Protectionism in International Trade: The Case of the European Union Member States

By Piekutowska, Agnieszka; Marcinkiewicz, Jacek | European Research Studies, April 2020 | Go to article overview

Protectionism in International Trade: The Case of the European Union Member States


Piekutowska, Agnieszka, Marcinkiewicz, Jacek, European Research Studies


1. Introduction

Considering the evolution of the world trade and economy, it is worth recalling that international economy was entering the XXth century with the freest flow of goods, services, and capital in human history. Although the previous century had witnessed expansion of global output and trade, and rising living standards, an abrupt disruption of trading and financial ties took place more than once: during the First World War, the Great Depression, and the Second World War. Since then, there has been an unprecedented revival of global integration, supported by technical change, and by international economic policies within multilateral cooperation that resulted in greatly reduced barriers to international flows, further acceleration in the growth rate of world output, the reduction of poverty and improved living standards (Krueger, 2006).

Although significant progress has been made in the liberalization of international trade, further development cannot be taken for granted. The first two decades of XXIst century already witnessed vast disruptions considering global crisis of 2008 and the coronavirus COVID-19 pandemic. In such circumstances, concerns that protectionist pressures will be strengthened, leading to wreckage the progress made in the past are justifiable. Thus, there is a need to track and measure protectionism pressure. However, measuring protectionism is challenging considering only plenty of different kinds of measures that countries implement within commercial policy.

Therefore, the aim of the paper is to present an original concept of measuring the degree of protectionism that covers all interventions. In our study we focused on European Union member states, considering EU's share in international trade. The results indicate that EU member states were not strongly diversified as regards to degree of protectionism level, however with some exceptions--regarding more protectionist trade in Germany and the most liberal trade of the Netherlands.

2. Protectionism in the European Union

EU is the most important trading partner for around 80 economies (WTO, 2019). Together with the highest world share of trade in goods (3)--at the level of 34.2% in relation to export and 33.5% in relation to import in 2018--the European Union trade policy is by no means accidentally a spotlight of analysis. However, the share of EU trade in the world export and import is on a decline: in 2003 the share of EU25 in the world export/import was 42.8 and 42% respectively (WTO, 2019b). This numbers do not automatically mean that there is a premise for more protectionism, but yet, EU was already accused for "harmful lobbyism and protectionism" (Svendsen, 2003) and that "market protectionist tendencies are clearly present in the EU" (Borocz, 2009), especially within Common Agriculture Policy, "a system of protectionism aimed at giving advantages to EU produce over imported produce" (McCormick, 2017). Indeed, considering simple average MFN applied in 2019 one can notice essential predominance of tariffs on agriculture products (average tariff was 14.2%) versus the non-agriculture products (average tariff was 4.2%). As an average has many shortcomings, it is reasonable to add that the tariff range was between 0 and 171.6% with lower share of duty-free lines in case of agricultural products than in case of non-agricultural ones.

On the other hand, much was done within, first EEC, and then EU to liberalize trade; this effort should not be neglected also considering the very beginning of European integration. With the creation of GATT and OECD in the 1940s under which trade liberalization in Europe took place, the European Economic Community was created by the Treaty of Rome in a climate of trade liberalization. Indeed, trade in goods was the core of trade liberalization efforts in 1950s within EEC that constituted a customs union and free movement of goods unrestrained by tariffs, quantitative restrictions or equivalent measures--albeit--among EEC member states only (Weiss and Kaupa, 2014; Thalassinos, 2007). …

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