A dangerous rise in protectionist measures threatens to derail G20 efforts to stimulate growth and create jobs
“The world economy is experiencing the worst crisis of the last 60 years, with growth falling in many regions, unemployment rising, multilateral talks stalled and protectionist measures proliferating”, said Jean-Guy Carrier, Secretary General of ICC.
The rise in protectionist measures is amply documented in recent detailed reports, prepared jointly by the World Trade Organization (WTO), the Organisation for Economic Co-operation and Development (OECD) and the United Nations Conference on Trade and Development (UNCTAD) at the request of the G20, as well in other reports by the European Commission, and Global Trade Alert.
During the G20 Business Summit in Los Cabos Monday, the International Chamber of Commerce (ICC) reacted strongly to the latest reports on trade and investment measures, by calling for the G20 to heed the WTO-OECD-UNCTAD warning that countries should be aware of the damage to the business climate and to economic recovery that [trade and investment] restrictions can cause. ICC expressed grave concern on behalf of world business that an increasingly protectionist climate may derail efforts to stimulate to world economic growth and development.
The EU’s Ninth Report on Potentially Trade Restrictive Measures further echoes the WTO-OECD-UNCTAD report and states that despite the pledges made by G20 leaders, the number of potentially trade restrictive measures has steadily continued to rise since September 2011, with 123 measures in just eight months. The report by Global Trade Alert said: “There has been a steady stream of protectionist measures introduced since the last G20 summit – at least 110 measures have been implemented, 89 of which were imposed by G20 members”.
ICC is the lead organization for the 2012 G20 Business Summit Task Force on Trade and Investment, which is chaired by leading CEO members of the ICC G20 Advisory Group. Among their recommendations during the Summit is a call for the G20 to lead by example in rejecting measures that restrict trade and investment and in promoting measures that enhance them.
In light of the current global economic situation, world business reiterates calls for the G20 to reinforce its commitment towards liberalization under a transparent, global, and rules-based framework that protects and promotes international trade and investment. However, the latest WTO-OECD-UNCTAD report noted that G20 members “have not witnessed any slowdown in the imposition of new trade restrictions” nor have “provided any indication that that efforts have been stepped up to remove existing trade restrictions” from mid-October 2011 to mid-May 2012. This trend is cause for concern: uneven growth and widening imbalances fuel the temptation to diverge from multilateral, global solutions, but that such uncoordinated policy actions only lead to worse outcomes for all.
At a moment of great economic uncertainty, and when global trade liberalization could provide a debt-free and much-needed stimulus to world economic growth and development, the multilateral trade negotiation process appears to have come to a standstill. ICC is also concerned with the trend toward re-regulation of cross-border investment. According to the 2011 World Investment Report, 32% of all investment regulations were classified as “restrictive” in 2010, compared to 2% in 2000. “Liberalizing” regulations were 68% of the total in 2010, compared to 98% in 2000.
Against a background of growing protectionist measures, ICC is committed to promoting a more open and secure environment for global business to generate more jobs and increased economic growth. Following the Cannes G20 Summit, ICC published its Open Markets Index to track G20 countries’ openness to trade. The Index showed that only one G20 country (Germany at number 19) ranked within the top 20 of 75 countries evaluated. This lagging performance is further reflected in ICC’s G20 Business Scorecard, which tracks the G20’s performance in response to business recommendations. The Scorecard was launched last week in Washington DC during a meeting with US G20 Sherpa Michael Froman. The Scorecard marked the G20 performance on trade matters as “incomplete”, but noted that progress to roll back trade barriers and show progress on multilateral trade negotiations would result in a swift upgrade of that score. ICC also recently released its 2012 Guidelines for International Investment to encourage a more secure environment for cross-border investment. The Guidelines provide another key opportunity for business to promote a regulatory environment that encourages economic growth. To invest, business needs to know that it is being supported by effective regulations, and that further barriers to investment will not be put in place. All of these publications contribute to ICC’s mission to improve the conditions for robust international trade and investment and to establish an enduring, legitimate voice of world business targeting G20 policy development on a global scale.