the previous period. A positive development saw the number of restrictive measures affecting exports decline significantly during the period.

· G-20 economies introduced 79 trade‑liberalizing measures during the period under review. Measured per month this figure is also unchanged compared to the previous period.

· Greater transparency is needed from G-20 members in order to improve the understanding of the operation and effects of non-tariff barriers to trade. These behind-the-border measures include regulatory measures and subsidies.

· While this report shows that the stock of new trade‑restrictive measures has continued to rise, it also supports the conclusion that the overall trade policy response to the 2008 crisis has been significantly more muted than expected based on previous crises. The multilateral trading system has acted as an effective backstop against protectionism.

Chart 1 Trade restrictions since October 2008
Number of measures

Note: The monitoring of the accumulation of restrictions and the removals started at end-2010. Information on trade restrictions and distortions in place before October 2008 is not available.

Source: WTO Secretariat.

Chart 2 Stockpile of restrictive measures

Source: WTO Secretariat.

Executive Summary of WTO Report

This is the twelfth report on G-20 trade measures. With continuing global economic uncertainty and sluggish trade growth, it remains of concern that the stock of restrictive trade measures introduced by G-20 economies since 2008 has continued to increase during the period between mid-May 2014 and mid-October 2014. Prevailing global economic conditions mean that this is not a time for complacency in the international trading system. The G-20 economies must take decisive action to reduce this stock of trade restrictions by showing restraint in the imposition of new measures and by effectively eliminating existing ones.

Of the 1,244 restrictions recorded by this exercise since the onset of the crisis in 2008, only 282 have been removed. Thus, the total number of those restrictive measures still in place now stands at 962 – up by 12% from the end of the reporting period in November 2013. Of course, this report does not capture the restrictive measures which were in place before the crisis and those subsequently removed. Nevertheless, the combination of the continuing addition of new restrictive measures and a relatively low removal rate runs counter to the G-20 pledge to roll back any new protectionist measures that may have arisen. An interesting question will also arise in the years ahead regarding how trade remedy measures will be affected by the operation of sunset clauses that provide for reviews of such measures after five years.

The report finds that the pace of introduction of new trade‑restrictive measures by the G-20 in the period between mid-May and mid-October remained unchanged from the previous reporting periods. More encouragingly, G-20 economies have adopted significantly fewer restrictive export measures. On a similar positive note, looking specifically at tariff measures, the number of import tariff liberalization measures introduced by G-20 economies during the period far exceeded the number of tariff increases.

G-20 economies applied 93 new trade‑restrictive measures during this five-month period, compared with 112 during the previous six months. As in previous periods, trade‑remedy measures account for more than 50% of these measures, followed by other restrictive import measures and restrictive measures affecting exports. In terms of trade coverage, the trade remedy actions and other restrictive import measures applied by G-20 economies during the period under review constitute 0.8% of the value of G-20 merchandise imports and 0.6% of the value of world merchandise imports. This amounts to around US$ 118 billion. Further, the import‑restrictive measures recorded since October 2008 that remain in place cover around 4.1% of the value of world merchandise imports and around 5.3% of the value of G-20 imports. This amounts to US$ 757.0 billion.

G-20 economies also applied 79 trade‑liberalizing measures, both temporary and permanent in nature, during the period under review. In terms of trade coverage, import‑liberalizing measures account for 2.6% of the value of G-20 merchandise imports and 2.0% of the value of world merchandise imports. This amounts to some US$ 370 billion – almost three times the trade value of the new trade‑restrictive measures. This relatively positive development in the area of trade‑liberalizing measures should not distract from the concerns about the accumulation of trade restrictions.

In addition, adequate information on behind-the-border measures, including regulatory measures and subsidies, is still lacking. Non-tariff measures applied by a number of G-20 economies have been the subject of recent debate in various WTO bodies. Some consider that these types of measures have become more prominent in recent years, compared to conventional border measures, and therefore the need to increase the quality of the information available is paramount. To deliver on this and enhance our understanding of the operation and effects of non-tariff barriers to trade, G-20 Members should look to provide greater transparency in this area.

Overall, this report supports the conclusion that despite the continuing increase in the stock of new trade‑restrictive measures recorded since 2008, the trade policy reaction to the 2008 global economic and financial crisis has been more muted than expected based on previous crises. This shows that the multilateral trading system has acted as an effective backstop against protectionism. However, it is clear that the system can do more to drive economic growth, sustainable recovery and development. World trade has grown more slowly than expected since the June 2014 report, due largely to slow and uneven economic growth in both developed and developing economies. On current forecasts trade growth will remain below average in 2014 and 2015. The removal of remaining trade‑restrictive measures combined with further multilateral trade liberalization would be a powerful policy response.

Joint Summary on G-20 Trade and Investment Measures

We recall that G-20 Leaders, at their last Summit meeting in St. Petersburg, Russia on 5-6 September 2013, delivered a strong statement of commitment to free trade and investment as crucial for restoring global growth. Their message on the importance of the multilateral trading system in guaranteeing free and rules-based trade and fostering economic opportunities reiterated the Group's emphasis on trade and investment as fundamental for economic growth, sustainable development and job creation globally and at national level. Recognizing the continued risks of economic slowdown and trade and investment weakening posed by protectionism, G-20 governments extended until the end of 2016 their standstill commitment with respect to measures affecting global trade and investment and their commitment to roll back new protectionist measures. Finally, Leaders also stressed the significance of a positive outcome at the WTO Ministerial Conference in Bali in December 2013 as a stepping stone towards further multilateral trade liberalization and conclusion of the Doha Development Round and urged all WTO Members to show the necessary flexibilities towards that goal.

With continuing global economic uncertainty and sluggish trade growth, it remains of concern that the stock of restrictive trade measures introduced by G-20 economies since 2008 has continued to increase during the period between mid-May 2014 and mid-October 2014. Prevailing global economic conditions mean that this is not a time for complacency in the international trading system. The G-20 economies must take decisive action to reduce this stock of trade restrictions by showing restraint in the imposition of new measures and by effectively eliminating existing ones. Of the 1,244 restrictions recorded by this exercise since the onset of the crisis in 2008, only 282 have been removed. Thus, the total number of those restrictive measures still in place now stands at 962 – up by 12% from the end of the reporting period in November 2013. The combination of the continuing addition of new restrictive measures and a relatively low removal rate runs counter to the G-20 pledge to roll back any new protectionist measures that may have arisen.

G-20 economies applied 93 new trade-restrictive measures during this five-month period, compared with 112 during the previous six months. As in previous periods, trade remedy measures account for more than 50% of these measures, followed by other restrictive import measures and restrictive measures affecting exports. In terms of trade coverage, the trade remedy actions and other restrictive import measures applied by G-20 economies during the period under review constitute 0.8% of the value of G-20 merchandise imports and 0.6% of the value of world merchandise imports. This amounts to around US$ 118 billion. Further, the import restrictive measures recorded since October 2008 that remain in place cover around 4.1% of the value of world merchandise imports and around 5.3% of the value of G-20 imports. This amounts to US$ 757.0 billion.

Despite the continuing increase in the stock of new trade restrictive measures recorded since 2008, the trade policy reaction to the 2008 global economic and financial crisis has been more muted than expected based on previous crises. This shows that the multilateral trading system has acted as an effective backstop against protectionism. However, it is clear that the system can do more to drive economic growth, sustainable recovery and development. World trade has grown more slowly than expected since the June 2014 report, due largely to slow and uneven economic growth in both developed and developing economies. On current forecasts trade growth will remain below average in 2014 and 2015. The removal of remaining trade-restrictive measures combined with further multilateral trade liberalization would be a powerful policy response.

The findings regarding investment are more encouraging and testify to the value that governments attach to open international investment policies as an important contributor to growth. The investment policy measures introduced by G-20 members between May and October 2014 tended, for the most part, to enhance openness and transparency for international investment. Also, four of the five G-20 Members that have changed their policies with respect to Foreign Direct Investment (FDI) have further opened their infrastructure sectors to foreign capital, thus reinforcing policies that promote long-term financing for investment – especially in infrastructure – that G-20 Leaders have committed to. In this connection, it is worth recalling the importance that G-20 governments send policy messages that boost public and investor confidence by adopting measures that serve genuine public policy goals (e.g. protecting national security) and that are not used as a cover for hidden protectionism.