G20 Trade Barriers 2009
Global Trade Alert Website Tracks Protectionist Actions by Country
Sep 22, 2009
Today, world leaders claim to recognize the dangers of inward-looking protectionism. Most experts agree that trade barriers will only exacerbate the projected 2.9% decline in the global economy and 9.7% contraction in world trade expected during 2009.
When President George W. Bush spearheaded the G20 Leaders Summit in Washington, DC in November 2008, G20 leaders preached that it would be folly to embrace protectionism. Fixating only on recovery within one’s own borders is the kind of tunnel vision that led to disaster during the Great Depression.
Specifically, G20 members agreed not to:
- Erect new barriers to investment or international trade including discriminatory tariffs;
- Impose new export restrictions; or
- Implement any measures to stimulate exports contrary to World Trade Organization (WTO) standards.
The Standstill Provision
President Barack Obama was in office for the follow-up London Summit declaration of April 2009. According to Alan S. Alexandroff, G20 leaders at the London Summit declared that reinvigorating world trade and investment is essential for restoring global growth, and that G20 countries would “not repeat the historic mistakes of protectionism of the previous eras.”
The G20’s public resolution to resist trade barriers at all costs became know as the “Standstill Provision.”
Global Trade Alert for Trade Barriers
In June 2009, an independent watchdog organization called the Global Alert began to monitor international trade measures and post them on their consolidated global trade alert website.
The results of Global Alert’s investigations provide a startling wake-up call.
In the 300 days since George Bush called the first crisis-related G20 summit last November, G20 member countries have broken their pledges to not impose protectionist actions one hundred times.
G20 Countries Creating the Most Trade Barriers
As of August 1, Global Trade Alert reported that G20 countries had implemented 41 red-flag trade measures that definitively discriminate against foreign commercial interests. Russia was the worst violator, having introduced 9 discriminatory trade barriers. Tied for second was the United States and Indonesia with 6 red flag offences, followed by Japan with 5. Saudi Arabia had 3 while Argentina, China and Mexico each had 2.
G20 Countries Implementing Potentially Discriminatory Trade Measures
The US had a leading 19 trade measures that had potentially discriminatory aspects and were implemented or had been announced or are under consideration. While Canada did not implement any red flag trade measures, that country had 9 potential trade barriers in the works. China had 3, India had 2, while the European Union, Japan, Mexico and South Africa each had 1 of these amber-flag trade measures.
G20 Liberalized Trade Actions
The Global Alert had some good news, reporting that G20 countries had implemented 7 trade actions that involved liberalization on a non-discriminatory basis or the measure involves no further discrimination and is likely to improve transparency.
The US introduced 2 of these green-flag trade measures. Australia, the EU, France, Germany and Mexico each launched 1 trade action to help remove barriers to international trade.
America’s Protectionist Tariff on Chinese Tires
On September 11, President Obama announced the imposition of a 35% tariff on automobile and light-truck tires imported from China. In contrast, Canada charges a 7% duty on these tires. The US argues that it has the right to impose a special safeguard provision simply by showing that American workers have suffered a market disruption or oversupply of imported goods from the People’s Republic. The safeguard provision was part of an agreement for America to support China’s entry into the World Trade Organization back in 2001.
From 2004 to 2008, China’s share of the American tire market grew from 4.7% to 16.7%. Also according to Edmund L. Andrews of The New York Times, 4 US tire factories closed from 2006 to 2007. Several more are set to close in 2009.
This is a flagrant example of a “made in America” protectionist trade action that contradicts the G20’s commitment to removing trade barriers at all costs under the “Standstill Provision.” Instead of setting an example on encouraging growth in international trade, this political move jeopardizes the still-fragile recovery of the global economy.
Already, China has retaliated by proposing punitive tariffs on American-exported automotive products and chicken meat.
Barack Obama has much to answer for when he faces Chinese leaders at the Pittsburgh G20 Leaders Summit from September 24 to 25.
 |
 |
 |
