Commission notes excessive trade protectionism around the world (07/06/2012)
In a report, which covers also Ukraine and which was released on 6 June, the European Commission identifies a staggering increase in protectionism around the world with 123 new trade restrictions introduced over the last eight months – a rise of just over 25%. This brings the total number of restrictive measures in place today to 534. The European Commission also points to a failure by the G20 countries to reducing trade barriers, with EU trade Commissioner Karel De Gucht saying that «G20 Members need to seriously step up their efforts to fight protectionism».
The ninth edition of the report on the monitoring of potentially trade restrictive measures of the European Commission's Directorate-General for Trade provides the latest state of play regarding trade activities of the EU's trade partners between September 2011 and 1 May 2012. This monitoring activity was launched in the aftermath of the financial and economic crisis in autumn 2008 and represents a crucial aspect of the enforcement and implementation agenda of the EU's trade policy.
The main conclusions of the report:
- Between September 2011 and 1 May 2012, on average more than 15 new measures were introduced each month as compared to less than 12 new measures per month the year before: the pace of introduction of new restrictive measures has accelerated. Overall, 123 new trade-restrictive measures have been introduced in the last eight months.
- The state of G20 countries' compliance with regards to the removal of existing measures remains clearly insufficient. Between September 2011 and 1 May 2012, the roll-back of measures slowed down: only 13 measures have been removed, compared to 40 measures between October 2010 and September 2011. Overall, only about 17% (89) of the measures have so far been removed or lapsed since October 2008.
- At the global level, trade is showing signs of good recovery, even with a short-lived contraction observed mid-2011. Despite their growing economic weight and increasing role in the global economy, emerging economies continue to resort to the highest number of trade-restrictive measures, often as part of new national industrialisation plans.
- Russia deserves close scrutiny as one of the most frequent users of trade-restrictive measures that may not be in conformity with its obligations as an upcoming member of the WTO.
Apart from the global trends, the report discusses in detail trade policies of the EU’s key trade partners, including Ukraine. As it says, on 12 September 2011 Ukraine adopted a Programme to Develop Domestic Production under resolution n° 1130 announcing 159 industry-related projects. The Programme increases the role of the State in the process of reform and economic diversification. The main actions having protectionist potential include: introducing preferential regimes of production with simultaneous increase of tax and customs tariffs for imports; implementation of effective customs duties to protect domestic producers of light industrial goods; use of TBT and SPS measures, certification, licensing, quota and standards to protect national producers on domestic markets.
Besides, Ukraine’s newly-amended Law on Electricity contains a new provision under which local content rules should be observed for obtaining a specific feed-in tariff for electricity produced from renewables. The Law was amended to this end on 18 December 2011 (#4065-VI). It stipulates that such incentive for electricity production from alternative energy sources shall apply on condition that the share of raw stock, materials, main assets, works and services of Ukrainian origin in the cost of the construction of the respective facility producing electricity makes at least 15% starting from January 2012. From January 2013 this will be 30% and from January 2014 50%. For production of electricity from solar there is an additional requirement in that the share of raw materials of Ukrainian origin in the production cost of solar modules shall make at least 30% starting from January 2013 and 50% from January 2014 respectively.
However, compared to many other EU trade partners, Ukraine’s trade policy remains relatively open, with only 2 restrictive measures applied since October 2008 to May 2012, compared to 119 applied by Argentina, 86 by Russia, 59 by Indonesia, 38 by Brazil, 30 by China and 8 by the US. Ukraine also showed relatively high level of compliance with G20 committment to roll back the restrictive measures, dropping since October 2008 9 measures, compared to 21 removed by the US, 14 by Russia, but only 1 by China and none by Australia, Brazil, South Africa or Turkey.