Rising protectionism and degeneration of protectionist trade policies

Tariffs are not the only instruments that national governments use to limit imports or stimulate exports. There are several other non-tariff barriers that exist, which in most cases are not easy to detect.

Among these measures there are import quotas or other restrictions placed on the imports of foreign competitors, trade remedies (ex. antidumping, anti-subsidy and safeguard measures), government subsidies or policies aimed at favoring domestic firms with respect to foreign companies (an example are public procurement policies, where local firms are favored in participating to public tenders), the use of health and safety regulations to discriminate against imported products (ex. import bans justified with health or safety reasons), or of quality standards that make particularly hard the access of foreign products in certain markets.

Excessive bureaucracy associated with the process of importing and exporting is another factor that also restrict trade, like in the case of long or unnecessarily complex and lengthy paperwork associated with international transactions.

The 21th edition of the WTO Monitoring Report on G20 trade measures observes that trade restrictions in G20 countries have kept expanding in terms of trade-coverage in the last period, by affecting even larger quantities of products and services than in the past. On the other hand, the 2019 UN Global Survey on Digital and Sustainable Trade Facilitation report concludes that the insufficient implementation of trade facilitation measures in less developed countries is putting at risk their economic growth efforts, because of the particularly high trade costs in such countries.

The website www.globaltradealert.org, which provides a database of protectionist measures implemented worldwide, raises an alarming trend towards the increase of such measures on a global scale. The interactive map on this website shows how the United States and China are the two countries that have introduced the highest number of restrictions to trade (a phenomenon exacerbated by the recent trade war between the two countries). This casts serious doubts over the capability of the international community to maintain an open and liberalised international trade system, as the WTO wishes for. 

The risk is that this situation will degenerate in a severe outbreak of protectionist trade policies, where trade barriers will provoke a sharp contraction in world trade, similarly to what happened in the early 1930s.

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