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World Trade

Blocked opportunities

by Peter Hauff
Trade barriers are multiplying internationally. Governments of emerging markets are thwarting economic aspirations of developing countries, for instance in the textiles trade. By Peter Hauff

The Swiss non-governmental organisation Global Trade Alert (GTA) documents protectionism worldwide. In November 2011, it warned that tensions in international trade were escalating. The reason, according to GTA, was the impact of the global financial crisis that broke in 2008. The recently published annual report of the World Trade Organisation (WTO) similary reports more trade barriers. Pascal Lamy, WTO director general, even speaks of “economic nationalism”. The WTO counted 340 new protectionist measures last year, after 220 new mea­sures in 2010.

The WTO warns that things could become as bad as during the Great Depression of the 1930s. Back then, many countries blocked international trade, relying only on their domestic markets, thus aggravating the global downturn. In Lamy’s opinion, many emerging markets are now pursuing similar policies in efforts to seal off their markets. For instance, import duties have lately risen drastically in the Mercosur, a preferential trade area in South America.

World champion Argentina

According to GTA, Argentina holds the record with almost 200 new trade restrictions. After its financial crisis in 2002, the government did not scrap regulations, fees and proscriptions. Lately, it has even been extending them as President Cristina Kirchner is restricting imports in order to boost domestic production, the critics argue. This policy annoys the other Mercosur members. A third of Argentina’s imports comes from Paraguay, Brazil and Uruguay.

Brazil added 81 new protectionist mea­sures, according to GTA. South America’s biggest economy has, for example, recently increased the tax on imported cars. The same report states that Russia announced 172 new trade restrictions, China 95 and India 101.

According to the WTO, other issues hamper international trade too. Among other things, the report lists the high sovereign debts of rich nations as well as natural disasters, including the earthquake and tsunami in Japan last year. The interruption of Libyan oil production in the course of revolution also weakened international trade, resulting in an eight percent decline of African exports, the WTO states, adding that the revolutions in Tunisia and Egypt affected business too.

Peter Hauff