TRADE WAR: How 12 Major Economies Have Closed Up Since The Crisis

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The last couple of decades have seen the world’s economy open up, with formerly closed economies like China and India joining global trade with gusto.The recent downturn however has caused some regression, with countries desperate to stimulate their economies via trade, occasionally at the expense of their partners. 

The Global Trade Alert, an effort by the Centre for Economic Policy Research (CEPR) to track protectionist efforts that started in 2009, found that 400 new measures have been enacted in the past 6 months.

Some measures are taken in response to perceived unfair laws on the other side, especially in the face of the eternally incomplete Doha Round of trade negotiations. At its worst protectionism not only distorts global trade, it can be a source of graft and corruption. Here’s our summary of some of the worrying trends throughout the world.

The European Union: Imposes the largest number of discriminatory trade measures in the world

Active, discriminatory measures: 64, 47, and 53 in Germany, Italy, and France. 302 total across the European Union.

Most Affected Trading Partners: China, the United States, India, and Japan

Despite calling for a reduction in global protectionist measures and a great deal of liberalization since its inception, restrictive policies exist across the European Union. These include a variety of subsidies, anti-dumping and other import safeguards, and of course, preferential treatment for member states.

Source: CEPR's Global Trade Alert

Russia: Still broadly restrictive after gaining WTO membership

Active, discriminatory measures: 169

Most Affected Trading Partners: Russia, China, Ukraine, and the United States

Russia is cited as the most actively protectionist nation in the report. It finally joined the World Trade organisation, but maintains a wide variety of trade barriers.

An EU report on protectionism cites Russia for restricting the import of live animals, restrictions on food, chemicals, and machinery, import duties for sugar, and a variety of supports for specific industries.

Source: CEPR's Global Trade Alert

Argentina: Beyond the YPF nationalization, a restrictive import licensing scheme

Active, discriminatory measures: 141

Most Affected Trading Partners: China, Brazil, the United States, and Italy

Argentina maintains a wide variety of import licensing laws and restrictions. It requires that many companies apply for licenses before bringing goods into the country, a process that can take up to six months in some cases. The European Union recently filed a complaint at the World Trade organisation over the practice.

Source: CEPR's Global Trade Alert

India: Strong restrictions on foreign retailers and agricultural tariffs

Active, discriminatory measures: 74

Most Affected Trading Partners: China, Thailand, Japan, and Italy

India was a closed economy as recently as the early 90's. Despite significant progress since then, foreign, multi brand retail firms like Walmart are excluded from the country. There are significant agricultural tariffs, in addition to public procurement preferences and other supports for domestic industry.

Source: CEPR's Global Trade Alert

China: Supports industry via state capitalism, and broadly regulates foreign investment

United Kingdom: Bank support and visa restrictions

Active, discriminatory measures: 55

Most Affected Trading Partners: China, India, the United States, and South Africa.

The U.K. is party to a variety of the European Communities measures. Additionally, though enacted in the extraordinary circumstances of the financial crisis, the government has supported banks that continue to operate internationally, possibly distorting outcomes. There have also been worrying trends in the visa system.

Source: CEPR's Global Trade Alert

Brazil: Compensating for an overvalued currency with protectionism

Active, discriminatory measures: 54

Most Affected Trading Partners: China, the United States, Germany, and Italy

Brazil's growth has come largely from an export boom, which overvalued the Real and hurt its industry. It has responded with a variety of protectionist measures, most recently in a motor vehicle trade with Mexico.

Mexico was exempt from Brazil's 30 per cent charge on imported cars, until the country announced it was breaking its free trade agreement in February. Now, both countries have enacted export quotas, further distorting free trade.

Source: CEPR's Global Trade Alert

Indonesia: Restrictions on foreign equity and commodities

Active, discriminatory measures: 47

Most Affected Trading Partners: China, Malaysia, Singapore, and Thailand

An EU report cites Indonesian restrictions on shipping and logistic companies, as well as significant new restrictions on foreign equity ownership in the country.

Indonesia also restricts commodities, and has proposed limits on trade in pharmaceuticals and processed foods in support of state owned enterprises.

Source: CEPR's Global Trade Alert

Turkey: A recent increase in tariffs and safeguard measures

Active, discriminatory measures: 29

Most Affected Trading Partners: China, Italy, France, and Germany.

Turkey has recently increased tariffs on a variety of textiles, up to 30 per cent. It additionally created a program supporting local producers of medical devices, and established new restrictions on imported foods which impose a significant burden on importers.

Source: CEPR's Global Trade Alert

Canada: Required domestic content in green energy, shipbuilding

Active, discriminatory measures: 26

Most Affected Trading Partners: China, the United States, France, and Mexico

Though relatively open, Canada has significant domestic input requirements for certain green energy projects. This includes a 50 per cent domestic content requirement for some wind projects, and a 60 per cent requirement for larger solar projects.

Source: CEPR's Global Trade Alert

United States: Recently passed an anti-dumping tariff against Chinese solar panels

Active, discriminatory measures: 25

Most Affected Trading Partners: China, Mexico, Canada, and India.

The United States has a variety of anti dumping laws, many impacting China. It additionally has a long standing sugar import quota, and a regulated public procurement process.

The number of measures may increase as the country seeks to improve the manufacturing sector.

Source: CEPR's Global Trade Alert

South Africa: The effort to provide jobs has led to extra support to preferred industries

Active, discriminatory measures: 25

Most Affected Trading Partners: China, Germany, the United States, and India.

South Africa, under pressure to provide jobs, is enacting an Industrial Action Plan which provides tax breaks, capital, and grants to preferred industries.

It additionally increased duties to protect certain value added industries, and has a preferential public procurement process for domestic industries.

Source: CEPR's Global Trade Alert

But what is global trade going to look like in the future?

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