International creditors are on a tour of the Middle East and North Africa, preaching that the keys for development and prosperity are the implementation of free market liberalisation that will usher in an age of global cooperation. However, now that political considerations have zoned in on China’s rapid rise, a wave of protectionist and discriminatory measures have begun to define the world economy, says a new Global Trade Report (GTR) titled “FDI Recovers?”, an analysis of the current discussion and policy framework in the G20 summit in Hangzhou, China.
The GTR analyses the stagnation in global trade, depressed growth rates, and the shift from trade liberalisation as well as the G20’s contribution to the recovery, and the coherence of policy so far. They found that trade protectionism and anti-free market policies from richer nations are the culprit for depressed growth, implementing 350 trade restrictive measures in the first eight months of 2016.
Since 2008, 4,000 trade barriers and discriminatory incentives have been implemented by the G7+Austrailia and BRICS, which severely distort FDI gains.
As trade protection sees “harm being done more frequently to the non-G20 nations”, this has a major effect on Egypt, not to mention the decrease in global trade and cheap oil has had a profound effect on Suez revenue. For example, Saudi Arabia’s protection has, in the view of GTR, less to do with promoting exports and “better reflects its propensity to discriminate against foreign commercial interests”, which greatly affects Egypt.
Of the total amount of protectionist measures, the US has enacted almost 1,050 unfair practices. GTR notes that “the [act of] resorting to protectionism appears more sustained than in [Russia, India, and Argentina]”. The majority of the US’s trade distorting has increased levels of subsidies and tax incentives to multi-national corporations.
The GTR acknowledges that China has been the country targeted most by the trade protection measures, even amongst its fellow BRICS countries. While these polices do have a global fall out in depressing growth and trade, they are crafted “surgically” and precisely target industries or firms connected to China.
Western nations and multinational corporations grow increasingly panicked over China’s economic pre-eminence. This will be the heart of what is discussed at the G20 summit on Monday.