UN report warns G20 bloc against slipping towards protectionist trade policies

The Group of 20 (G20) largest economies have in most part refrained from initiating protectionist trade or investment measures in reaction to the global recession, according to a new United Nations report released today, cautioning G20 leaders against restrictive policies.

“There is no indication of a descent into high-intensity protectionism as a reaction to the crisis, involving widespread resort to investment restrictions,” said a news release issued by the UN Conference on Trade and Development (UNCTAD), who produced the report with the World Trade Organization (WTO) and the Organisation for Economic Cooperation and Development (OECD).

Although recent policy developments “paint a reassuring picture,” some G20 – an informal forum comprising 19 nations and the European Union – governments have established national support schemes that can discriminate against foreign investors or raise hidden barriers to outward investment, said the report.

It also noted that despite indications of economic recovery in some parts of the world, the global crisis is not over and rising unemployment will continue to fuel protectionist pressures for years to come.

“It is the responsibility of all world leaders, in particular those of the G20 members, to take the appropriate policy actions so that trade and international investment can help economies recover from the global crisis on a sustained basis,” stressed the report.

“In this regard, G20 leaders should undertake a stronger commitment to open markets and make concrete their call to conclude the Doha Round in 2010.”

The report noted that some of the fiscal stimulus packages introduced to tackle the global economic and financial crises contain elements that favour domestic goods and services at the expenses of imports.

“It is urgent that governments start planning a coordinated exit strategy that will eliminate these elements as soon as possible,” it said ahead of the two-day gathering of G20 leaders in Pittsburgh, the United States, later this month.