(VOVWORLD) - Global trade growth is expected to exceed 3.5% this year. But there remain downside risks, in particular protectionism for local production that could threaten the world economy and block the recovery of global trade.
 (Photo: tes.com) |
Protectionism, a technical term, describes economic policies of restraining trade between countries through methods such as tariffs on imported goods, restrictive quotas, and strict standards of quality, origin, and hygiene and safety.
The essence of protectionism is governments wanting to protect locally made products against foreign rivals who can sell the same products at lower prices.
The World Trade Organization has consistently warned that growing protectionism will have a negative effect on global trade prospects.
According to a recent study by the Bertelsmann Institute, protectionist measures could cause great losses for the US. In the worst-case scenario, its annual GDP would drop by 2.3% - 415 billion USD.
Asia-Pacific could also be severely affected by an isolationist policy. The region exports about 15% of its products to major markets like the US.
At the just concluded WTO Ministerial Conference in Buenos Aires, WTO Director-General Roberto Azevedo warned of a possible trade war due to protectionism and insisted that trade and technology are the keys to global progress.