Growing Protectionism after the Financial Crisis
2 May 2018
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Summary:
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- The weak global GDP growth since the financial crisis in 2007-2009 has coincided with unusually weak growth in global trade.
- Organisations that monitor international macro-economic development have identified growing protectionism – not least the increase in non-tariff barriers to trade, such as local regulations or subsidies – as a potential cause of the weaker growth in global trade.
- Non-tariff barriers to trade are a significant element of countries’ trade policies and may often be more harmful than tariff trade barriers. In particular, technical trade barriers and other administrative costs that export companies encounter can inhibit trade.
- The number of initiated and introduced technical trade barriers increased at the beginning of the financial crisis. Both initiated and introduced technical trade barriers have since remained at high levels. At the same time, the number of international health and safety requirements for food, animal and vegetable products has increased.
- The average global tariff level has decreased somewhat since the mid- 2000s, which is in contrast to the strong increase in various non-tariff barriers to trade. However, according to a report by Global Trade Alert, since the financial crisis the number of policy measures that restrict trade has increased significantly faster than the number of policy measures that liberalise trade.
- Research shows that protectionist measures affect international trade negatively. There is thus good reason to believe that the sharp increase in non-tariff barriers in recent years is an important contributing factor to the weaker growth in global trade.
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