Claims 330 restrictive moves by key trading partners since 2008.
Ahead of the G20 summit in Seoul next week, the European Union (EU) has stated that the observance of the G20 pledges both to avoid the introduction of new protectionist measures and to remove those in forces or planned has been at best ‘mixed'.

New report

In a new report on potentially trade restrictive measures, seventh in a series of reports, the EU contended that as many as 330 trade restrictive measures have been taken by its major trading partners since the outbreak of the financial and economic crisis in 2008.

Of this, in the latest span covering May and September, 66 new trade restrictive measures have been introduced by the EU's trading partners. It deplored the plight that the economic recovery underway in many countries has, therefore, not yet translated into “a reversal of the tendency towards new trade restrictive measures noted in the past reports”. Out of 332 measures, a good half have a behind-the-border tenor and have been subject to a complex domestic decision-making process and, hence, their removal is not only “a matter of political will but also bears on the necessary administrative framework.

Remain locked-in

Behind-the-border measures, therefore, tend to remain ‘locked in', it said, adding that there is some danger of “the institutionalisation of already introduced measures and the complexity of the removal of such measures”.

Pointing out that only about 10 per cent of the measures put in place in the context of the crisis have been recanted or allowed to expire, the report asserted that “this figure is clearly at odds with the repeated commitments made by G20 leaders and confirmed at the last G20 summit in Toronto to rectify such measures”.

Hence, it said, at the G20 summit in Seoul, leaders will take stock once again of their two-fold pledge (i) not to resort to trade restrictive measures during the economic and financial crisis and (ii) to rectify without delay any measures introduced.

While the measures introduced since early autumn 2008 continue to be implemented across the board even where the crisis has alleviated, there remain “mounting concerns that the measures have become part of the post-crisis trade regime, creating “an additional layer of burden on exporters”.

It said the danger of mounting non-tariff barriers, in particular in the area of government, as well as import and export tariff increases, remains present and there would be “a lasting impact on the EU trade flows, even after the crisis”.

Affected sectors

The most affected EU sectors were still agro-food, automotive, services, textile and clothing.

New measures have been introduced to affect automotives and textiles in particular, though there have been fewer measures applied in the steel and other metals sector.

Worrying trend

Stating that in the reference period a spurt in the adoption of export restrictions for raw materials has been noticeable, it said China has significantly reduced the annual export quota of rare earth for the second half of 2010, which is “a worrying trend”.

While taking note of India's slapping of an export tax of Rs 2,500 a tonne on raw cotton and of three per cent on cotton waste on top of an increased export duty on iron ore and concentrates that was adopted end of April this year, the EU report specifically mentioned about “a wide support package to traditional labour- intensive industries” by India in August this year, including also interest rate subsidies.

It further underlined “the quite intensive use of anti-dumping by China, India and Israel against the EU”.