A newly published report from three of the world's leading trade and development organizations seeks to remind G-20 nations of their commitment, made in November 2011, to resist protectionist measures in recognition that freer trade can speed the global economic recovery.

The report - from the World Trade Organization, the Organization for Economic Cooperation and Development and the United Nations Conference on Trade and Development - has noted a recent deterioration in the trade policies of G-20 nations.

G20 leaders in November 2011 endorsed the benefits of the multilateral trading system and free trade, and at the time committed to a moratorium on the introduction of new protectionist measures, and to review previously introduced restrictive policies.

Reviewing measures introduced since November, in anticipation of the forthcoming G-20 Summit in Los Cabos, the report says: "The weak recovery of the global economy and persistently high levels of unemployment are continuing to test the political resolve of G-20 governments to resist trade protectionism. The past seven months have not witnessed any slowdown in the imposition of new trade restrictions, and there is no indication that efforts have been stepped up to remove existing restrictions, particularly those introduced since the start of the global crisis."

"Some governments are facing particularly difficult economic conditions domestically, but they must resist the temptation to move towards more nationalistic and inward-looking policies," the report argues. "The accumulation of trade restrictions is a matter of concern, which is aggravated by the relatively slow pace of rollback of existing measures. This situation is clearly adding to the downside risks to the global economy. Moreover, government support to selected sectors is distorting competition and restricting trade."

"G-20 governments should resist any further deterioration in their collective trade policy stance and rely on open markets and the benefits of freer trade to help reboot growth in the world economy, " the report adds, stressing that: "Increasing trade is critical to stimulating global recovery."

While the report admits that often trade measures seek only to achieve domestic policy objectives, ill-conceived measures can heighten investors' perception of risk, at a time of great uncertainty.

"Countries should be aware of the damage to the business climate and to economic recovery that such measures can cause," it cautions. "G-20 governments [should] redouble their efforts to strengthen multilateral cooperation to find global solutions to the current economic difficulties and risks, and to seek to avoid situations that would create trade tensions between them."

"The forthcoming G-20 Summit in Los Cabos should send a strong and clear signal about the need to keep markets open, resist protectionism, and preserve and strengthen the global trading and investment system."

June 3, 2012

Source: Tax News

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