Having finished the trade topic in the AS course I was interested to read that although global trade is on the increase the World Trade Organisation (WTO) are still concerned about the level of protectionism that countries seem to implementing. When the Global Finaincial Crisis (GFC) started to impact on global growth the G20 countries, which account for 85% of global GDP, were determined not to replicate the protectionist measures of the 1930’s when the world economy went through a depressionary phase. China and India are steaming along and China accounts for 20% of India’s trade deficit – in the last year India has a trade deficit with China of US$40bn. According to the Economist for US$1 worth of exports to China, India imports US$3. What is also significant about world trade is that later this Russia joins the WTO and it is assumed that foreign direct investment in Russia will increase significantly. HSBC have suggested that the value of global trade will increase by 90% over the next 15 years.
However the WTO are not so sure of the growth in global trade. They believe that protectionist measures are a real threat to the free movement of goods and services. The barriers include higher tariffs and import and custom controls but more significant is the less obvious barrier which is excessive regulation/red tape. The graph below shows that China is the country targeted by the most governments for protectionist measures. Fifty-five countries have passed measures that hurt Chinese exports. That is followed by the U.S., with 49 measures against it; and Japan, with 46. Source WSJ.