africa resists the protectionist temptation the 5th gta report a focus on sub-saharan africa

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Centre for Economic Policy Research53-56 GREAT SUTTON STREET • LONDON EC1V 0DG • TEL: +44 (0)20 7183 8801 • FAX: +44 (0)20 7183 8820 • EMAIL: [email protected]

With the return to economic growth of many industrialised economies ineither late 2009 or the first half of 2010, combined with sustained expansionsin the emerging market economies, came the hope that protectionist pressures would ease in the world economy through 2010. If anything, theperiod since our last report was published in January 2010 has been one of thebusiest for the Global Trade Alert team.

Nothing short of a mountain of evidence has been uncovered in recentmonths concerning state measures announced after the start of our reportingwindow, November 2008. A total of 247 new reports on implemented orannounced and pending state measures have been added to the Global TradeAlert database since our last report was published, expanding the total number of reports to 960. This 40% expansion in the GTA's database providesfor a more comprehensive assessment of contemporary protectionism and, as this Report makes clear, some of our previous findingshave been revised.

Like our two previous reports, the fifth Report also has a regional focus. Thistime our focus is on Sub-Saharan Africa, whose development significance isevident. What may be less well known is that Sub-Saharan African govern-ments have not resorted to protectionism on the scale of industrialised countries and some developing country peers during the recent global economic downturn. Sub-Saharan Africa is also the recipient of preferentialaccess to the markets of many industrialised countries. This Report containstwo papers on the likely reforms to the United States and European Uniontrade preference regimes and their potential implications for Sub-SaharanAfrica. These papers will also be of interest to those following the West's policies towards Sub-Saharan Africa.

Africa Resists theProtectionist Temptation

The 5th GTA Report

A Focus on Sub-Saharan Africa

Edited by Simon J. Evenett

Africa Resists the Protectionist Temptation The 5th G

TA Report

GTA5_cover.qxp 26/05/2010 13:20

Africa Resists the ProtectionistTemptation

The 5th GTA Report

Centre for Economic Policy Research (CEPR)

Centre for Economic Policy Research2nd Floor53-56 Great Sutton StreetLondon EC1V 0DGUK

Tel: +44 (0)20 7183 8801Fax: +44 (0)20 7183 8820Email: [email protected]: www.cepr.org

© Centre for Economic Policy Research 2010

Africa Resists the ProtectionistTemptation

The 5th GTA Report


About Global Trade Alert (GTA)

Global Trade Alert provides information in real time on state measures taken during the currentglobal economic downturn that are likely to discriminate against foreign commerce. GlobalTrade Alert is:

Independent: GTA is co-ordinated by the Centre for Economic Policy Research, an independentacademic and policy research think-tank based in London, UK. GTA draws upon expertise andanalysis from 7 independent research institutions around the world.

Comprehensive: GTA complements and goes beyond the WTO and World Bank's monitoringinitiatives by identifying those trading partners likely to be harmed by state measures.

Accessible: The GTA website allows policy-makers, exporters, the media, and analysts to searchthe posted government measures by implementing country, by trading partners harmed, andby sector. Third parties will be able to report suspicious state measures and governments will begiven the right to reply to any of their measures listed on the website.

Transparent: The GTA website allows policymakers, government officials, exporters, the media,and analysts to report discriminatory measures, but also will provide data for all stakeholderson the posted government measures by implementing country, by trading partners harmed,and by sector.

Timely: The up-to-date information and informed commentary provided by Global Trade Alertwill help ensure that the G20 pledge not to "repeat the historic mistakes of protectionism of pre-vious eras" is met, by maintaining confidence in the world trading system, deterring beggar-thy-neighbour acts, and preserving the contribution that exports could play in the future recoveryof the world economy.

For further information, visit www.GlobalTradeAlert.org

About the Centre for Economic Policy Research (CEPR)

The Centre for Economic Policy Research is a network of over 700 Research Fellows andAffiliates, based primarily in European universities. The Centre coordinates the research activi-ties of its Fellows and Affiliates and communicates the results to the public and private sectors.CEPR is an entrepreneur, developing research initiatives with the producers, consumers andsponsors of research. Established in 1983, CEPR is a European economics research organizationwith uniquely wide-ranging scope and activities.

The Centre is pluralist and non-partisan, bringing economic research to bear on the analysis ofmedium- and long-run policy questions. CEPR research may include views on policy, but theExecutive Committee of the Centre does not give prior review to its publications, and theCentre takes no institutional policy positions. The opinions expressed in this report are thoseof the authors and not those of the Centre for Economic Policy Research.

CEPR is a registered charity (No. 287287) and a company limited by guarantee and registered inEngland (No. 1727026).

Chair of the Board Guillermo de la DehesaPresident Richard PortesChief Executive Officer Stephen YeoResearch Director Mathias DewatripontPolicy Director Richard Baldwin

Contents

Foreword vii

Executive Summary 1Simon J. Evenett

Section 1: Crisis-related Discrimination Against ForeignCommercial InterestsA Global Overview of Protectionism through to May 2010 19Simon J. Evenett

Section 2: Sub-Saharan Africa, Commercial PolicyDiscrimination and the Global Economic DownturnEffects of Post-Crisis Foreign Trade Policy Measures on Economic and 35Trade Performance in AfricaEric Kehinde Ogunleye

Impact of the Global Financial Crisis on Trade and Economic 49Policy Making in AfricaFelix Fofana N’Zue

Transforming Africa’s Structure and Composition of Trade after the 63Global Economic CrisisNana Amma Afari-Gyan

Towards More Balanced Trade within the Framework of the Forum for 75China-Africa Cooperation: The Impact of China on Africa’s TradeSarah Jane Danchie

How Much Did Africa’s Top Exports Fall During the Crisis? 93A Comparison with East Asia and AfricaMartin Wermelinger

US Trade Policy Towards the Least Developed Countries: 103Are these Countries’ Interests Congruent or in Conflict?Craig vanGrasstek

Reform of the EU GSP Regime and its Potential Impact on Sub-Saharan 113AfricaMalwina Nowakowska

Section 3: Country-by Country ReportsAngola 139Benin 142Botswana 145Burkino Faso 148Cameroon 151Cape Verde 154Central African Republic 157Chad 160Comoros 163Congo 166Democratic Republic of The Congo 169Cote d’Ivoire 172Eritrea 176Ethiopia 179Gabon 183Gambia 186Ghana 189Guinea 193Guinea-Bissau 196Kenya 199Lesotho 203Liberia 206Madagascar 209Malawi 213Mali 216Mauritania 219Mauritius 222Mayotte 225Mozambique 228Namibia 231Niger 234Nigeria 238Rwanda 243Sao Tome and Principe 246Senegal 249Seychelles 253Sierra Leone 256Somalia 259South Africa 262Sudan 266United Republic of Tanzania 269Togo 272Uganda 276Zambia 280Zimbabwe 284

Global Trade Alert is now almost a year old. Over the past year it has received 960reports of state measures taken during the global downturn that are likely to affectforeign commerce. The flow of reports about these measures shows no signs of abat-ing: we have received 247 reports since the publication of the fourth GTA Report inJanuary 2010. Each report is carefully scrutinized by our independent team of tradepolicy analysts based around the globe before it is published on the GTA website. TheGTA team has concluded that 496 'beggar thy neighbour' measures have been intro-duced since November 2008. Almost a third (31%) involve bailouts and state aids: sur-prisingly, many of these are not in the financial sector but instead in smokestack,declining industries or in agriculture. Anti-dumping, anti-subsidy and safeguardmeasures are also popular, and represent 20% of the measures. There is a glimmer ofgood news, however: tariffs are becoming less important, and only represent 12% ofthe measures introduced. There is other good news as well: the ratio of 'beggar thyneighbour' to liberalizing measures has fallen recently, and was less than three to onein the latest reporting period.

This report, the fifth produced by the GTA team over the past year, examines the'global dynamics' of protectionism: whether a return to growth has altered govern-ments' tendencies towards protectionism, and the extent, nature and possible harmdone by discriminatory state measures taken since November 2008.

Like its two predecessors, this GTA report has a regional focus, this time on Sub-Saharan Africa. The report includes seven papers on the commercial policy challengesfacing Sub-Saharan Africa. First, there are three papers on Africa's trade relations withits leading trading partners: China, the European Union, and the United States. Thisis followed by detailed information on each nation in Sub-Saharan Africa: the extentto which its commercial interests have been harmed by the actions of other countries,and the extent to which measures it has introduced have affected its trading partners.

On Sub-Saharan Africa, there is some encouraging news: governments in thatregion have not resorted to protectionism on the scale of industrialised countries andsome of their developing country peers. If anything, governments in Sub-SaharanAfrica have continued to pursue policies of openness, intensifying their drive toattract foreign direct investment (FDI) through changes to tax, investment, and otherpolicies designed to lure foreign firms.

At the global level, however, the picture is still mixed: a few rays of sunshine break-ing through a sombre background. The G20 countries are typical. To their credit, theyimplemented 33 of the 41 benign or liberalising measures discovered since the lastGTA report was published in January 2010. On the other hand, since we published

vii

Foreword

our report, we have discovered 96 more discriminatory measures implemented byG20 countries: a 40% increase!

So the evidence we have from the GTA database suggests the importance of con-tinued vigilance. Such vigilance would not be possible without Simon Evenett andthe unbounded energy and enthusiasm he has shown in leading GTA initiative.Thanks are also due to his hard-working team at the Swiss Institute for InternationalEconomics and Applied Economic Research in St. Gallen, who prepared the summa-ry tables and maps and provided general research support – namely, Johannes Fritz,Darya Gerasimenko, Malwina Nowakowska, and Martin Wermelinger. CEPR'sPublications Team – Anil Shamdasani and Samantha Reid, provided invaluable sup-port, as ever. The task of collecting and analysing the data has been conducted veryefficiently and professionally by GTA's regional network partners, notably, the AfricanCentre for Economic Transformation (ACET), the Centre for InternationalGovernance Innovation (CIGI), the Gulf Research Center (GRC), the Latin AmericanTrade Network (LATN), and the Research and Information System for DevelopingCountries (RIS). We also owe thanks to GTA's supporters: the Centre for InternationalGovernance Innovation, the German Marshall Fund of the United States, theInternational Development Research Center, the Trade Policy Unit of the UKDepartment for Business, Innovation and Skills and the Department for InternationalDevelopment. In particular we would like to acknowledge financial support from theGlobal Trade and Financial Architecture project (an initiative of the UK Departmentfor International Development and the World Bank). Indeed, the support from all ourpartners has been generous and most welcome, but they of course play no role in theoperation of GTA, nor do they necessarily endorse the opinions expressed in thisReport.

We have been very much encouraged by the overwhelmingly positive reaction toGlobal Trade Alert from the world's media, policymakers and the international tradecommunity in general. This response has convinced us that an independent initiativesuch as GTA is necessary, valuable and can sit comfortably alongside, and comple-ment, other such monitoring initiatives that are taking place around the world. Inthis spirit, we trust that the contents of this report, and the ongoing work of GTA, willcontinue to be of interest to trade policymakers, commercial organisations, NGOsand analysts following developments in the world trading system.

Stephen YeoChief Executive Officer, CEPRLondon, 26 May 2010

Africa Resists the Protectionist Temptation: The 5th GTA Report

viii

Revisiting contemporary protectionism on the basis of a far greaterevidential base

With the return to economic growth of many industrialised economies in either late2009 or the first half of 2010, combined with sustained expansions in the emergingmarket economies, came the hope that protectionist pressures would ease in theworld economy through 2010. If anything, the period since our last report was pub-lished in January 2010, has been one of the busiest for the Global Trade Alert team.

Nothing short of a mountain of evidence has been uncovered in recent monthsconcerning state measures announced after the start of our reporting window,November 2008 (corresponding to the date of the first crisis-related G20 summit heldin Washington DC.) A total of 247 new reports on implemented or announced andpending state measures have been added to the Global Trade Alert database since ourlast report was published, expanding the total number of reports to 960. This 40 per-cent expansion in the GTA's database provides for a more comprehensive assessmentof contemporary protectionism and, as will become clear, some of our previous find-ings have had to be revised accordingly.

The purpose of this fifth report of the Global Trade Alert is to provide an overviewof the state measures taken during the current global economic downturn and nas-cent recovery1 that might affect international commerce. The principal findings ofthe report are summarised below and a global overview of contemporary commercialpolicies is provided in the next chapter.

Like our two previous reports, this report also has a regional focus. This time ourfocus is on Sub-Saharan Africa, whose development significance is evident. What maybe less well known is that Sub-Saharan African governments have not resorted to pro-tectionism on the scale of industrialised countries and some developing country peersduring the recent global economic downturn (see Map 1.1). Indeed, the contest forforeign direct investment (FDI) appears to be in full swing in Sub-Saharan Africa, with

Executive Summary

Simon J. EvenettUniversity of St. Gallen and CEPR

1

1 The recent downturn in business sentiment in Europe and the dislocation in the financial markets asso-ciated with the solvency of certain Eurozone governments are discussed in the next chapter. Should theworld economy ultimately succumb to another bout of contraction then the past six months may wellhave been a lull before the storm, with attendant implications for the corporate demand for protectionfrom foreign competition. The Global Trade Alert does not make macroeconomic forecasts, instead itsteam stands ready to monitor the potential cross-border implications of state measures taken over thecoming months irrespective of macroeconomic conditions.

governments making repeated changes to tax, investment, and other policies to lureforeign firms to establish facilities.2

Sub-Saharan Africa is also the recipient of preferential access to the markets ofmany industrialised countries. This report contains two papers on the likely reformsto the United States and European Union trade preference regimes and their poten-tial implications for Sub-Saharan Africa. These papers will, therefore, also be of inter-est to those following the West's policies towards Sub-Saharan Africa.

A contribution to policy dialogue through independent monitoring ofstate measures

Global Trade Alert (GTA) has always operated on the assumption that in current cir-cumstances the most practical approach to resisting protectionism is to combine peerpressure with high-quality, current information about state measures and their actu-al or potential effects on foreign commercial interests. Governments, the media, andcivil society are the key sources of the former; the job of Global Trade Alert and othermonitoring exercises is to provide the latter.

An assessment as to the extent and changes over time in protectionist dynamics isalso provided for in this Report, by considering not just the quarter-by-quarterchanges in the numbers of protectionist measures implemented but also the numberof pending measures that have been announced and are expected to implemented inthe future. Information on the pending measures provides policymakers with an"early warning" of what is to come, a feature unique to the GTA's monitoring initia-tive.

Principal findings of the Fifth Report concerning crisis-eraprotectionism

The substantial expansion in the GTA's database permitted a re-evaluation of the keyaspects of crisis-era protectionism. Below is our latest assessment of these dynamics.

1. Since the first G20 crisis-related summit in November 2008, the governments ofworld have together implemented 496 beggar-thy-neighbour policy measures;that is, more than one for every working day. Add in another 86 implementedmeasures that are likely to have harmed some foreign commercial interests, thetotal reaches 582; that is, more than one for every actual day since the first G20summit in November 2008.

a. Of those 247 new entries in the Global Trade Alert, 131 governmentmeasures been implemented that almost certainly discriminated againstforeign commercial interests. The total number of implemented (almost)discriminatory measures in the Global Trade Alert database rose then to 496measures, just over half of the total number of reports (960).


2

2 Some of the best evidence for this sustained policy of openness can be found in the budget speeches ofvarious finance ministers from Sub-Saharan Africa over the past two years.

b. Since our last report was published in January 2010, the number of beggar-thy-neighbour measures reported (131) was less than three times thenumber of benign or liberalising measures reported (53). This ratio wasconsiderably more favourable to market opening than in the previous GTAreports, and constitutes some good news.

2. Since the first G20 crisis-summit, bailouts and state aids are the most frequentsource of discrimination against other nations' commercial interests. Thirty-onepercent of all discriminatory measures were bailouts. By now 96 out of the 166discriminatory state aid/bail out measures in the Global Trade Alert database arein sectors other than the financial sector; many governments have taken theopportunity of the crisis to bail out manufacturers and farmers.

3. Although there are a lot of anti-dumping, anti-subsidy and safeguard measuresin the pipeline, they still account for only 99 of the 496 harmful measuresimplemented since November 2008. The large numbers of discriminatorymeasures reported in the Global Trade Alert database are, therefore, not drivenby so-called unfair trade actions.

4. Relatively speaking tariff measures--the trade barrier most associated with the1930s--continue to decline further in numerical importance. Tariff increasesaccount for only one in eight of the total number of discriminatory statemeasures imposed in the current global economic downturn.

5. No doubt to the embarrassment of those who systematically talked down theincidence of protectionism during 2009, the evidence continues to mount as tothe extent to which governments discriminated against foreign commercialinterests.

a. Since our last report was compiled the GTA team has found evidence ofmore harmful state measures that were imposed in the last quarter of 2008and the first half of 2009. This evidence forces us to revise upward byapproximately 10 percent the number of beggar-thy-neighbour measuresimposed in the first six months of 2009, to at least 115 measures per quarter.

6. By May 2010, no four-digit product line, no UN classified economic sector, andno jurisdiction has emerged unscathed by crisis-era protectionism.

7. Since November 2008 China's commercial interests have been hit 221 times byprotectionist measures. Only if the 27 members of the European Union arecounted together, does any other jurisdiction come close to absorbingcomparable harm (the EU27 group being hit 206 times).

a. There have been substantial increases in the number of times certainjurisdictions' commercial interests have been harmed since the last GTAreport was published in January 2010. Since that last report, everyone of the10 ten targets have been hit by at least another 28 beggar-thy-neighbourpolicies. China has been hit by 60 more measures (the most again), followedby the EU 27 (53 more adverse measures) and the USA (38 more hits).

8. Despite taking their no-protectionism pledge the G20 members have imposed316 beggar-thy-neighbour policies since November 2008. Since our last reportwas published in January 2010, a total of 96 more discriminatory measuresimplemented by G20 countries have been discovered, representing at least a 40percent increase.

Executive Summary

3

a. The G20 countries also implemented 81 of the 107 benign or liberalisingmeasures recorded in the GTA database. To their credit, 33 of the 41 benignor liberalising measures discovered since the last GTA report was publishedwere implemented by G20 countries.

9. Unlike recent GTA reports, by May 2010 it was not longer the case that theRussian Federation was in the top 5 of offending nations on all four criteria(number of harmful measures implemented, tariff lines affected, sectors affected,or trading partners affected). Now, taken together, the EU 27 has this dubiousdistinction. See Table 1.1. below.

a. On all four metrics, Argentina, China, Indonesia, and Russian Federation arealways in the top 10 worst offending nations.

b. The Russian Federation has the dubious distinction of raising trade barriersagainst the most tariff lines (40 percent of all product categories.) Still,Algeria takes the prize for measures that harm foreign commercial interestsin the largest number of economic sectors; Indonesia for harming the mosttrading partners (165).

c. When nations are ranked by the number of trading partners their statemeasures have harmed, every one of the top-10 worst offenders has hurt thecommercial interests of over 120 nations.

10.In the last GTA report it was stated that only five jurisdictions had takendiscriminatory measures that affected more than a quarter of all the possibletraded product categories; interestingly that number has now risen to nine.3

Still, only six (or five if one does not count the EU 27 as a group) jurisdictionshave taken measures that affect more than a third of all possible productcategories. The latter demonstrates that the across-the-board measures seen inthe 1930s have not been repeated in the recent global economic downturn.

11.Our expansion of the database confirms one long-standing GTA finding: Despiteall the talk about measures to bolster green industries, innovation, and futuregrowth poles of the economy, the great majority of the discrimination is infavour of domestic firms is in smokestack, declining industries and inagriculture.

12.In January 2010 the GTA reported there were 188 suspicious protectionistmeasures in the pipeline4; by May 2010 that total has risen to 237. As in ourprevious reports, if every one of these measures were eventually implemented itwould be equivalent just under half a year's more protectionism.


4

3 The Russian Federation, Brazil, Ukraine, EU 27, Indonesia, China, Ecuador, Argentina, and India. SeeTable 2.5 in the next chapter for more details.

4 For the purposes of this report (and the last one) the protectionist pipeline is said to include all thosestate measures that (i) have been publicly announced, (ii) that have yet to be implemented and (iii) uponexamination are likely to harm foreign commercial interests. Such measures are classified amber in theGTA database until implemented, whereupon their classification may change (depending on the detailsabout the potential discriminatory impact available at the time of implementation.)

Executive Summary

5

Metric, Country in specified rank, Number

Rank Ranked by number of

(almost certainly) discriminatory

measures imposed

Ranked by the number of tariff lines (product

categories) affected by (almost

certainly) discriminatory

measures

Ranked by the number of sectors affected by (almost


measures

Ranked by the number of trading partners affected

by (almost certainly)

discriminatory measures

1.

EU 27 (140)

Russian

Federation (487) Algeria (54) Indonesia (165)

2. Russian Federation (48) Brazil (440) EU 27 (52) EU 27 (163)

3. Argentina (37) Ukraine (389) Indonesia (31) China (152)

4. Germany (28) EU 27 (371) Ecuador (30) Argentina (145)

5. India (27) Indonesia (346) China (26) India (144)

6.

UK (22) China (335)

Russian Federation

(25)

Russian Federation

(137)

7. Indonesia (20) Ecuador (316) Mexico (24) Belgium (132)

8. China (19) Argentina (299) UK (128)

9. Italy (18) India (282) Germany (124)

10. Austria (17) Belguim (203)

Argentina

Belarus (23)

Belgium France (121)

Table 1.1 Which countries have inflicted the most harm?

Note: There is no single metric to evaluate harm. Different policy measures affect different numbers of products, economic sectors, and trading partners. GTA reports four measures of harm. The EU27 refers to the sum of all of the measures taken by the 27 national governments of the EuropeanUnion and the measures taken by the European Commission. To be included in this total a state measuremust have involved discrimination against the commercial interests of another state, including potentiallyanother member of the European Union.

How GTA built its extensive database on contemporary protectionism

Since GTA was launched on 8 June 2009 just under 1000 state initiatives have been investigated

by our independent team of trade policy analysts located around the globe. These initiatives

vary from packages of wide-ranging public measures, with many implications for trade and

investment policy instruments, to temporary tariff increases on single product lines. GTA's goal

is to provide the most comprehensive online database of state measures taken since the first

crisis-related G20 summit in November 2008 that might affect foreign commercial interests. The

latter are broadly conceived by the GTA team to include not just trade flows and foreign

investments but also intellectual property rights and migrant workers deployed abroad. It is

through careful, multi-faceted investigations of these initiatives that a rich evidential base was

built, from which the contours of contemporary protectionism can be discerned. Users can

access this evidence at the website: www.globaltradealert.org

One of the most important steps in a GTA investigation is to establish whether the

implementation of a state initiative has, or is likely, to alter the relative treatment of domestic

and foreign commercial interests in the markets where the initiative's effects will be felt. In

common parlance, GTA checks whether a state initiative tilts the playing field against foreign

firms. GTA, therefore, does not opine on the WTO legality of a measure or whether a measure

is "appropriate," "fair," "reasonable" or "crisis-related" (there being no agreed definitions of these

terms.)

State initiatives that almost certainly (or certainly) introduce or change asymmetries of

treatment to the detriment of some foreign commercial interests are deemed by the Global Trade

Alert to be contrary to the no-protectionism pledges made at the November 2008 G20 summit

in Washington, DC, and London summit in April 2009. In this Executive Summary, the phrases

discriminatory and protectionist are used synonymously.

Without attempts to carefully enumerate the different types of state measures used and their

various effects, any assessment of contemporary protectionism is likely to overlook key trends

and is of diminished value to policymakers. That is why GTA goes beyond providing an

assessment of the discriminatory impact of state initiatives. Examination of the tariff lines,

sectors, and trading partners that are likely to be affected by each state initiative are carefully

conducted so as to provide some indication of a public initiative's impact in what is still a

relatively interdependent global economy even though, strictly speaking, there may be some

circumstances where some form of discrimination is needed to attain a non-protectionist

government objective.

No doubt purists will argue that a complete understanding of the consequences of crisis-era

protectionism requires a detailed economic analysis of each state initiative. Such analyses could

indeed be very useful, indeed the GTA team is and would gladly cooperate with experts

interested in conducting such studies. But, leaving aside the question of resources and the

availability of all the necessary data, quite frankly it is utopian to believe that just under 1000

such analyses could be conducted in the timeframe necessary to influence policymaking. In

short, we should not make the perfect the enemy of the very good. GTA's investigations go a

long way towards indicating the scale of an initiative's effects by making extensive use of

publicly available trade, investment, migration, and other data. Still, the GTA team welcomes

suggestions that will result in further improvements in the coverage and assessment of state

initiatives.

Note: See Evenett (2009a) for an overview of the GTA's methodology and Evenett (2009b) for adiscussion of the concerns some have raised about the GTA's approach.


6

Mapping crisis-era protectionism

Sometimes averages and totals obscure interesting variation across countries. Tocounter this, and to facilitate comparisons across jurisdictions, in each report of theGlobal Trade Alert several world maps will be included. These maps are reproduced atthe end of this Executive Summary. Map 1.1 shows how many almost certainly dis-criminatory measures have been implemented by each jurisdiction since November2008. There is considerable variation across countries. Almost every major tradingnation has implemented 10 or more such measures since the first G-20 crisis meeting.In contrast, with the exception of Nigeria, every African nation has implemented lessthan 10 discriminatory measures.

Some government initiatives affect very few trading partners, others many. Map1.2. reports the total number of trading partners that - on the basis of existing flowsof goods, investments, and people across borders - are likely to have been harmed bythe implementation of a government's discriminatory measures. More than a dozennational governments have already taken measures that harm 100 or more of theirtrading partners. Maps 1.3. and 1.4. report the number of product categories (4 digittariff lines) and economic sectors affected by the discriminatory measures that havebeen put in place since the first crisis-related G-20 summit in November 2008.

Maps were also generated for the number of times that each jurisdiction's com-mercial interests have been harmed by other countries' discriminatory measures. Thenumber of countries whose state measures have adversely affected a given jurisdic-tion's commercial interests is reported in Map 1.5. Map 1.6 shows how many times ajurisdiction's commercial interests have been harmed by the discriminatory statemeasures taken by other governments.

Given the enduring interest in whether the G-20 member states have lived up totheir no-protectionism pledge, Map 1.7. may be of particular interest. This mapdemonstrates the almost global reach of the harm done when G-20 governments vio-lated their own no-protectionism pledges.

Map 1.8. shows that the overwhelming majority of nations will find their coun-tries' commercial interests harmed if the discriminatory measures in the pipeline areactually implemented. Forward-looking trade policymakers may find this map andthe related information in the Global Trade Alert database helpful in identifyingthose pending foreign measures whose implementation could be usefully influenced.

The organisation and contents of the remainder of this Report

The rest of this Report is organised as follows. The large number of state measuresinvestigated by the GTA team provide the evidential base from which trends in con-temporary protectionism can be assessed. Next an account of the protectionistdynamics worldwide is provided, drawing on the substantial expansion in the GTA'sdatabase since our last report was published in January 2010. This global perspectiveis complemented by seven papers on contemporary commercial policy challenges fac-ing Sub-Saharan Africa. Three of these papers specifically address African trade rela-tions with leading trading partners, namely, China, the European Union, and theUnited States. Finally, for each nation in Sub-Saharan Africa information is presented

Executive Summary

7

on the extent to which its commercial interests have been harmed by the actions ofother countries. Symmetrically, information is presented on the extent to which eachnation's state measures have affected other trading partners.

References

Evenett (2009a). Simon J. Evenett. "What can be learned from crisis-eraprotectionism? An Initial Assessment." Business & Politics. October.

Evenett (2009b). Simon J. Evenett. " Crisis-era protectionism one year after theWashington G20 meeting: A GTA update, some new analysis, and a few words ofcaution." In Richard E. Baldwin (ed.). The Great Trade Collapse: Causes, Consequencesand Prospects. VoxEU.org publication. December 2009.

About the author

Simon J. Evenett is Professor of International Trade and Economic Development,University of St. Gallen, Switzerland; Co-Director of the International Trade andRegional Economics Programme, CEPR; and Coordinator of Global Trade Alert.

26 May 2010


8

Executive Summary

9

Map

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Executive Summary


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Executive Summary


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Map

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Executive Summary


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Revisiting contemporary protectionism on the basis of a far greaterevidential base

With the return to economic growth of many industrialised economies in either late2009 or the first half of 2010, combined with sustained expansions in the emergingmarket economies, came the hope that protectionist pressures would ease in theworld economy through 2010. If anything, the period since our last report was pub-lished in January 2010, has been one of the busiest for the Global Trade Alert team.

Nothing short of a mountain of evidence has been uncovered in recent monthsconcerning state measures announced after the start of our reporting window,November 2008 (corresponding to the date of the first crisis-related G20 summit heldin Washington DC.) A total of 247 new reports on implemented or announced andpending state measures have been added to the Global Trade Alert database since ourlast report was published, expanding the total number of reports to 960. This 40 per-cent expansion in the GTA's database provides for a more comprehensive assessmentof contemporary protectionism and, as will become clear, some of our previous find-ings have had to be revised accordingly.

The purpose of this fifth report of the Global Trade Alert is to provide an overviewof the state measures taken during the current global economic downturn and nas-cent recovery1 that might affect international commerce. The principal findings ofthe report are summarised below and a global overview of contemporary commercialpolicies is provided in chapter 2 of this report.

Like our two previous reports, this report also has a regional focus. This time ourfocus is on Sub-Saharan Africa, whose development significance is evident. What maybe less well known is that Sub-Saharan African governments have not resorted to pro-tectionism on the scale of industrialised countries and some developing country peersduring the recent global economic downturn (see Map 1.1). Indeed, the contest forforeign direct investment (FDI) appears to be in full swing in Sub-Saharan Africa, with

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1 The recent downturn in business sentiment in Europe and the dislocation in the financial markets asso-ciated with the solvency of certain Eurozone governments are discussed in the next chapter. Should theworld economy ultimately succumb to another bout of contraction then the past six months may wellhave been a lull before the storm, with attendant implications for the corporate demand for protectionfrom foreign competition. The Global Trade Alert does not make macroeconomic forecasts, instead itsteam stands ready to monitor the potential cross-border implications of state measures taken over thecoming months irrespective of macroeconomic conditions.

governments making repeated changes to tax, investment, and other policies to lureforeign firms to establish facilities.2

Sub-Saharan Africa is also the recipient of preferential access to the markets ofmany industrialised countries. This report contains two papers on the likely reformsto the United States and European Union trade preference regimes and their poten-tial implications for Sub-Saharan Africa. These papers will, therefore, also be of inter-est to those following the West's policies towards Sub-Saharan Africa.

A contribution to policy dialogue through independent monitoring ofstate measures

Global Trade Alert (GTA) has always operated on the assumption that in current cir-cumstances the most practical approach to resisting protectionism is to combine peerpressure with high-quality, current information about state measures and their actu-al or potential effects on foreign commercial interests. Governments, the media, andcivil society are the key sources of the former; the job of Global Trade Alert and othermonitoring exercises is to provide the latter.

An assessment as to the extent and changes over time in protectionist dynamics isalso provided for in this Report, by considering not just the quarter-by-quarterchanges in the numbers of protectionist measures implemented but also the numberof pending measures that have been announced and are expected to implemented inthe future. Information on the pending measures provides policymakers with an"early warning" of what is to come, a feature unique to the GTA's monitoring initia-tive.

Principal findings of the Fifth Report concerning crisis-eraprotectionism

The substantial expansion in the GTA's database permitted a re-evaluation of the keyaspects of crisis-era protectionism. Below is our latest assessment of these dynamics.

1. Since the first G20 crisis-related summit in November 2008, the governments ofworld have together implemented 496 beggar-thy-neighbour policy measures;that is, more than one for every working day. Add in another 86 implementedmeasures that are likely to have harmed some foreign commercial interests, thetotal reaches 582; that is, more than one for every actual day since the first G20summit in November 2008.

a. Of those 247 new entries in the Global Trade Alert, 131 governmentmeasures been implemented that almost certainly discriminated againstforeign commercial interests. The total number of implemented (almost)discriminatory measures in the Global Trade Alert database rose then to 496measures, just over half of the total number of reports (960).


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2 Some of the best evidence for this sustained policy of openness can be found in the budget speeches ofvarious finance ministers from Sub-Saharan Africa over the past two years.

b. Since our last report was published in January 2010, the number of beggar-thy-neighbour measures reported (131) was less than three times thenumber of benign or liberalising measures reported (53). This ratio wasconsiderably more favourable to market opening than in the previous GTAreports, and constitutes some good news.

2. Since the first G20 crisis-summit, bailouts and state aids are the most frequentsource of discrimination against other nations' commercial interests. Thirty-onepercent of all discriminatory measures were bailouts. By now 96 out of the 166discriminatory state aid/bail out measures in the Global Trade Alert database arein sectors other than the financial sector; many governments have taken theopportunity of the crisis to bail out manufacturers and farmers.

3. Although there are a lot of anti-dumping, anti-subsidy and safeguard measuresin the pipeline, they still account for only 99 of the 496 harmful measuresimplemented since November 2008. The large numbers of discriminatorymeasures reported in the Global Trade Alert database are, therefore, not drivenby so-called unfair trade actions.

4. Relatively speaking tariff measures--the trade barrier most associated with the1930s--continue to decline further in numerical importance. Tariff increasesaccount for only one in eight of the total number of discriminatory statemeasures imposed in the current global economic downturn.

5. No doubt to the embarrassment of those who systematically talked down theincidence of protectionism during 2009, the evidence continues to mount as tothe extent to which governments discriminated against foreign commercialinterests.

a. Since our last report was compiled the GTA team has found evidence ofmore harmful state measures that were imposed in the last quarter of 2008and the first half of 2009. This evidence forces us to revise upward byapproximately 10 percent the number of beggar-thy-neighbour measuresimposed in the first six months of 2009, to at least 115 measures per quarter.

6. By May 2010, no four-digit product line, no UN classified economic sector, andno jurisdiction has emerged unscathed by crisis-era protectionism.

7. Since November 2008 China's commercial interests have been hit 221 times byprotectionist measures. Only if the 27 members of the European Union arecounted together, does any other jurisdiction come close to absorbingcomparable harm (the EU27 group being hit 206 times).

a. There have been substantial increases in the number of times certainjurisdictions' commercial interests have been harmed since the last GTAreport was published in January 2010. Since that last report, everyone of the10 ten targets have been hit by at least another 28 beggar-thy-neighbourpolicies. China has been hit by 60 more measures (the most again), followedby the EU 27 (53 more adverse measures) and the USA (38 more hits).

8. Despite taking their no-protectionism pledge the G20 members have imposed316 beggar-thy-neighbour policies since November 2008. Since our last reportwas published in January 2010, a total of 96 more discriminatory measuresimplemented by G20 countries have been discovered, representing at least a 40percent increase.

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a. The G20 countries also implemented 81 of the 107 benign or liberalisingmeasures recorded in the GTA database. To their credit, 33 of the 41 benignor liberalising measures discovered since the last GTA report was publishedwere implemented by G20 countries.

9. Unlike recent GTA reports, by May 2010 it was not longer the case that theRussian Federation was in the top 5 of offending nations on all four criteria(number of harmful measures implemented, tariff lines affected, sectors affected,or trading partners affected). Now, taken together, the EU 27 has this dubiousdistinction. See Table 1.1. below.

a. On all four metrics, Argentina, China, Indonesia, and Russian Federation arealways in the top 10 worst offending nations.

b. The Russian Federation has the dubious distinction of raising trade barriersagainst the most tariff lines (40 percent of all product categories.) Still,Algeria takes the prize for measures that harm foreign commercial interestsin the largest number of economic sectors; Indonesia for harming the mosttrading partners (165).

c. When nations are ranked by the number of trading partners their statemeasures have harmed, every one of the top-10 worst offenders has hurt thecommercial interests of over 120 nations.

10.In the last GTA report it was stated that only five jurisdictions had takendiscriminatory measures that affected more than a quarter of all the possibletraded product categories; interestingly that number has now risen to nine.3

Still, only six (or five if one does not count the EU 27 as a group) jurisdictionshave taken measures that affect more than a third of all possible productcategories. The latter demonstrates that the across-the-board measures seen inthe 1930s have not been repeated in the recent global economic downturn.

11.Our expansion of the database confirms one long-standing GTA finding: Despiteall the talk about measures to bolster green industries, innovation, and futuregrowth poles of the economy, the great majority of the discrimination is infavour of domestic firms is in smokestack, declining industries and inagriculture.

12.In January 2010 the GTA reported there were 188 suspicious protectionistmeasures in the pipeline4; by May 2010 that total has risen to 237. As in ourprevious reports, if every one of these measures were eventually implemented itwould be equivalent just under half a year's more protectionism.


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3 The Russian Federation, Brazil, Ukraine, EU 27, Indonesia, China, Ecuador, Argentina, and India. SeeTable 2.5 in the next chapter for more details.

4 For the purposes of this report (and the last one) the protectionist pipeline is said to include all thosestate measures that (i) have been publicly announced, (ii) that have yet to be implemented and (iii) uponexamination are likely to harm foreign commercial interests. Such measures are classified amber in theGTA database until implemented, whereupon their classification may change (depending on the detailsabout the potential discriminatory impact available at the time of implementation.)

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measures imposed




measures



measures




1.

EU 27 (140)

Russian






6.

UK (22) China (335)

Russian Federation

(25)

Russian Federation

(137)





Argentina

Belarus (23)


