Third Report on Potentially Trade Restrictive Measures
Total Page:16
File Type:pdf, Size:1020Kb
Report on potentially trade restrictive measures 12 June 2009 Introduction and main findings This is the third report on new potentially trade restrictive measures planned or implemented by our trading partners in the face of the economic crisis. The information used in this report has been primarily gathered by European Commission Delegations / Market Access Teams in G-20 countries and other key markets through their local monitoring exercises1, as well as from business sources providing specific contributions. The report provides an overview of the data received since mid-March 2009. It shows that trade restrictive measures continue to be on the rise, including in some G20 members. Moreover, the types of measures identified have become more complex and diversified, notably when they are part of broader stimulus packages. Therefore, increased alertness, as well as political determination to use all opportunities to address the measures put in place so far, remains all the more necessary at this stage. The world-wide economic downturn has been dramatic since the start of the financial crisis last autumn. 2009 seems set to be the first year in which global trade will decline year-on-year since the early 1980s. Although more indications continue to emerge pointing to the gradual stabilisation of the financial sector (stock market indices, lower risk spread), the signals from the real economy continue to be at best mixed. Despite some evidence of a slowdown in the pace of decline, the evolution of exports and imports of all the major trading countries remains very negative. Moreover, the fact that unemployment continues to rise in most major economies, means that the global recovery is still not fully underway. This latter aspect is particularly important because real economy developments are crucial to the political environment within which trade policy is framed. At the G20 summit on 2 April in London, leaders reaffirmed their shared responsibility and commitment to resist protectionist pressures and agreed to extend this commitment until the end of 20102. In addition, a specific mandate has been given to the WTO secretariat to carry out surveillance of new trade and trade-related measures to be backed by quarterly technical reports. There is thus a sense of urgency at global level to resist any trade restrictive tendencies that may be prompted by the economic crisis. 1 Information was gathered from EC Delegations in: USA, China, Japan, Canada, Hong-Kong, South Korea, Mexico, Columbia, Singapore, Russia, India, Australia, Thailand, Saudi Arabia, Brazil, Turkey, Indonesia, Malaysia, Norway, South Africa, Philippines, Israel, Venezuela, Ukraine, Chile, Nigeria, Argentina, Algeria, Vietnam, Egypt, Kazakhstan, New Zealand, Switzerland (Bern), Tunisia, Morocco, Taiwan. 2 In November 2008 the G20 leaders made two specific commitments to keep trade open and transparent. First, they pledged that: within the next 12 months, they will refrain from raising new barriers to investment or to trade in goods and services, imposing new export restrictions, or implementing World Trade Organisation (WTO) inconsistent measures to stimulate exports. Second, they agreed to: strive to reach agreement this year on modalities that leads to a successful conclusion to the WTO’s Doha Development Agenda with an ambitious and balanced outcome. At the G20 summit on 2 April 2009 in London global leaders committed themselves (among other things) to 'reaffirm the commitment made in Washington: to refrain from raising new barriers to investment or to trade in goods and services, imposing new export restrictions, or implementing World Trade Organisation (WTO) inconsistent measures to stimulate exports. In addition we will rectify promptly any such measures. We extend this pledge to the end of 2010'. 1 The EU has to continue to show global leadership in the international reaction to the financial and economic crisis, namely in the framework of the G20 and the WTO. At a time of rapid change and economic turmoil, Europe needs to make the case for openness and engagement, not isolation and retreat. Against this background, the following overall conclusions can be drawn from the monitoring exercise: • Whilst no generalised race towards protectionism was detected during the period covered by the report, the emergence of new trade restrictive or distortive measures confirms that extreme vigilance is required. Regular monitoring of the situation needs to be continued. It will not only serve to collect precise information that would allow assessing the trade distortive or restrictive effects of policy measures worldwide but also to send a strong signal to our partners that there will be no complacency on the part of the EU. • Some G20 members continue to impose trade restrictive measures within the framework of their governmental policy. These actions clearly go against the G20 commitments not to resort to direct or indirect protectionism and show the need for further peer pressure to ensure full respect of the G20 commitments. The actions taken by Russia and Indonesia set out in this report merit special attention in this respect. In addition, Brazil has recently taken for the first time trade restrictive measures in the steel sector. • Many countries, including in the developing world, have chosen to adopt stimulus packages, in particular China, Russia, and the US. Although most of these measures aim at economic recovery and promotion of trade, some of them may lead to trade restrictions adopted in more subtle forms. This is the case in particular when stimulus packages contain discriminatory elements, for instance in the area of subsidies or local content requirements for government procurement purposes. Therefore, further attention should be paid in the future - in particular to measures related to government procurement - as their full impact may only become clear at a later stage. • In terms of sectoral coverage, the trend from the two previous reports is confirmed, i.e. trade restrictive measures continue to be focused on certain sectors, such as, the agricultural and food, iron/steel/metals and automobile sectors. • This time we have received further detailed information regarding services, which has allowed the identification of certain trade restrictive measures in this sector. Close monitoring will be required to determine whether this reflects a new pattern that manifests itself more slowly due to the increased complexity of the regulatory framework applying for services. The fact that services remain less internationally integrated than other economic activities and less bound by international rules, warrants additional caution in monitoring the situation. • An additional reason for remaining very firm in resisting protectionism relates to the risk of domino effects that is inherent to the adoption of any protectionist measures. Recent moves in Canada aiming at reciprocating 'Buy American' restrictions against US companies are illustrative in this respect. 2 • The WTO-monitoring exercise is likely to remain an important component of our trade policy for quite some time. In this context it will result in closer scrutiny of our trade measures, which needs to be taken into account when devising our trade policy. Moreover, it will be crucial to stimulate the necessary peer pressure for the effectiveness of the protectionism standstill commitment agreed by the G20. In terms of sequencing, it seems appropriate to align future reports to the WTO reports and issue them on a quarterly basis, a few weeks ahead of the WTO report. The information contained in this report is also used for the EC contribution to the WTO secretariat. The report is organised as follows. Section 1 outlines the most recent developments in terms of new measures reported since mid-March 2009. Section 2 analyses, more in detail, some salient trends and features since the inception of the monitoring exercise in January, notably as regards industry, stimulus packages, trade defence measures, and services. The annex lists all measures which have been reported, by Market Access Teams in EC Delegations and business associations in Brussels, since the start of the exercise in early January 2009. As in the previous report, measures are included that are planned, are to be implemented, or are already implemented. In some cases, the measures previously reported have been complemented with further information from the EC Delegations and business3. It should be highlighted once again that working closely with Member States and business, in particular through the Market Access Teams in European Commission Delegations, has proved to be very efficient. This is true notably in terms of capacity to quickly collect and analyse information on new planned measures, thus contributing also to the early warning aspect of our efforts. I. Recent developments: new measures reported in key trade partner countries Since the last report presented on 27 March 2009 new relevant policy developments have been identified in several countries, with additional potentially trade restrictive and distortive measures. Tables 1, 2 and 3 give an overview of newly reported measures. They are classified as follows: - measures which are clearly trade restrictive and trade distortive; - measures which lift previous restrictions; - measures aiming at boosting the economy which may have either a negative impact on trade or may stimulate trade ("support measures"). Measures which are planned but not yet officially adopted or implemented