G-20 Protectionism: AThreat For World Economy

Although the G-20 has talked a lot about blocking the path toward protectionism, the trade barriers have not stopped growing and leading to negative consequences for the world economy and the international labor market.

That was identified in the recent report published by the Peterson Institute for International Economics in Washington.

According to the report, within the past two years, all of the G-20 countries have increased their foreign trade protection barriers. In the month of September 2009, these countries applied 172 measures to obstruct the free trade of goods and labor. They are still considering many other similar plans of action.

Protectionism plans cause adverse effects for trading partners. They are the first resort to which countries turn to protect their labor job markets. This leads to a reduction in the number of export jobs. Experts say that cutting back in foreign trade in favor of protectionism often brings damaging results.

An example: The U.S. government hopes to create approximately 43,000 jobs through the “Buy American” plan, but it is running the risk of terminating more than 200,000 other jobs relating to export due to trading partners applying counter-plans against U.S. protectionism.

Also, according to the authors of this report, Russia, the U.S., India, Argentina and Brazil apply protectionism more often than other countries among the G-20 nations. Mexico, Turkey, Australia, South Korea, South Africa and Saudi Arabia are countries which apply less protectionism practices.

The G-20 summit in Toronto recently ended on Sunday (June 27). Members agreed to prohibit trade and investment protectionism until late 2013.