The International Chamber of Commerce (ICC), which believes that trade has a vital role to play in the global economic recovery, is disappointed by the Toronto G20 Summits inadequate approaches to two key trade issues: trade finance and the Doha Round of trade negotiations.

ICC has been championing a better treatment of trade finance since the onset of the financial crisis. We applauded the G20,s recognition at previous summits of the major role of trade finance in keeping trade flowing. Since then, the business community has strongly criticized proposals from the Basel Committee on Banking Supervision to increase the risk weighting of trade finance under a new framework to limit bank leverage.

ICC regrets that the Toronto summit does not appear to have heeded these warnings.

Despite repeated commitments by G-20 countries to avoid adopting such measures, protectionist policies are being implemented at an alarming rate, according to a new research report, “G-20 Protection in the Wake of the Great Recession”. The report was commissioned by the International Chamber of Commerce,s (ICC) Research Foundation (ICCRF) and researched and written by the Peterson Institute for International Economics in Washington, D.C.

Findings from the report were presented today ( June 30) at the world Business Summit in Hong Kong by Gary C. Hufbauer, Senior Fellow, Peterson Institute for International Economics:

Findings revealed:

All G-20 countries have implemented protectionist trade measures over the last two years. By September 2009, the G-20 were responsible for 172 such measures being implemented, with hundreds more “in the pipeline”. If only half the upcoming measures were to actually take effect, the world could see a global cycle of protectionist retaliation not seen since the Great Depression.

Protectionist trade measures meant to protect jobs have the opposite effect. This is because other countries either emulate or retaliate against them, resulting in lost export-related jobs that typically exceed those saved through protectionist actions. For example, its estimated that the 43,000 jobs that the US government claims to be saved by the “Buy American” legislation could result in a loss of over 200,000 jobs because of foreign emulation or retaliation.

Russia, the United States, India, Argentina and Brazil are the five most protectionist countries based on measures implemented from 2008-2009 and those “in the pipeline”. The least protectionist countries are Mexico, Turkey, Australia, the Republic of Korea, South Africa and Saudi Arabia.

In closing, the report urges G-20 leaders to take initiatives to conclude the Doha Round; expedite the WTO,s dispute settlement mechanism; establish a regular G-20 trade ministers meeting; and appoint a G-20 group of internationally recognized trade experts, or “G-20 Wisemen”, to identify and publicly name the countries implementing new protectionist measures.

Victor K. Fung, Chairman of ICC, said: “During a time of economic recovery such as this, the world needs fewer barriers to trade, not more. The conclusions of this report should serve as stark reminders of the dangers of protectionism — especially at times of economic crisis — and why the world economy needs a comprehensive, multilateral trade agreement such as the WTO,s Doha Round to foster economic growth and stability.”