The Twenty Roundtable: Protectionism and the G20

IMGXYZ1430IMGZYXThe members of the G20 have refrained from engaging in high-intensity protectionism as a reaction to the crisis, which would have been capable of turning the global recession into a depression. But protectionist sentiment is now intensifying as unemployment continues to rise, even as the economy begins to recover. In this climate, G20 leaders need to spend more political capital on pushing for a quicker conclusion of the Doha Round trade negotiations. Engagement by the Obama administration in Doha talks at the WTO is necessary if the talks are to progress.

Carnegie sponsored the third Twenty Roundtable meeting to address the status of protectionist measures, the role of the G20, and implications of the G20 for Doha, as well as the broader topic of world trade reform.

G20 Succeeded in Keeping Protectionism Under Control

Participants agreed that, even though most G20 members have adopted some protectionist measures, the G20 has kept member nations from resorting to them on a large scale. They have achieved this largely through strategic leadership and by calling on the WTO and other international organizations to monitor and report protectionist measures.

Protectionist Sentiment on the Rise

Nonetheless, protectionist sentiment is rising in major markets.

• Some G20 members invoked protectionist measures that did not technically violate the porous WTO rules. As a result, uncertainty in trade relations increased among members, encouraging other countries to introduce their own protective measures (i.e. "buy local" programs such as the "Buy American" provisions in the United States, and tariffs placed on Chinese tires).


• As unemployment continues to rise, the pressure on G20 members to work together to mitigate protectionist measures may lessen. 


• In addition, rising unemployment and other social problems are reviving fears that countries will introduce protectionist measures to protect jobs at home.

The Dangers of Protectionism

• Protectionist measures damage the authority of world trade regulations and risk triggering a trade war. Protectionism undermines global efforts to seek a joint solution to common problems and could end up hurting everybody.


• In addition, protectionism has global knock-on effects through global production chains. In some globally integrated industries (such as automobiles), protectionism that affects one country will affect all others involved.

G20 Leaders Need to Put Their Political Weight Behind the Doha Agenda

Participants broadly agreed that G20 leaders, having successfully avoided the collapse of trade, should now focus on building the conditions for sustained growth. Concluding Doha is an important way for G20 countries to demonstrate their commitment to open trade and will also help restore growth. 

• In their Pittsburgh communiqué, the G20 leaders did no more than repeat their previous pledge to conclude Doha by 2010. They did nothing to confront the remaining differences of opinion over the Doha negotiations.


• While concluding Doha is important, the Round is running into deeper and deeper trouble.  In fact, it is not even formally included in the agenda of the upcoming WTO ministerial meeting. The United States and the EU are also continually getting accused of backsliding because of their requests for increased flexibility in agriculture.

Participants of the Twenty Roundtable agreed that the issue of trade has been a low priority for the Obama administration and other global leaders. The lack of drive for trade liberalization in the private sector has also hindered the push to conclude Doha.

• Even as trade has become an increasingly important part of the U.S. economy, its political profile has been dropping for years.


• There has been a decreasing interest in trade policy both on the demand side (i.e. demands made by the private sector) and on the supply side (i.e. the willingness of elected officials to respond to these demands).


• Reflecting the rate at which trade policymaking is demanded, there has been a steady decline in the number of petitions filed for protection under safeguard laws, as well as a downward trend in the filing of antidumping petitions.

WTO Reform

Participants broadly agreed that some kind of WTO reform is necessary.

• The WTO is getting bypassed in liberalization by autonomous and regional free trade agreements and it has failed to provide adequate disciplines to the most pressing areas of incomplete liberalization, including opening up trade in services.


• Trade policy has to be clarified and codified on several emerging issues, most notably climate change.


• The WTO must adopt a more flexible approach to trade negotiations, tailored to the needs of individual countries and groups. The institution should move beyond multilateral, all-or-nothing negotiations that are bearing little fruit and find ways to leverage opportunities where liberalization is taking place.

To rectify these shortfalls, G20 leaders should use their political weight to encourage reform in the WTO and to prompt a Ministerial-level discussion of these issues. It is possible to begin this process while continuing to negotiate Doha.

Carnegie's Twenty Roundtable provides senior Washington representatives of the G20 nations with a forum for discussing key economic and political issues confronting their countries as they deal with the global financial crisis.