Newsfile: 2016



Bad news for WTO on protectionism, and China

By Peter Hulm

The G20 nations, self-proclaimed promoters of freer trade, have introduced unprecedented measures restricting trade and have seen "a notable rise in anti-trade rhetoric" since October 2015, the World Trade Organization notes in its latest monitoring report.

The elephants in the room are the U.S. and China, followed at a distance by India and South Korea. But first the big picture.

The 21 new restrictive measures introduced each month from mid-October to mid-May 2016 are "highest monthly average registered since the WTO began its monitoring exercise in 2009," the report said.

WTO Director-General Roberto Azevêdo declared in a statement on 21 June: "These trade restrictive measures, combined with a notable rise in anti-trade rhetoric, could have a further chilling effect on trade flows, with knock-on effects for economic growth and job creation."

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The rise in trade restrictions since 2008. Click on chart for larger view.

Despite the G20's commitment in 2008 to resist protectionism, they have removed only 387 of their restrictive measures since then. The Report declared: "There seems to be a relapse in G20 economies' efforts at containing protectionist pressures. Not only is the stockpile of trade-restrictive measures continuing to increase, but also more new trade restrictions were recorded during the period, in particular trade remedy investigations and local content requirements" (p4).

"Metal products, and in particular steel products, chemicals and plastics and rubber account for the largest shares of anti-dumping and countervailing initiations" (p5).

Trade remedy actions accounted for 61% of the restrictive measures (p17). "There were 38 import-restrictive measures, mostly in the form of tariff rate hikes, eight restrictive measures affecting exports and ten measures mainly relating to domestic-content requirements -- this latter figure has increased significantly since the last report," the WTO Report said.

The experts estimated the measures affected US$135.8 billion of trade. This amounted to 0.94% of the value of G20 imports and 0.73% of the value of world merchandise imports. This was almost triple the amount for the previous period (0.34% and 0.26%, respectively)(p19).

Trade throttled by $930 billion

"The import-restrictive measures introduced since October 2008 that remain in place are estimated to cover around 6.4% of G20 imports or around 5% of world merchandise imports," the report noted. "This amounts to US$930 billion" (p24). That's just a bit less than all U.S. foreign trade ($1 trillion).

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U.S. targets for anti-dumping and countervailing measures since 2008 (see x-axis for figures). Click on chart for larger view

The U.S. notified "a significant increase" in anti-dumping measures (42 in 2015 compared to 19 in 2014) while other countries recorded "notable decreases" (p24).

"China continues to be the most frequent target of investigations on metal products with 20 investigations during January-December 2015, followed by India and the Republic of Korea with six each," the WTO figures showed (p25).

Chemical products were second in nearly all periods. India accounted for almost 50% of the 79 new investigations in the 24-month period. China was again the main target in 2015 (11 of 31).

In all, China faced action in one third of the measures. South Korea was next, accounting for 6% (p29). G20 action against other G20 nations accounted for 70% of the actions.

The analysis is issued under the responsibility of the Director-General, and therefore does not represent WTO members' views.

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China's targets for anti-dumping and countervailing measures since 2008 (see x-axis for numbers). Click on chart for larger view

On 23 June Azevêdo conceded the WTO hadn't achieved on tariff-cutting measure for 19 years until a Ministerial meeting in Nairobi last December. The deal to cut tariffs on new generation information technology products covers international trade worth around $1.3 trillion each year, more than the global automotive trade, he pointed out.

But the pre-Nariobi report said on 9 December: "WTO [...] finds no acceleration in trade restrictions."

Dispute over judge

The latest report says that in addition to anti-dumping actions "G20 members also imposed more distortive measures in the form of government support for sectors such as infrastructure, agriculture and export-specific activities."

The parlous state of international economic governance can be seen through a dispute that sets the U.S. against South Korea (and several others).

In May the U.S. blocked the reappointment of a sitting judge on its trade dispute panel, Prof. Seung Wha Chang from South Korea, after four rulings that went against U.S. interests.

D. Ravi Kanth of the Third World Network said the highest adjudicating body on trade disputes had suffered "irreperable damage and faced its worst systemic crisis" as a result.

Prof. Chang, 53, has taught international trade law and WTO dispute settlement at several U.S. universities. He was also appointed to a chair at Harvard Law School.

The EU described the veto as "unprecedented" and said it *poses a very serious threat to the independence and impartiality of current and future appellate body [AB] members."

The United States accused Chang of making "wrong" decisions, as well as decisions that went beyond the issues raised and parties' specific arguments to reach a decision.

South Korea told the WTO: "Its message is loud and clear: 'If AB Members make decisions that do not conform to U.S. perspectives, they are not going to be reappointed.'"

The six other current judges sent a letter expressing concern "about the tying of an Appellate Body member's reappointment to interpretations on specific cases and even doing so publicly".

Attack on WTO's credibility

The Washington Post reported: "All 13 living former AB members-- including three from the United States -- followed up with an equally strong warning that linking an AB member's consensus on a particular decision to reappointment would jeopardize the credibility and integrity of the WTO's dispute-settlement mechanism."

D. Ravi Kanth on 2 June, this time on LiveMint, noted they did not mention the U.S. by name, but they spoke of "inappropriate pressures" and "political interference".

The four rulings include two involving China, one India, and the fourth Panama vs Argentina, in which U.S. interests were involved.

...and what's behind it

The looming question over all these issues is whether China gets new powers to fight anti-dumping cases.

Beijing was automatic "market economy" status from December, the 15th anniversary of its joining the WTO.

The U.S., reports the Financial Times, is arguing the issue will have to go before the appellate body. China's overcapacity in steel production has led to a collapse of world price and the closing of competing mills.

Perhaps it's not surprising that six former U.S. Trade Representatives on 21 June sent a public letter to support the veto of Prof. Cheung. They said Administrations from both political parties had expressed "a serious and ongoing concern" that the AB was not "applying the WTO agreements strictly as written".


WTO report: "G20 trade restrictions reach highest monthly level since the crisis". 21 June 2016

DG Azevêdo updates 'Geneva Week' participants on current WTO work. 23 June 2016

WTO report finds no acceleration in trade restrictions but slow pace for barrier removal. 9 December 2015

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