BEIJING – Amid uncertainties caused by Britain’s decision to exit the European Union, leaders of the Group of 20 economies will likely renew their commitment to avoid new trade barriers for another two years, sources involved in preparations for the group’s next summit said.
The leaders are set to make the promise of a freeze through 2018 when they meet in the Chinese city of Hangzhou in early September, senior officials taking part in the planning said recently.
“Under the current circumstances, it is meaningful and we should renew this pledge,” Wang Xiaolong, China’s special envoy on G-20 affairs, told reporters last week. The pledge is currently set to expire later this year.
The G-20 last extended the standstill commitment at a summit in St. Petersburg, Russia, in 2013. That provision runs until the end of this yea
Wang said a recommendation for this emerged at a meeting of sherpas, the top diplomats in charge of summit preparations, in the city of Xiamen in June.
While there has been a rise in protectionist political rhetoric in many parts of the world, such as from U.S. presidential hopeful Donald Trump, Britain’s vote last month to leave the EU has cast a larger shadow over the global economy. The vote also came about two months ahead of the summit, the most important international political event that will be hosted by Chinese President Xi Jinping this year.
A report released by the World Trade Organization on June 21 said the G-20 economies, including Britain, China, Germany, India, Japan, Russia, and the United States, which account for 90 percent of global gross domestic product, introduced 145 new trade-restrictive measures in the seven months to mid-May. It was the highest number since 2009.
The report also found that only 387 of a total of 1,583 trade restrictions applied by members of the group since 2008 — when the financial crisis roiled markets — had been removed by May this year.
“A rise in trade restrictions is the last thing the global economy needs today, with GDP growth sluggish and 2016 expected to be the fifth year in a row that trade has expanded by less than 3 percent,” the WTO quoted its director general, Roberto Azevedo, as saying at the time.
“These trade-restrictive measures, combined with a notable rise in anti-trade rhetoric, could have a further chilling effect on trade flows, with knock-on effects for economic growth and job creation,” the WTO chief said.
Of the new trade barriers, the report showed that most came in the form of anti-dumping and countervailing duties on imports that were deemed unfairly cheap.
In particular, special tariffs have been imposed on metal and chemical products. Amid a sharp downturn in commodity prices over the past several years, a worldwide steel glut has been a major obstacle to growth.
China, the world’s biggest steel producer, has often been blamed for distorting markets with its oversupply.r.
When G-20 trade ministers meet this weekend in Shanghai, how best to tackle protectionism and the steel glut is also expected to top the agenda.