EU report: protectionist "worst-case scenario" has been avoided

Nov 6, 2009, 14:44 GMT

Brussels - The global economic crisis has led to an increase in trade barriers, but the Group of 20 most powerful nations have managed to stave off a protectionist spiral, according to a European Union report published Friday.

According to the EU's Fifth Report on Potentially Trade Restrictive Measures, the bloc's major trade partners have introduced 223 such measures at the height of the global recession, between October 2008 and October 2009.

At the same time, 'the worst-case scenario of a protectionist downward spiral has been avoided,' said EU Trade Commissioner Catherine Ashton.

Ashton called for continued vigilance amid concerns that Russia, seen as one of the greatest offenders alongside Argentina, may be planning to introduce yet more barriers.

EU experts said the anti-protectionist commitments taken by national governments at various G20 meetings over the past year were largely responsible for preventing a potentially devastating surge in trade barriers.

The current economic crisis has been compared to the Great Depression of the 1930s, which saw a rapid increase in protectionism and beggar-thy-neighbour policies. These in turn led to a collapse in world trade and a consequent delay in a return to economic growth.

'In this context, global leaders of the G20 swiftly drew the lessons of that historical account,' the report states.

While global trade volumes in August 2009 were still 18 per cent below their peak in April 2008, 'it appears that the sharp drop in world trade was above all a reaction to the financial crisis and not driven by trade policy initiatives,' its authors say.

The protectionist measures analysed by the EU report range from classical trade barriers such as import bans or tariff increases, to more sophisticated measures such as the 'buy American' clause introduced by the United States in its public procurement sector.

The report singles out Russia, which introduced 10 new barriers during the period under consideration and was planning a further eight.

Published on the eve of a meeting of G20 finance ministers in St Andrews, Scotland, the report is to be followed in the coming weeks by a similar report by the World Trade Organization which will also looks at the EU's own behaviour during the crisis.