All G-20 countries have implemented protectionist trade measures over the last two years. By September 2009, the G-20 were responsible for 172 such measures being implemented, with hundreds more “in the pipeline”. If only half the upcoming measures were to actually take effect, the world could see a global cycle of protectionist retaliation not seen since the Great Depression.
Protectionist trade measures meant to protect jobs have the opposite effect. This is because other countries either emulate or retaliate against them, resulting in lost export-related jobs that typically exceed those saved through protectionist actions. For example, it’s estimated that the 43,000 jobs that the US government claims to be saved by the “Buy American” legislation could result in a loss of over 200,000 jobs because of foreign emulation or retaliation.
Russia, the United States, India, Argentina and Brazil are the five most protectionist countries based on measures implemented from 2008-2009 and those “in the pipeline”. The least protectionist countries are Mexico, Turkey, Australia, the Republic of Korea, South Africa and Saudi Arabia.
In closing, the report urges G-20 leaders to take initiatives to conclude the Doha Round; expedite the WTO’s dispute settlement mechanism; establish a regular G-20 trade ministers meeting; and appoint a G-20 group of internationally recognized trade experts, or “G-20 Wisemen”, to identify and publicly name the countries implementing new protectionist measures.
Victor K. Fung, Chairman of ICC, said: “During a time of economic recovery such as this, the world needs fewer barriers to trade, not more. The conclusions of this report should serve as stark reminders of the dangers of protectionism — especially at times of economic crisis— and why the world economy needs a comprehensive, multilateral trade agreement such as the WTO’s Doha Round to foster economic growth and stability.”
Findings from the report were presented today by Gary C. Hufbauer, Senior Fellow, Peterson Institute for International Economics. The reportwill be discussed at the ICC World Business Summit in Hong Kong on 30 June 2010. An event co-organized by the ICC and the Hong Kong Trade Development Council, the Summit, titled “New Global Economic Realities: Asia Pacific Perspectives”, addresses the transformation of the global economy, global solutions in an increasingly interdependent world, and how the post-financial crisis period has created new trade opportunities. The financial crisis also emphasized the role of the Asia-Pacific region as a resilient, driving force in the global economy.
Participants in the Summit will include leading figures in business and finance such as Martin Wolf, Associate Editor and Chief Economics Commentator for the Financial Times, Chen Yuan, Chairman of the Board of Directors, China Development Bank and David L Sokol, Chairman, President and CEO, NetJets, Inc. Donald Tsang, Chief Executive of the Hong Kong Special Administrative Region, will deliver the keynote address.
To read a copy of the report “G-20 Protection in the Wake of the Great Recession”, click here
For more information on ICC's Research Foundation (ICCRF), click here