Protectionism is thriving and ‘could hit growth’

Riot police line up at an anti Free Trade Agreement rally in Seoul, South Korea.
Chung Sung-Jun | Getty Images
Riot police line up at an anti Free Trade Agreement rally in Seoul, South Korea.

Trade protectionism has continued to increase across the world over the last year, with over 150 new trade restrictions created and almost 700 introduced since October 2008, according to a report by the European Commission.

While the 154 new restrictions seen over the 12 months to May 2013 marked a slowing trend compared to the previous year, the Commission said there was a worrying increase in the adoption of highly trade-disruptive measures, such as those applied directly at the border in the form of import duty hikes.

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"All of us need to stick to our pledge to fight back against protectionism. It is worrisome to see so many restrictive measures still being adopted and virtually none abolished,"said European Union (EU) Trade Commissioner Karel De Gucht. "The G-20 agreed a long time ago to avoid protectionist tendencies because we all know these only hurt the global recovery in the long run."

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The Commission said that emerging conomies had applied the highest number of potentially trade-restrictive measures, which it described as a "striking phenomenon," with Brazil, Argentina, Russia and Ukraine introducing the heaviest tariff increases. Brazil was singled out in particular, accounting for more than one-third of restrictions related to government procurement and deliberately shielding some of its domestic industries from foreign competition.

The Commission argued that trade was vital for economic growth in developed economies - as well as developing and emerging countries - and that trade restrictions would have negative consequences on expansion and delay the global recovery.

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The report comes as the U.S. and the EU attempt to finalize the world's most ambitious free-trade zone by the end of 2014. The talks have been made difficult by demands from France that movies and online entertainment be protected from competition from Hollywood and Silicon Valley, and ongoing European concerns about U.S. spying.

The Commission stated that the upcoming G-20 Summit in St. Petersburg, Russia - a country that the report said had introduced a number of potentially restrictive import and export measures - represented an opportunity for world leaders to reflect on the trade issue, "and to confirm the need to preserve unimpeded trade, as well as to reaffirm the commitment not to resort to trade restrictive measures during the crisis period and to rectify without delay any measure introduced."