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November 14, 2019

Trade constraints in the world rose by 10% in 2016

Trade constraintsTrade constraints in the world, which also affect European exporters, are rising by 10% in 2016, according to a new European Commission (EC) report. Towards the end of last year there will be total of 372 trade barriers in 50 different trading destinations in the world. According to the report, 36 new restrictions have been introduced in 2016, which could harm the European Union’s (EU) exports, hitting it by 27 billion USD.

The G20 countries are among the countries that created most barriers to imports as a whole. Russia (33), Brazil, China and India (23) are on the top of the list. According to the Commission, the fact that the G20 countries have the most barriers is worrying. The institution says that at the forthcoming meeting of the group in Hamburg will call on leaders to oppose protectionism.

Most new restrictions in 2016 are reported in trade and investment relations with Russia (6 new) and India (5), which, according to the Commission, confirms the protectionist tendencies of previous years. The obstacles in Russia are related to certification requirements in the pharmaceutical and cement sectors, as well as to restrictions on the participation of foreign companies in investment projects. In India, barriers are targeted at the telecommunications sector, wine and spirits, as well as the pharmaceutical industry.

Switzerland has imposed three new restrictions, while Algeria, China, Egypt and Turkey – two. The remaining 14 new trade barriers have been raised by individual third countries.

According to EU estimates, the new trade restrictions in 2016 have potentially harmed union’s exports by up to 27.17 billion EUR. This exceeds the EU’s total exports to trading partners such as South Africa, Algeria, Ukraine and corresponds to 1.6% of all EU exports at the global level for the period 2013-2015. The forecasts indicate that the measures introduced by Russia are likely to have the strongest effect on EU exports, potentially hitting trade flows by as much as 12.26 billion EUR. Algeria (3.75 billion EUR), China (3.7 billion) EUR, Turkey (2.69 billion EUR), India (2.2 billion EUR) and Egypt (1.72 billion EUR).

The analysis also shows that the new measures introduced by Russia target sectors where EU exports to the country are traditionally strong. Until the introduction of unwarranted certification requirements for pharmaceuticals, for example, European medicines exports reached 6.1 billion EUR. At the same time, subsidies for automotive and agricultural machinery may have affected trade flows in these sectors with reduced exports to 5.85 billion EUR from the EU to Russia every year.

The Commission notes that it is striving to protect European businesses against growing protectionist trends, with some results being achieved in 2016. The EC managed to restore normal trade relations in 20 different cases, affecting EU exports worth 4.2 billion EUR. South Korea, China, Israel and Ukraine head the list of countries where the Union has managed to overcome the restrictions.

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