Leaders of the G20 look set to reiterate their commitment to renounce protectionism even as a raft of reports released on the eve of their summit have shown a dramatic surge in trade-distorting measures.
The world’s richest developed and emerging nations added almost 90 protectionist measures since their last summit in Cannes in November, according to the independent monitor Global Trade Alert.
GTA said that the G20 had implemented 226 more trade distorting measures in 2010 and 2011 than first estimated, an increase of 36%, indicating that protectionism had continued to thrive after the spike in 2009.
The author of the report, Simon Evenett of St Gallen University, said the fact the G20 made up almost 80% of all protectionist measures showed that the leaders’ pledges were “useless”.
“Don’t expect much on protectionism from the G20 summit in Mexico,” he told Emerging Markets. “The G20 hasn’t stuck to its word and won’t start now. The primary battle against protectionism is in national capitals not on the world stage or in international organizations.”
The report, came as the World Bank warned governments that a return protectionism could trigger a “sharp” downturn.
In an interview with Emerging Markets Andrew Burns, head of macroeconomics at the World Bank, which last week cut its forecasts for global growth this year, warned protectionism could worsen the outlook.
“Virtually all economists watching the global situation are concerned by the possibility of protectionist tendencies materializing,” he said. “Indeed there have been some indications of more protectionist measures recently than in the preceding several years.”
He said that on the positive side the actual number of measures being taken was “relatively little” compared with previous episodes in history.
But he added: “It is very important for us to stay in that world because if we do get into that situation we do start to see tit-for-tat trade actions then we could find the situation deteriorating quite sharply.”
The GTA report comes just a week after the European Commission condemned a “staggering” rise increase in protectionism around the world. It said G20 nations had introduced 123 new trade restrictions over the last eight months – a rise of just over 25%.
Last month the World Trade Organization and UNCTAD, the United Nation’s trade committee, voiced “concern” after reporting an increase in trade-distorting measures.
They found the G20 implemented 124 new trade restrictive measures in the seven months to mid-May, affecting around 1.1% of their merchandise imports, or 0.9% of world imports.
Pascal Lamy, director-general of the WTO, said: “Weak recovery of the global economy and persistent high levels of unemployment are continuing to test the political resolve of G20 governments to resist trade protectionism. The past seven months have not witnessed any slowdown in the imposition of new trade restrictions.”
The gloomy message from the GTA and other report stands in stark contract to the continued public stance by the G20 leaders – expected to be reiterated in tomorrow’s communiqué – that they will “avoid protectionism and not turn inward”.