Economic Analysis - Protectionism Update: Calm Before The Storm? - JAN 2018
BMI View: We expect the trend of rising global protectionism that has been in place since 2013 to resume over the coming quarters after a hiatus in 2017 . Developed states will drive this uptrend, particularly once the White House attempts to reform US-China trade relations, which is likely to occur over 2018-2019.
The trend of rising global protectionism that has been in place since 2013 gathered significant momentum over 2015-2016, but has thus far taken a breather in 2017. This slowdown appears counterintuitive given the significant media attention devoted to trade policy, particularly US policy, since the start of the Trump administration. For instance, a high-profile decision in October by the US Department of Commerce to impose a 219% tariff on imports of Bombardier products into the US became headline news in the US, UK and Canada and drew public statements from the leaders of these countries, Donald Trump, Theresa May and Justin Trudeau.
Nonetheless, according to data from Global Trade Alert (GTA), there were half as many protectionist measures enacted globally over the first three quarters of 2017 than during the same periods in 2015 and 2016. This decline was led by a significant drop off in the US and EU, which have accounted for the largest share of protectionist measures in recent years. The GTA defines protectionist measures as any policy that is 'almost certainly discriminatory towards foreign commercial interests', which includes indirect measures such as public procurement localisation or export subsidies. This is a broader, and in our view more appropriate measure than that used by the WTO, which focuses on a narrower selection of more direct measures such as import tariffs.
|Trade Recovery Set To Slow|
|Global Trade Volumes And BMI Forecast|
|Source: CPB, Macrobond, BMI|