For proponents of globalization and liberalized trade, one of the greatest concerns is the fear that leading nations may turn their back on the benefits of free trade in response to economic uncertainty and the social unrest that accompanies it.
The protectionist approach adopted by the US in recent months has shown that this is a legitimate concern to harbor, but a new report from the World Trade Organization (WTO) has indicated that for the most part, major nations are resisting the temptation to introduce new trade restrictions in a bid to bolster performance in their domestic markets.
However, the WTO data nevertheless offered signs that the risks posed by protectionism are still worth taking seriously, and that leading nations need to maintain a proactive commitment to trade liberalization if the global business community is to continue seeing the benefit of an international free market.
Continued progress on tackling trade restrictions
The WTO's 18th monitoring report on trade measures among G20 nations covered the period from mid-May to mid-October 2017, and revealed that 16 new trade-restrictive measures - including new or increased tariffs, export restrictions and local content measures - were implemented by G20 countries during this time.
This equates to an average of just over three restrictive measures per month, down from six during the previous review period. By contrast, 28 measures aimed at facilitating trade (including eliminated or reduced tariffs, and simplified customs procedures) were introduced in the same timeframe, averaging almost six per month - broadly equivalent to the previous period, and to the trend observed for the whole of 2016.
It demonstrates that the world's leading nations remain much more likely to introduce new laws designed to promote free trade, rather than to restrain it.
Prevailing causes for concern
However, the WTO was quick to point out that not all of the trends highlighted in its latest report were positive. Of particular note was the fact that the actual commercial coverage of the trade-facilitating measures during the review period came to only $27 billion (€22.7 billion), which was markedly lower than the previous period's figure of $163 billion.
This means that despite the overall low number of trade restrictions recorded, their estimated trade coverage ended up being larger than the trade-promoting initiatives at $32 billion, even though this was down from $47 billion in the previous period.
Crucially, this represents a reversal of the findings of the previous report, where the estimated trade coverage of import-facilitating measures was more than three times larger than the impact of the new restrictions.
What must be done next?
As such, the WTO is calling for leading nations to make a strong commitment to free trade and to continue to oppose protectionism, in order to preserve the transparency and predictability in trade policy that global businesses require to thrive.
Specifically, it called for G20 countries to restate their belief in open and mutually beneficial trade as a key driver of economic growth and a major engine for prosperity, and to continue working to improve the global trading environment, including through cooperation at the forthcoming WTO Ministerial Conference in December.
WTO director-general Roberto Azevedo said: "G20 members have shown restraint in implementing trade-restrictive measures, despite continuing economic uncertainties. This is positive news and it shows again that the global trading system is working.
"Nevertheless, the threat of protectionism remains, and so I urge G20 countries to redouble their efforts to avoid implementing new trade restrictions and to reverse those measures that are currently in place."
