The G20 group of industrialised nations’ credibility is in tatters just five months after it pledged to end protectionism in response to the global financial crisis.
A just-released World Bank report has found that 17 members of the 20-member group have embarked on protectionist measures in one form or another since they signed a pledge on November 15 not to go down that path.
That communiqué was relied upon heavily by countries like New Zealand who are pushing for improved trade liberalisation, especially in agriculture.
Just days into his premiership at the APEC summit in Peru last month, John Key was an energetic advocate for free trade as an antidote to the effects of the global economic slowdown.
He warned business leaders that if trade ministers were unable to re-active the stalled Doha multilateral trade round at an imminent ministerial meeting in Geneva, then this would be “nothing short of political failure.”
However, since the beginning of the financial crisis, officials have proposed and/or implemented about 78 trade measures, according to the World Bank’s monitoring list of trade and trade-related measures.
Of these, 66 involved trade restrictions, and 47 trade-restricting measures eventually took effect.
This gives the G20 a major credibility problem less than two weeks before it is due to hold a much-vaunted summit in London on April 2, ostensibly to devise new ways to cope with the global financial crisis.
Report authors Elisa Gamberoni and Richard Newfarmer said the protectionist trend was “incipient but worrisome.” They said the cost of inaction in the World Trade Organisation’s Doha multilateral negotiations was rising.
Most countries had not yet raised tariffs to bound levels or taken full
advantage of headroom on agricultural subsidies.
However, as the global recession deepened, many countries may well do so, they said.
Tariff binding is a commitment not to increase a rate of duty beyond an agreed level. Once a rate of duty is bound, it may not be raised without compensating the affected parties.
New Zealand diplomat Crawford Falconer included proposed lower bindings and caps on agricultural subsidies in his draft texts as chairman of the WTO agriculture negotiations.
The report said these proposed measures would have kept many markets open, but in the current protectionist environment, the chances of that were diminishing.
“This underscores the importance of pushing forward with a rapid
conclusion of the Doha round,” it said.
The G20 members are: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom, the United States, and the European Union.
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