Notwithstanding the headlines and rhetoric about greater protectionism in trade this year, the World Trade Organization said countries are holding back on trade restrictions, despite the apparent uncertainty.
In its latest trade monitoring report, WTO said in the year to October, 108 new trade-restrictive measures—like new or increased tariffs, customs regulations, restrictions on quantities and local content measures—were put in place, which amounts to an average of nine new measures per month, according to the WTO.
As WTO director-general Roberto Azevêdo said, it’s a “marked reduction” from the average of 15 per month in the report’s prior year period.
Over the same period, WTO members also implemented 128 measures designed to facilitate trade—like reducing or eliminating import tariffs and simplifying customs procedures, amounting to roughly 11 measures per month, which is down considerably from the 18 trade facilitation measures implemented each month in the previous period.
The WTO said international trade flows have rebounded “strongly” in the last year, following a sharp downturn in 2016. As such, the WTO in September upgraded its forecast for trade growth in 2017 to 3.6% from the previous 2.4% forecast. World merchandise trade volume growth in the first half of 2017 was 4.2%, considerably higher than the 1.3% increase recorded for all of 2016.
Several factors contributed to this year’s upturn in world trade, according to the WTO.
“Asian trade flows have strengthened, partly due to stronger intra-regional trade as China and its neighbors have recovered from a period of financial volatility in early 2016, and partly due to stronger extra-regional shipments as demand has risen in the United States and remained steady in the European Union,” the report noted. “Prospects for imports in resource exporting regions have also brightened as commodity prices have risen year-on-year, boosting export revenues that support higher imports. South America in particular should exert less of a drag on the world economy going forward as Brazil emerges from its two-year recession.”
Though things are looking up, Azevêdo cautioned that the positives won’t necessarily persist if certain things get in the way.
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“This improved outlook is very welcome, but substantial risks that threaten the world economy remain in place and could easily undermine any trade recovery,” Azevêdo said, adding however, “Looking ahead, we need to keep up the hard work to help facilitate trade. And of course, this includes avoiding measures which can hamper and restrict trade flows.”
Countries have been looking to partner up on trade—seemingly even more so as the U.S. pulls pack—and the WTO said between October 2016 and October 2017, it was made aware of 18 regional trade agreements, compared to nine in the prior year reporting period. Among those deals, the Pacific Alliance (formed by Chile, Colombia, Mexico and Peru) agreed to remove 92 percent of tariffs on goods traded between members, and the European Union was busy, making an agreement with Canada, Colombia and Peru, and the Southern African Development Community, among others. None of the deals involved the U.S.
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Trade growth volume is expected to moderate to 3.2% next year, reflecting “the higher level of uncertainty associated with longer-term forecasts,” the WTO said.
Further to Azevêdo’s point, the report went on to say, “The improved outlook for trade could still be undermined by downside risks, including the possibility that protectionist rhetoric translates into trade-restrictive actions, increasing geopolitical tensions and a rising economic toll from natural disasters across several regions. On the other hand, synchronized trade expansion across regions could be self-reinforcing, leading to more positive outcomes.”