Governments are unfairly blocking trade in response to the global downturn, squeezing automotive and steel exports and hurting wealthy economies most, the head of the World Trade Organisation has claimed.
In a report prepared for the WTO’s 153 members, director-general Pascal Lamy described the global economy as “fragile”.
“Developed economies have been hit hardest, especially the major exporters of automotive products and other machinery,” the report found, citing particular trouble in Germany, whose exports are down nearly a quarter this year.
While weak demand for iron ore and minerals will hurt some emerging players, such as China, Mr Lamy’s report said that on the whole developing countries should fare slightly better, with a seven per cent overall export drop in 2009.
The protectionism report, the third Mr Lamy has issued since the global economy started its slide last year, raised concerns about stimulus measures in both rich and poor countries and said that many governments had imposed unfair restrictions on imports to shield their national markets.
“In the past three months there has been further slippage towards more trade restricting and distorting policies,” the report said. Cars, dairy products, iron, steel, chemicals, plastics and textiles were found to be the most shielded.
Mr Lamy found that many countries – among them China, India, Russia and Vietnam – announced cuts to import duties, fees and other trade barriers, but said “some of the countries concerned also raised import restrictions on other products during the period under review”.
The outbreak of H1N1 influenza caused nearly 40 countries to unfairly limit imports of pig and pork from Mexico and other affected areas, even though the virus does not spread through food, according to Mr Lamy, who has frequently said that the influenza pandemic does not justify any trade bans.
WTO rules allow countries to temporarily limit or restrict imports in response to public health or safety threats that are backed up by scientific evidence, or in some situations where market prices are seen to be skewed.
The report stressed that many import duties and taxes introduced in the wake of the global downturn were problematic, meaning they could be challenged at the WTO’s dispute settlement body, which can allow countries to impose retaliatory sanctions.
The WTO chief’s report highlighted arbitration risks from massive bailouts of banks, insurers and carmakers, and campaigns by many governments urging people to “buy/invest/lend/hire local”, saying such measures could offer an unfair edge.
“These countries’ trading partners, and particularly most developing countries that are unable to provide matching support for their own firms, face highly skewed and unfavourable competitive conditions on world markets,” the report said.
The biggest stimulus programmes have been enacted in the United States, Australia, Canada, Japan, Norway and the European Union and its members, but poorer nations such as Bangladesh, Egypt, Jordan, Mexico, Singapore, South Africa, Thailand and Vietnam also introduced measures.
Last week, Germany’s confederation of industry proposed a state-backed body to lend directly to the country’s exporters.