- Reducing restrictions on maritime trade could lead to GDP gains of up to 3.4% for national economies, says International Chamber of Shipping.
- Non-tariff restrictions, such as anticompetitive licensing laws and discriminatory treatment of foreign companies, found to be up to five times worse than tariffs.
- Report, co-authored with Professor Craig Van Grasstek of Harvard Kennedy School of Government, will be presented to an influential G20 taskforce.
A recent news article published in the ICS Shipping reveals that cutting restrictive trade policies could boost global economic recovery from COVID-19 by 3.4%, finds International Chamber of Shipping.
Prospects of economic recovery
Countries around the world could boost their prospects of economic recovery from COVID-19 by reducing restrictive maritime trade policies, the International Chamber of Shipping (ICS) has found.
An ICS report, entitled ‘Protectionism in Maritime Economies’ and co-authored with Professor Craig Van Grasstek of the Harvard Kennedy School of Government, found that reducing trade protectionism could see GDP gains for national economies increase by up to 3.4%.
Loosen tariff and non-tariff restriction
The report found that high-income countries could see an average increase of 4.5% in their goods exports if they were to loosen tariff and non-tariff restrictions on trade.
Developing economies would experience an even greater increase, of 7%, if they reduced their restrictions in a ‘modest and equal’ way.
Trade barriers
Trade barriers are making it more difficult for national economies to recover from the effects of the COVID-19 pandemic.
According to the World Trade Organization US$1.7 trillion of world imports have been affected by constraints like these since 2009.
The value of global maritime trade was estimated at US$14 trillion in 2019.
Four scenarios for potential reform
The report lays out four scenarios for potential reform, ranging from ‘highly ambitious’ (where countries reduce tariff and non-tariff measures by 50%), through ‘modest and equal’ (a 10% reduction), ‘modest and unequal’ (wealthy countries reduce by 10%, developing economies by 5%), to ‘tariffs and trade agreements only’ (whereby all countries make a reduction of 10%, based only on traditional trade tariffs and commitments in trade agreements).
46 maritime nations
46 maritime nations, accounting for the vast majority of the global economy, were analysed and given a ‘Protectionism in Maritime Economies’ (PRIME) score according to how restrictive their trade policies are, based on factors such as management and licensing rules, government integrity, and tariffs.
The PRIME score is a single number that allows general comparison by aggregating the different measures of a country’s trade policies.
The economic impact of the pandemic
The economic impact of the pandemic is being compounded by the knock-on effects of growing trade protectionism.
ICS’s report found that decades of progress toward open markets has begun to reverse in recent years, with damaging restrictions imposed as weapons in trade wars or in response to the pandemic.
Factors such as overzealous anticompetitive licensing laws, or discriminatory treatment of foreign companies, were found to be up to five times as harmful to an economy as traditional tariffs.
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Source: ICS Shipping
