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Global protectionism threatens EU recovery

BRUSSELS - Russian import restrictions and similar moves by China, Brazil and Argentina threaten to hold back European economic recovery, an EU Commission study published on Monday said, but Europe plans to fight back.

Europe’s major trading partners have imposed or planned 332 new trade restrictions since the global downturn in 2008, from import substitution and export taxes to limits on investment and government procurement, the study showed.

More than 60 measures took effect in the last six months, despite several commmitments by G20 leading economic nations against such steps.

The EU is set to unveil plans next month for legal and political weapons to fight restrictions by its main trade partners, according to policy plans seen by Reuters.

“The world’s major economies must remove trade restrictive measures that put a brake on growth” because the economic recovery is still fragile, EU trade chief Karel De Gucht said in a comment on the report.

World Trade Organisation head Pascal Lamy warned earlier this month that the world’s trading powers may be in a spiral of measures that could hamper economic recovery.

Trade barriers have affected the EU more than most other trading regions, hitting 1.7 percent of EU goods exports — and were likely to continue do to so, the report said.

“It is...likely there will be a lasting impact on EU trade flows, even after the crisis,” the report says, identifying the worst affected sectors as labour-intensive agro-food, automotive, textiles, clothing and services.

Russia, Argentina, Brazil, South Africa and China

Key points of the report:

· Russia has imposed the most restrictive measures since the start of the global crisis, most recently with numerous import-substitution policies and local-content requirements for foreign investment.

· China recently cut its export quota for rare earths used in high-tech goods and internet communication equipment, and export restrictions generally increased between May and Sept 2010. “This is a very worrying trend,” the report says.

· Argentina’s import licensing regime and import reference values remain of “serious concern”.

· South African has put up trade barriers with the aim of developing numerous industrial sectors.

· Brazil has joined a growing list of countries that restrict foreign bids for lucrative government procurement contracts for projects like roads, hospitals and water sanitation.

“The negative trend in government procurement, already highlighted in previous periods, is again confirmed and there is evidence of new worrying developments,” the report concluded.