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EU Concerned About Continued Proliferation of Trade Restrictions

Wednesday, September 04, 2013
Sandler, Travis & Rosenberg Trade Report

The European Commission released Sept. 2 its annual report on potentially trade-restrictive measures imposed by EU trading partners. The report finds that the number of such measures has increased as a result of the slow removal of existing measures and a continuously high rate of addition of new ones. Considering the importance of trade to the global economy, the report states, this trend represents “a significant threat to global growth and welfare.”

Highlights of the Commission report, which covers the period May 1, 2012, through May 31, 2013, include the following.

- The number of new measures adopted totaled 154, which is a slightly slower monthly pace than in previous reporting periods but included a “worrisome increase” in the application of certain types of measures.

- The number of existing measures removed was 18, a pace that “remained as slow as in the last period and is largely unsatisfactory” given that “economies are now recovering faster.”

- Since October 2008 the total number of potentially trade-restrictive measures observed has reached 688, including more than 350 in the last 33 months, while only 107 have been removed.

- South Africa, Argentina, Russia and Indonesia formally announced the highest number of new potentially restrictive import and export measures, mainly by raising import tariffs or equivalent import fees, introducing new import licensing procedures, fixing reference or minimum import prices and applying export duties. Brazil and Ukraine should also be included in this group as they announced one-off measures having an impact on significant numbers of traded products. In addition, Ukraine is now trying to renegotiate many of its bound import duties beyond the rates agreed in its accession to the World Trade Organization.

- Trade-related restrictions in government procurement continued to increase in share. Brazil accounted for more than one-third of these, followed by Argentina and India. Many of these measures are linked to business localization requirements.

- The pace of new stimulus measures remained worrying and the greatest number of such measures was introduced by Brazil, South Africa, Turkey, Japan and South Korea.

- The high number of behind-the-border measures that have been applied by some countries through technical regulations (e.g., China) or internal taxation schemes based on localization requirements (e.g., Brazil) is “a cause of serious concern.”

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