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Last Updated:[12-08-2013 03:10:09 EDT] Zoom in Zoom out Back to Tradenews

Is the World going Anti Free Trade

tradenews The recent furore about the strife brewing between China and the European Union (EU) concerning the export of cheap Solar Panels by the former to the countries of the EU, the resultant anti-dumping tax imposed by the EU on Chinese Solar Panel exporters and the counter tax imposed by the Chinese trade ministry on wines imported from Europe might just be the first salvos (or atleast the most visible) in a series of regulations imposed by various governments that hinder free trade. The current trend is disturbing and counterproductive- countries are trying to boost their economies at the expense of others.

The Chinese-EU problem might be the most publicised, yet not the most controversial. Agencies report that this trend of ‘protectionism’ had reached worrying proportions by the fourth quarter of 2012 and early 2013. A disturbing 431 new anti-free trade regulations were introduced by the governments of the world in the duration of June-2012 to May-2013. Atleast 183 more such regulations are in the works. What compounds this problem is the fact that only about 143 new regulations were introduced in the same duration that actively supported free trade.

Surprisingly, the EU- an undertaking that was formed to broaden and encourage trade amongst its member countries, heads the list when it comes governmental bodies that harbour such protective policies. Many members of G20 are also part of this listing. In terms of countries that apply significantly high import duties on specific product groups, Vietnam heads the list and is closely followed by Argentina, Italy and Germany. These nations are guilty of erecting major barriers to free trade while keeping only their national interest in mind- consequently, denting the liberating concept of free trade for other countries.

There is a strong intent at play when it comes to economies bringing forth these protectionist strategies. Often this intent is masked subtly to appear less intentional. A paltry 174 regulations out of 413 introduced between June-2012 and May-2013 were conventional trade policies as anti-subsidy or anti-dumping regulations and taxes, others were measures that allowed these governments to bypass the strict checks put in place by the World Trade Organization (WTO). These measures include mild to severe restrictions imposed on exports, immigration and investments. A powerful example is the ‘Buy America’ bill introduced by the US Agricultural ministry- a regulation which ensures that US agricultural produce holds precedence in bids put out to public tender, has the ability to affect agricultural producers in 15 countries including Canada, Germany and Mexico.

The warnings are all here- it remains to be seen if the governments wake upto the potential trade wars that are in the works. A scenario such as that has the propensity to escalate into something much more critical.

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