Building capacity to help Africa trade better

Slowdown in protectionism as the global trade outlook remains bleak


Slowdown in protectionism as the global trade outlook remains bleak

Taku Fundira, tralac Researcher, discusses the slowdown in protectionism as the global trade outlook remains bleak and gives a summary of the 8th G20 report on trade measures

In recent years, the world economy has been confronted with one of its worst economic crises. The financial crisis and its impact in the real economy, highly volatile commodity prices, and the failure to conclude the Doha Development Agenda have all worsened the global economic outlook. A constant concern is the risk of countries reverting to protectionism and thus eroding the gains of trade liberalisation.

In 2010, according to a joint summary prepared by the WTO, OECD and UNCTAD on the G20 trade and investment measures, these organisations noted that G20 governments continued to resist protectionist pressures, although there was evidence of new trade restricting or distorting measures surfacing. However, Evenett (2010) noted that as world trade recovered in early 2010, evidence of a corresponding slowdown in protectionism was not observed and the G20 remain the main culprits.

Protectionism discriminates against foreign goods and services in favour of domestic goods and services. Basic instruments used by governments to protect their economies include among others, tariffs and quotas, industry subsidies, currency manipulation, and import and export regulations. A reversion to protectionism clearly poses a threat to the benefits of trade liberalisation especially when trade has long been regarded as an engine for growth, development and poverty reduction in developing and least developing countries (LDCs).

Slowdown in protectionism

The latest G20 report on trade measures provides a promising outlook (unless otherwise stated, all statistical figures are taken from the 8th G20 report on trade measures released on October 31 2012). This eighth monitoring report reviews trade and trade-related measures implemented by G-20 economies in the period from mid-May 2012 to mid-October 2012. According to the report, implementation of new measures that can be considered as restricting, or potentially restricting trade, has slowed down, with 71 new restrictions recorded over the past five months.  Trade remedy actions, particularly anti-dumping investigations continue to constitute the main trade measure used by G-20 economies, although not by all of them. This is followed by border measures, mainly in the form of more stringent customs procedures, while there were fewer export restrictions than in previous periods.

A wide range of products are affected by these the new trade-restrictive measures implemented by G-20 economies over the past five months.  Sectors most frequently affected over the review period include:

  • iron and steel (and articles of); plastics, organic chemicals; rubber products; man-made staple fibres; and  edible vegetables and fruits (and preparations of).

While sectors most heavily affected in terms of trade coverage are:

  • electrical machinery; mineral fuels and oils; fertilizers; chemical products; machinery and mechanical appliances; and  plastics.

The report further notes that the bulk of the trade restrictions introduced at the onset of the global crisis are still in place. By mid-October 2012, only 21% of the recorded measures implemented in October 2008 were removed and these were mainly the termination of trade remedy actions; the end of temporary tariff increases; and the elimination of certain export restrictions. This slow removal of previous restrictions impacts on the accumulation of measures, thus gradually adding to the stock of restrictions and distortions that existed before October 2008.

Future outlook – impact on trade

According to the WTO, the recovery of the global economy remains weak and unemployment levels high. The outlook for the global economy is worse than at the time of release of the previous G-20 monitoring report due, among other things, to budget developments and the persistent debt crises in some major economies.

In light of these developments, the WTO Secretariat recently revised downward its forecast for world trade growth in 2012 to 2.5% from its 3.7% forecast issued in April 2012.  The volume of trade growth in 2013 is now forecast to be at 4.5%, well below the long-term annual average of 5.4% for the last 20 years.

World trade growth in the first half of 2012 slowed down mainly due to the deceleration in imports of developed countries and a corresponding weakness in the exports of developing economies. Forecast for 2012, full year review reveals that merchandise exports from developed countries to grow by 1.5% and those from developing countries by 3.5% (WTO, 2012).

The 8th G20 report on trade measures can be accessed directly from the WTO website link.



Evennet, S. J. 2010. The state of protectionism on the eve of the Seoul G20 summit, A VoxEU.org Publication, 8 November 2010. Available at: http://www.voxeu.org/article/protectionism-eve-seoul-g20-summit

WTO, 2012. The 8th G-20 Report on Trade Measures, WTO publication.

Comments received:

Gustav Brink, 12 November 2012 09:46 AM:

“I think Taku’s comment is perhaps a little early. Brazil currently has 57 on-going anti-dumping investigations and recently significantly increased the customs duties on 100 different products, including several that significantly affect South African exporters as the SACU-Mercosur Agreement has not yet been ratified by all concerned.

Argentina has recently significantly stepped up protectionism and India currently has 55 open anti-dumping investigations. All indications are that South African will impose anti-dumping duties on poultry from Brazil, despite been guaranteed of a WTO dispute (which it has no chance of defending) if it did, while indications are that it will initiate several new anti-dumping investigations before the end of 2012 or early in 2013.”


Email This email address is being protected from spambots. You need JavaScript enabled to view it.
Tel +27 21 880 2010