European Commission report criticises ‘growing international protectionism’

Out-Law News | 18 Nov 2014 | 4:13 pm | 1 min. read

The EU’s trade commissioner has criticised countries that “still consider protectionism a valid policy tool” and accused many of “still imposing restrictive trade measures” contrary to commitments by the G20 group of the world’s biggest developed and emerging economies.

Cecilia Malmström’s said the release of the European Commission’s annual report on protectionism showed countries “also resorted more frequently to discriminatory internal taxation, technical regulations or localisation requirements to shield their markets from foreign competition”. China introduced the highest number of such measures, the report said.

According to the Commission’s report (231-page / 2.18 MB PDF) released on 17 November, “G20 members and other key EU trading partners adopted a total of 170 new trade-unfriendly measures” over the past year. The countries that adopted the most such measures were Russia, China, India and Indonesia, the Commission said. “At the same time, only 12 pre-existing trade barriers have been removed. This means that hundreds of protectionist measures adopted since the beginning of the economic downturn continue to hamper world trade, despite the G20 commitment.”

“Investors and service providers also continue to be affected by limitations in access to foreign markets,” the report said. “While China has recently taken steps to open up its market to foreign capital, it has also restricted foreign activity or discriminated against foreign companies in other cases, which lead it eventually to adopt the highest number of restrictive measures in the services and investment area.”

The report, which covered the period from June 2013 to June 2014 and focuses on 31 of the EU's main trading partners including Canada, China, Saudi Arabia, South Africa, South Korea, Turkey and the US, said: “As another example of burdensome technical requirements, in May 2014, following the public dispute between the US and China on cyber-theft of trade secrets, China announced a new testing procedure for IT products and services which will focus on the ‘security and controllability’ of products and services used for government procurement and critical industries. Failure to meet the test would result in exclusion from the Chinese market. This system, as it is, has a high potential to put foreign IT products and service providers at a significant disadvantage.”

According to the report, the “tendency to restrict participation of foreign companies in public tenders remains strong, in particular in the US”. The report said: “The US has been the most active country to embrace procurement-related trade restrictions, especially at state level. The current monitoring period has revealed a growing trend in the country's states imposing their own domestic content requirements.”