Geneva - Protectionism is on the rise as more countries try to give their economies a leg-up by blocking foreign competition - especially Chinese imports, according to a report by independent economists to be published on Wednesday.
The report, by Global Trade Alert (GTA), found almost 200 protectionist steps taken since the G20 summit in Seoul last November.
Four out of five of those steps were taken by G20 countries, and almost half - 91 out of 194 - would harm Chinese interests.
Many politicians are facing leadership cycles and a worsening economic prognosis, which could tempt them to reach for the short-term popularity offered by protectionism, said Simon Evenett, an economics professor at St Gallen University in Switzerland who coordinates GTA.
“Moreover, now that many governments are cutting their budgets and that interest rates cannot fall much further in many countries, restricting foreign competition is one of the few tools available to policymakers when responding to pleas from domestic firms and trade unions,” said an executive summary of the report emailed to Reuters.
Although politicians love to rail against protectionism, the report said that many measures were unannounced and only came to light much later.
GTA had previously recorded a fall in protectionism in the second half of 2010, but it subsequently uncovered almost four times as much protectionism as previously thought in the fourth quarter, showing that a brief decline had quickly reversed.
“These days artful governments don’t use transparent protectionism, like tariffs, that much. Murky protectionism takes longer to detect but is no less harmful to global commerce,” Evenett said in a statement.
That means the 84 protectionist measures that GTA found in the first quarter of 2011 could end up in the 100-125 range, similar to 2009, when policymakers were vocal about the dangers of trade barriers going up.
“Policymakers - in particular from the larger G20 countries - must renew their vigilance against protectionism. Otherwise a ’people in glass houses’ dynamic will reassert itself, whereby governments won’t to criticise others that close borders to trade precisely because they know their own protectionist acts will come under scrutiny,” Evenett said.
Among the trade-distorting measures catalogued by GTA since the G20 summit were Indonesia’s decision to force food imports to use certain seaports and China’s introduction of a “national security” review of foreign acquisitions of local companies.
GTA found the European Union now had more discriminatory trade measures in place than another other trading entity, with 227 of the total 1 055. Russia, which is not a member of the World Trade Organisation, was second with 105.
The EU also led the world when ranked by the number of trading partners affected by its discriminatory measures, with its total of 180 just ahead of Argentina’s 175 and China’s 162.