Report warns of rising protectionism in EU
By Lénaïc Vaudin d’Imécourt | Thursday 26 July 2012
The EU’s increasing protectionist stance over its trade policy could have serious negative impacts on European economies and consumers, warns the Overseas Development Institute (ODI) in its latest report, published on 26 July.
The 18 contributors to the London-based think tank’s report – all trade and economic experts – assessed the European Commission’s 27 January communication on ‘Trade growth and development: Tailoring trade and investment policy for those countries most in need’, and found that while “there is much to celebrate in the EU document,” there is “major concern that the EU is moving towards protectionism”.
According to the head of ODI’s International Economic Development Group, Dirk Willem te Velde, “the clear protectionist trend in the EU’s new strategy will not only damage the developing world but also European economies and consumers”. In one of the report’s essays, Frederik Erixon, director of the European Centre for International Political Economy (ECIPE), explains that the Commission’s reform of the EU’s generalised system of preferences (GSP) – which looks at cutting out upper middle income countries (UMICs) from the EU’s trade preferences – is likely to impose more trade barriers on a range of products and countries when they are not benefiting from a reciprocal free trade agreement (FTA). “The GSP reform looks like a suspicious attempt to put pressures on middle income developing countries to conclude new free trade agreements with the EU,” Erixon says. “The GSP system is not the right place for exerting such pressures,” he added.
Christopher Stevens, senior research associate at ODI, points out the fact that the most likely beneficiaries of the GSP reform will often be high-income states, which export the largest number of the affected goods. In addition, 18 African, Caribbean and Pacific (ACP) countries – including Kenya, Ghana or Namibia – could lose €50 million if they do not sign up to an economic partnership agreement (EPA), while countries such as China, Indonesia or Thailand will continue to benefit from the EU’s trade preferences. The richer developing countries, on the other hand – such as Vietnam and India – would lose trade concessions of between €187 million to €257 million, according to the ODI report.
The Commission’s proposal to close government procurement markets to firms from countries that exclude European firms only adds to ODI’s concerns. “Protectionism is not just an EU phenomenon, yet it is ironic that the EU is currently complaining of the protectionist stances of other G20 countries,” the ODI notes.
There is also a “clear danger that differentiation in the area of trade will be applied without consideration of economic principles and without a clear strategy that brings together the various fields in which differentiation can be applied,” ie trade, aid or climate change, te Velde warns.
The report is available at