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WTO records moderate rise in G20 trade restrictions

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WTO records moderate rise in G20 trade restrictions

WTO records moderate rise in G20 trade restrictions

The WTO’s seventeenth monitoring report on Group of 20 (G20) trade measures, issued on 30 June, shows that trade restrictions in G20 economies have risen at a moderate rate similar to that of previous years, despite the uncertainty facing the global economy. The report calls on G20 governments to show leadership in supporting open and mutually beneficial trade as a driver of economic growth and development.

A total of 42 new trade-restrictive measures were applied by G20 economies during the review period (mid-October 2016 to mid-May 2017), including new or increased tariffs, customs regulations and rules of origin restrictions. This is an average of six measures per month – slightly higher than in 2016 but below the longer-term trend observed in 2009-2015 of seven per month.

G20 economies also implemented 42 measures aimed at facilitating trade during the review period, including the elimination or reduction of tariffs and the simplification of customs procedures. At an average of six new trade-facilitating measures per month, this represents a similar level compared to the previous reporting period (mid-May to mid-October 2016) and is in line with the declining trend observed in 2016.

It is notable that the estimated trade coverage of trade-facilitating measures implemented by G20 economies (US$163 billion) significantly exceeded the estimated trade coverage of trade restrictive measures (US$47 billion). In addition, liberalization associated with the 2015 expansion of the WTO’s Information Technology Agreement (ITA) continues to feature as an important contributor to trade facilitation

Commenting on the report, Director-General Roberto Azevêdo said:

“The moderation and restraint that we have seen in trade policies shows that the trading system is doing its job in keeping global commerce flowing and resisting protectionism. Nevertheless, there is a high level of economic and policy uncertainty, and therefore we need to remain vigilant. Efforts should be stepped up to avoid implementing new trade-restrictive measures and to reverse existing measures.

I urge G20 economies to continue showing leadership in supporting open and mutually beneficial trade, and in further strengthening the rules-based trading system. The G20 should seek to continue improving the global trading environment, including by implementing the WTO Trade Facilitation Agreement, which entered into force in February this year.”

The initiation of trade remedy investigations (which the report does not classify as restrictive or facilitating) remained the most frequently applied measure, representing 50% of all trade measures taken during the review period.  However, the amount of trade covered by these is relatively small (US$25 billion for trade remedy initiations and US$6 billion for terminations of duties). The main sectors affected by trade remedy initiations were wood and articles of wood; vehicles; and furniture, bedding material, and lamps. Main sectors where trade remedy duties were terminated were articles of iron and steel; machinery and mechanical appliances; and aluminum and articles thereof.

The G20 economies are Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Republic of Korea, Japan, Mexico, the Russian Federation, Saudi Arabia, South Africa, Turkey, the United Kingdom and the United States, as well as the European Union.

Key findings

  • G20 economies applied 42 new trade-restrictive measures during the review period (mid-October 2016 to mid-May 2017), including new or increased tariffs, customs regulations and rules of origin restrictions. This equates to an average of six measures per month which is slightly higher than in 2016, but below the longer-term trend observed from 2009-2015 of seven per month.

  • G20 economies also applied 42 measures aimed at facilitating trade over this review period, including eliminated or reduced tariffs and simplified customs procedures. This equates to an average of six new measures per month which is similar to the previous period and in line with the declining trend in the application of trade facilitating measures observed in 2016.

  • During the review period, the estimated trade coverage for trade facilitating measures (US$163 billion) significantly exceeded the estimated trade coverage of trade restrictive measures (US$47 billion).

  • This Report harmonizes the approach taken to trade remedies in the G20 Monitoring Report with that of the WTO-wide Report by introducing a separate annex for trade remedy measures. It is of interest to note that initiations of trade remedy investigations represented 50% of the total trade measures taken during the review period; although the amount of trade covered is relatively small (US$25 billion for trade remedy initiations and US$6 billion for terminations).

  • Transparency and predictability in trade policy remains vital for all actors in the global economy. The G20 should show leadership in reiterating their commitment to open and mutually beneficial trade as a key driver of economic growth and a major engine for prosperity.

  • Faced with continuing global economic uncertainties, the G20 should seek to continue improving the global trading environment, including by implementing the WTO Trade Facilitation Agreement, which entered into force in February this year, and working together to achieve a successful outcome at the 11th WTO Ministerial Conference in December.


Seventeenth UNCTAD-OECD Report on G20 Investment Measures

The joint UNCTAD-OECD Report indicates that, for the first time in years, the regular inventory of G20 Members' investment policy measures records a relatively greater proportion of restrictions to international investment.

During the reporting period (from mid-October 2016 to mid-May 2017), seven G20 Members have introduced investment policy measures specific to foreign direct investment (FDI). Among those, four countries took liberalisation measures in a variety of sectors. On the other hand, two countries restricted certain outward investment for public policy reasons and one country introduced a cap on foreign capital participation in payment transaction processing.

G20 Members (Argentina, Japan, Saudi Arabia and Turkey) concluded six new bilateral investment treaties (BITs). In addition, Argentina and Brazil concluded an Intra-MERCOSUR Cooperation and Facilitation Investment Protocol; the United States a Trade and Investment Framework Agreement (TIFA) with Paraguay; and the EU and Canada concluded a Comprehensive Economic and Trade Agreement (CETA). The termination of at least 10 BITs concluded by G20 Members entered into effect.

The Report cautions that, given the relatively low number of FDI-related policy measures that were taken in the reporting period, it is too early to interpret the comparatively higher ratio of restrictive measures as foreshadowing a trend. Nonetheless, these findings should focus policymakers’ attention to the commitments by G20 Leaders in favour of an open world economy, the promotion of global investment, and the thrust of the G20 Guiding Principles for Global Investment Policymaking, which call for open, non-discriminatory, transparent and predictable conditions for investment.

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