Via Inside U.S. Trade, Congressman Levin and Senator Wyden are upset with the WTO Secretariat about its recent Report on G20 Trade Measures. Here's an excerpt from the letter they sent to WTO DG Roberto Azevedo:
We are deeply disappointed that the Secretariat of the WTO has once again issued a report that expresses concern not with dumping, not with trade-distorting subsidies, and not with unsafe imported foods, but instead expresses concern with measures taken to address those very real problems. Specifically, in its most recent report on G20 Trade Measures, the Secretariat staff implicitly criticizes such "trade-restrictive measures" as protectionist, concluding that the "G20 economies must lead by example in the fight against protectionism by rejecting new trade restrictive measures and rolling back existing ones." By making such statements, the WTO Secretariat threatens to undermine WTO Member and public support for the WTO and the current rules-based global trading system.
The WTO agreements provide WTO Members with the express right to impose antidumping and countervailing duties when products are being dumped or illegally subsidized. And for good reason: dumping and subsidies, which still occur rampantly today, distort world markets and harm many producers that play by the WTO's rules. By broadly criticizing WTO Members for adopting antidumping and countervailing duties, the WTO Secretariat is contradicting the provisions in agreements under its own purview. Given that the WTO Member governments have agreed that dumping "is to be condemned" through antidumping measures, the WTO Secretariat's criticism of those measures is particularly disturbing.
Similarly, the WTO Agreement on Sanitary and Phytosanitary Measures expressly provides that no WTO Member should be prevented from adopting or enforcing legitimate measures necessary to protect human, animal or plant life or health. Nevertheless, these kinds of measures are the subject of criticism by the WTO Secretariat in its recent report.
For these reasons, we strongly urge the WTO to reconsider how it monitors and reports on G20 adherence to the undertakings on resisting trade protectionism.
Basically, they are upset that the WTO Secretariat is simply counting up measures such as AD/CVD/SPS measure in its report. These measures, they say, are not necessarily protectionist, and the WTO shouldn't issue a report implying that protectionism is on the rise on the basis that the use of these measures is increasing.
This issue gets at the heart of a crucial trade question for me: What kinds of trade measures should trade rules prohibit? Protectionist measures? All trade restrictions? And what's the difference between them? (The Swedish National Board of Trade has a good paper on this, in which it concludes: "the two core features of protectionism that most of the surveyed institutions highlight are (1) discrimination and (2) trade-restrictiveness." But there are a variety of views out there. And by the way, could a measure be protectionist but also increase trade? Are export subsidies in this category?)
Since I know people on both sides of this dispute, I'm going to try to play peacemaker here and bring everyone together.
At the outset, it's worth looking at the background a little more closely. The G20 asked the WTO to do the following:
We further reaffirm our longstanding commitment to standstill and rollback on protectionist measures and will remain vigilant by monitoring our progress. For this, we ask the WTO, OECD and UNCTAD to continue their reporting on trade and investment restrictive measures.
So already, the G20 is blurring the concepts. What do they mean by protectionist measures? What do they mean by trade restrictive measures? What's the relationship between the two?
Now, as for the WTO, in what I think is a footnote in the cover note that goes with both the trade and investment reports -- and which online is a separate document -- the WTO says this: "The inclusion of any measure in these reports or in their Annexes implies no judgement by the WTO, OECD, or UNCTAD Secretariats on whether or not such measure, or its intent, is protectionist in nature." So the WTO makes clear here that it is not looking at protectionism. The problem is, in the report on trade measures, it says things like this: "In the midst of this uncertainty, G20 economies must lead by example in the fight against protectionism by rejecting new trade-restrictive measures and rolling back existing ones." And this: "During this seven-month period, there seems to be a relapse in G20 economies' efforts at containing protectionist pressures. Not only is the stockpile of trade-restrictive measures continuing to increase, but also more new trade restrictions were recorded during the period, in particular trade remedy investigations and local content requirements." And also this: "the G20 economies must lead by example in the fight against protectionism by rejecting new trade-restrictive measures and rolling back existing ones." Now the lines are blurred again.
Many trade policy wonks probably get the distinction here, and realize that the WTO is not saying all the AD/CVD/SPS measures at issue are "protectionist." (Although I hold the view that all AD measures are inherently protectionist, but that's an issue for another day). But there is also the issue of how this is covered in the media. Here's how the Financial Times reported on it:
WTO warns on rise of protectionist measures by G20 economies
Growing trend noted as antitrade rhetoric around the world surges
The surge in antitrade rhetoric around the world is being accompanied by a rise in the introduction of protectionist measures by the world’s leading economies, the World Trade Organisation has warned.
The WTO said in a report released on Tuesday that between mid-October of last year and mid-May of 2016 G20 economies had introduced new protectionist trade measures at the fastest pace seen since the 2008 financial crisis, rolling out the equivalent of five each week.
That trend coincided with a slowdown in global trade now in its fifth year. Moreover, it was contributing to the persistent slow growth in the global economy, the WTO said, and the fact it was coinciding with an increase in protectionist political rhetoric around the world ought to be worrying.
“At this point in time what we don’t need is the slamming of the door on trade. Quite the contrary, we need to get trade going,” Roberto Azevêdo, the WTO’s director-general, told the Financial Times in an interview.
G20 leaders pledged in the wake of the 2008 financial crisis not to repeat the mistakes of the 1930s and erect the sort of trade barriers that are now widely believed to have contributed to making the Great Depression worse.
That pledge has largely held. But in recent years the WTO and others have begun warning more forcefully of a creeping protectionism that some economists believe has reached a point where, though it remains far less substantial than that seen in the 1930s, is contributing to keeping the world in the economic doldrums.
Since 2008, according to the WTO, G20 economies have introduced 1,583 new trade restricting measures and removed just 387. Between mid-October of 2015 and mid-May of this year they introduced 145 new protectionist measures — a monthly average of just under 21, the worst seen since the WTO began monitoring G20 economies in 2009.
Again, there is a blurring of the lines between "protectionist" measures and "trade restrictions" that is misleading.
So I think there is some work to be done here. The G20 needs to understand what they are asking for. When they are trying to monitor protectionism, do they really want a list of all SPS measures notified to the WTO? Isn't a list of SPS measures that may or may not be protectionist confusing in this context? With a better understanding of the distinctions in the kinds of measures at issue, the G20 needs to give clearer instructions to the WTO.
And in its response, the WTO needs to be more clear about what it is providing. There are some parts of the report where the distinction between protectionist measures and trade restrictions is made, but others where it is not.
Overall, I would say that it is important to monitor all trade restrictions, and the WTO report is useful in this regard. But it is also important to be clear that not all of the trade restrictions at issue have been shown to be protectionist.