The G-20 meeting recently concluded in Mexico with a promise by countries not to protect their businesses by restricting trade (“stand-still agreement”). This is somewhat of a success in light of creeping protectionism and the declining global economy. How long observing this promise will last is to be seen. My guess is not very long, unfortunately.
This promise of the G-20 countries is viewed as somewhat beneficial especially in the context of the recent enactment of trade restrictions by some states. They seem no longer aimed at merely combating the temporary effects of the global financial crisis but rather at trying to stimulate recovery and promote domestic industry by discriminating against foreign companies and investors. Just look at China, Argentina and Indonesia. “An Increase in Barriers to Trade is Reported.” New York Times (June 23, 2012).
It is clear that some states, both developed and developing, are playing around on at the margins of the WTO rules but increased litigation at the WTO has not yet happened. No serious damage has yet been detected in trade or investment flows. So far so good.
To me it’s necessary for states to focus more on promoting international transactions fairly than to restrict them by new trade barriers especially non-tariff barriers. The balance between more trade enforcement and more trade promotion is always a tough policy decision. But a more global, enlightened and proactive attitude by countries toward trade and investment is always to be encouraged. This will certainly benefit economic development and jobs globally.