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Last minute deal on trade barriers reveals strong divide at the G20 summit

Wednesday, June 20th 2012 - 06:52 UTC
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Brazilian president Rousseff proposed re-opening the Doha round to lower trade barriers Brazilian president Rousseff proposed re-opening the Doha round to lower trade barriers

World leaders extended by one year their vow not to put up new trade barriers at the G20 summit on Tuesday in a last-minute deal that exposed deep rifts over protectionism.

The agreement to refrain from new protectionist measures until the end of 2014 as part of world leaders' efforts to foster global growth was included in the final G20 communiqué.

Mexican President Felipe Calderon said it was hard won and struck only at the very end of two-day talks in the Pacific resort of Los Cabos.

“There was resistance from some countries but beyond that we did manage to get a consensus and arrive at an agreement,” he told a news conference after the meeting.

Brazil, Argentina and South Africa had resisted extending the trade pledge beyond its current expiry at the end of 2013, while other countries wanted to push it back to 2015, a diplomat with knowledge of the G20 trade talks said. The deadlock was broken by Russian President Vladimir Putin, the diplomat said.

Ahead of the summit, Japan and the European Union had sent strong warnings that free trade was under threat as some countries respond to slowing growth by trying to protect their domestic industries.

“The EU is sounding the alarm regarding a worrisome rise in protectionism,” EU President Jose Manuel Barroso said as G20 members arrived in Los Cabos.

Japan's Prime Minister Yoshihiko Noda called for world leaders to stamp out any efforts to lessen free trade. ”I see signs of protectionism emerging in the G20 debate, so we should deliver a message to counter (that),“ he told reporters.

Fearful that trade protectionism would slow global growth, G20 leaders at the height of the financial crisis in November 2008 first pledged to refrain from erecting any new trade barriers, often used to shield domestic businesses from world competition at times of economic stress.

Despite that effort, a World Bank report released on Sunday found that G20 nations have accounted for the vast majority of the more than 1.000 new protectionist measures that have been introduced between November 2008 and March 2012.

Brazilian President Dilma Rousseff launched a counter-offensive on trade at the G20 summit by proposing to re-open by 2014 the stalled Doha round of global negotiations to lower trade barriers. The idea failed to win traction with other G20 leaders.

”Some countries have agricultural subsidies, some countries think that there is protectionism in services, others saw problems in industry,“ she told reporters. ”It's obvious that there is a lot of resistance to reopening the Doha round.“

The Doha round was launched more than 10 years ago to help poor countries prosper through trade. However, bitter divisions over how much developed countries should cut farm tariffs and subsidies in exchange for developing countries opening their markets have prevented a deal.

Business lobby group the International Chamber of Commerce warned that the increasingly protectionist climate could derail efforts to stimulate to world economic growth and development, a message shared by business leaders meeting on the sidelines of the G20 summit.

”We believe in free trade and free investment, and that's key to promote growth in the global economy,“ said Kimberly Clark Mexico chief executive Pablo Gonzalez.

”We should all combat those decisions and commit ourselves to open trade and to open investment.”

Categories: Economy, International.

Top Comments

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  • Britworker

    Perhaps allowing the worst culprit to parade around like she has a legitimate reason to be at the top 2o performing countries, was not an example the G20 should have been setting, as Mr Cameron stated. Is Argentina even in the top 30? Seriously, what were they doing there? It's like inviting the owner of a popcorn stand to a directors AGM.

    Jun 20th, 2012 - 07:44 am 0
  • The Cestrian

    something else for RG Land to ignore.

    Jun 20th, 2012 - 07:57 am 0
  • Idlehands

    How can they extend a deal when it's clear many G20 members ignore it anyway?

    May as well agree that the sea is pink.

    Jun 20th, 2012 - 08:32 am 0
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