The European Union’s trade commissioner, Karel De Gucht, delivered a tough speech on free trade today in Shanghai. He warned that G20 attempts to prevent a new rash of trade restrictions have been only minimally successful:
Instead of being dismantled, as the G20 countries have promised, the number of
protectionist measures put in place since the crisis has increased. 425 of the
potentially trade-restrictive measures that were installed since the onset of the crisis
remain in force, whereas only 71 have been removed to date. Over the last twelve
months a total of 131 new measures were introduced.
The G20 commitments to reduce them have not been sufficient. Instead, a new
generation of protectionist measures is in gestation: the new industrial policies of
several G20 members raise concerns about open trade and investment. They are, in many cases, based on import substitution, subsidies, domestic preference, local content requirements, restrictions in public procurement and pressure to transfer intellectual property.
De Gucht also had some choice words about China’s committment to following international trade rules. “Regardless of the economic fruits of increasing trade,” he said, “there is a general feeling among European companies and governments that economic openness in China is improving too slowly or not at all.” China’s opaque and restrictive system for public procurements is a particular point of friction, he argued. He also urged the Chinese authorities to quickly adjust their export quota system to comply with a recent WTO ruling. De Gucht coupled this tough message with an insistence that he had no desire to marginalize China:
[W]e must not undermine the commitment of the Chinese people to open markets; their belief that trade will be one of the main drivers of prosperity in the future, as it has been in the past. These imperatives are fundamentally entwined: if China were to feel consistently marginalised by the rest of the world, misunderstood and mistreated, its enthusiasm for open markets could easily cool. It might try to seek a New Deal with its citizens that would no longer rely on international markets, firms and partners. And we would all be much the worse off as a result.