Major Economies Struggling on Trade Openness, Report Says
The International Chamber of Commerce’s Open Markets Index 2013 released this week shows that “despite recurring pledges to roll back protectionist measures” major economies are “failing to demonstrate global leadership on trade openness.”
The 2013 index ranks 75 countries using an aggregate score between one and six based on four factors: observed trade openness, trade policy, openness to foreign direct investment and trade-enabling infrastructure. This year’s average score was 3.6, a slight improvement from 3.5 two years ago, and the average for G-20 economies was 3.4. The two highest performing economies, and the only two ranked as excellent in terms of overall openness (scoring above 5.0), were Hong Kong and Singapore. Rounding out the top ten were Luxembourg, Belgium, Malta, the Netherlands, the United Arab Emirates, Ireland, Estonia and Iceland. Twenty-nine countries were ranked in the “most open” or “above average openness” categories, while 21 were deemed to have “below average openness” or to be “very weak.”
None of the G-8 economies were among the top 10 and only Canada ranked in the top 20. Four were included in the “above average openness” category (Canada, Germany, Australia and the United Kingdom) while eight had only “average openness” (France, the United States, Japan, Saudi Arabia, Italy, South Africa, Indonesia and Mexico). The G-20 countries were found to perform poorest on average in terms of observed openness to trade, with 19 of the 20 scoring only average or below average on this measure.
With the exception of South Africa, the so-called BRICS countries recorded below average indicators of trade openness despite their rapidly expanding economies. South Africa registered an aggregate score of 3.2 but Brazil, China, India and Russia all scored between 2.0 and 3.0 and were categorized as having “below average openness.” The ICC states that one of the main causes of poor performance among these economies was restrictive trade policy regimes, with generally higher than average tariff levels.