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Thursday, November 5, 2009

E.U. Finds Trade Barriers Rising Since Global Crisis

BRUSSELS — European exporters have faced more than 220 new and restrictive trade measures since the start of the global economic crisis, but a “protectionist worst-case scenario has been avoided,” according to a report due to be published Friday.

The document from the European Union’s trade commissioner, Catherine Ashton, says that in the 12 months since October 2008, “roughly 223” measures had been introduced by the E.U.’s trading partners or were under consideration, with Russia and Argentina responsible for the most.

However, the report says there is no sign of the spiral of protectionism that some had feared when the worldwide downturn took hold last year.

“Although, new trade-restrictive and distortive policy initiatives have been implemented since the start of the crisis,” the document says, “a widespread and systemic escalation of protectionism has been prevented.”

“Proliferation of the kind of beggar-thy-neighbor protectionist policies of the 1930s has been prevented,” adds the document, which was reviewed by the International Herald Tribune. “The current multilaterally based world trade system seems to have passed one of the most serious stress tests in its entire history.”

Global trade volumes in August 2009 were 18 percent below their 2008 peak but the report concludes that this slump was caused by the reaction to the financial crisis rather than protectionism.

The E.U. says that the commitments of Group of 20 leaders to defend free trade have sent an important signal. However, the range of restrictive measures reported include classical tariff increases, import and export bans or ceilings, non-tariff barriers and government procurement and investment measures which discriminate against foreign companies. Classical barriers alone potentially affect roughly 5 percent of E.U. exports.

And the document warns that some of the measures will remain in place as the global economy recovers — especially in countries that have not acceded to the World Trade Organization.

Russia and Belarus, which are among the nations still outside the W.T.O. framework, “are among the countries that have used border measures more widely.”

Argentina, together with Russia, has “yet again introduced the majority of new potentially trade-restrictive measures,” the document states.

Argentina and Indonesia have made much use of the “flexibility” offered by W.T.O. rules to raise applied tariffs up to their maximum levels.

Mexico, Vietnam, Paraguay, Egypt, and Brazil “have also taken advantage of this policy space but they have done so in a more ‘selective’ fashion,” the report adds.

For the United States, one potentially trade-distorting measure is listed: the Foreign Manufacturers Legal Accountability Act of 2009. The report says that this law aims to protect U.S. consumers and businesses from injuries caused by defective products manufactured abroad.

Four are listed as under consideration, including one draft bill that risks granting “unfair tax disadvantages” to subsidiaries of European companies in the United States in the insurance sector.

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