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Macroscope | Rising protectionism threatens global trade

Amidst weak global growth, countries around the world are turning inwards, hoisting trade barriers and protectionist practises, according to new data

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Activists bang on pans during a protest against the Transatlantic Trade and Investment Partnership in front of the EU commission building in Brussels on July 12, 2016. Photo: AFP

Last week’s Global Trade Alert report recorded growing levels of protection and stagnant trade in the world economy – the worst record since monitoring began in 2008. The GTA, run by Professor Simon Evenett of St. Gallen University in Switzerland, systematically reports on the incidence of trade measures.

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This is the largest private initiative that keeps an eye on trade and other trade-impacting policies across a broad spectrum of nations.

The World Trade Organization, along with the Organization for Economic Cooperation and Development and the United Nations Conference on Trade and Development, undertakes a similar monitoring exercise on trade and investment measures.

The latest WTO report issued in June states that G20 restrictions have reached their highest monthly level since the exercise began in 2009

It uses a different methodology that yields a lower level of recorded protectionist measures but nevertheless correlates well with the GTA.

The latest WTO report issued in June states that G20 restrictions have reached their highest monthly level since the exercise began in 2009, prompting WTO Director-General Roberto Azevedo to observe that trade is under siege in many countries.

At the margin, there can be honest disagreement about which measures should be labelled protectionist. The GTA, for example, counts any measure with putative discriminatory consequences as protectionist, regardless of why such measures are introduced. The WTO is more circumspect.

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Both the WTO and the GTA count measures rather than assessing impact, which is much harder to do. There can be no doubt, however, that protectionism is on the rise.

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