WTO worried over barriers due to crisis

The World Trade Organization (WTO) on Thursday warned about an “incremental build-up of restrictions” in the wake of worsening global economic crisis.

Though there is no “imminent descent into high intensity protectionism”, the trade body said, “the danger today is of an incremental build-up of restrictions that could slowly strangle international trade and undercut the effectiveness of policies to boost aggregate demand and restore sustained growth globally.”

As governments “continue to cede ground to protectionist pressures”, which over a period of time will further vitiate global trading climate, the trade body pressed for an early conclusion of the Doha trade negotiations.

Without any evidence, it asserted that “the market access package on industrial and agricultural goods that is on the table in the Doha Round is equivalent to a new stimulus package for consumers of over $ 150 billion”.

Several trade diplomats, however, described the WTO’s claim of potential gains of $150 billion from Doha agriculture and industrial goods market access cuts as “bogus”.

Restrictions such as increases in tariffs, new non-tariff measures, increasing anti-dumping actions, and “buy/lend/invest/hire local” conditions to favour the domestic goods and services at the cost of imports have the potent effect of worsening the contraction of world trade, it suggested.

Issuing its second report on the financial and economic crisis and trade-related developments, the WTO provided an account of different forms of measures to either facilitate trade or restrict and distort trade.

Trade-promoting measures adopted by countries include elimination of export taxes by Argentina on 35 dairy products, elimination of import tariffs on 214 tariff lines by Canada, elimination of import duties for naphtha for use in power sector as well as the enlarged list of entities authorised to import directly precious metals and so on.

Most of the trade restrictive measures adopted until now by both developed and developing countries include sectors such as footwear, automobile sector, and steel sector. “There has been an increase in state aids and potentially trade-distorting subsidies in some countries to support manufacturing industries, notably the steel and automobile industries, including direct funding, special loans and guarantees,” the report observed.

In the footwear sector, WTO members such as Argentina, Brazil, Canada, Ecuador, the European Union, Kazakhstan, Turkey and Ukraine have resorted to what are called import licensing, import tariffs and surcharges and trade remedies on products shipped from China and Vietnam at large.

The United States, which has become the global focal point for restrictive measures arising from Buy America provisions, has given huge loans running into billions of dollars to prop up its auto companies.

Other countries which have supported their auto sector in one form or the other include Argentina, Australia, Brazil, Canada, China, India (“introduction of licensing requirements for imports of auto parts, some of these requirements were removed between December 2008 and 2009”), France (credit lines for the car industry of euro 6 billion), Turkey and United Kingdom.

Commenting on the measures adopted in the steel sector, the report drew attention to the Buy America provisions that includes some blatantly anti most-favored-nation rules to bar imports from China. It mentioned India having introduced licensing requirements for imports of certain steel products.

However, the report added that some of these requirements were removed by the Indian government, adding that import duties on a range of iron and steel items were raised from 0 and 5 percent.

Aside the trade-distorting measures for companies and sectors, the report mentioned another naked form of denying MFN (most-favor-nation) benefits to China in poultry products by the US which recently passed the 2009 Omnibus Appropriations Act of the US. The Act “prohibits the use of funds available in the Act to establish or implement a rule allowing poultry products to be imported into the US from China.”