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The effect of trade barriers on Swedish and EU exports of goods since 2008

2017-12-12

Have Swedish exports of goods been held back due to trade barriers introduced since the financial crisis? According to a new report commissioned by the National Board of Trade Sweden and written by Professor Simon Evenett and Dr. Johannes Fritz of the University of St. Gallen, the answer is yes in relation to China but no in relation to the United States and Japan. Trade within the EU does not seem to have been affected much by trade barriers or trade distortions introduced globally since the financial crisis.

Ever since the global financial crisis, efforts have been made to monitor new trade restrictive measures globally. In a broad survey of these efforts, the National Board of Trade recently concluded that there are worrying indications that protectionism is on the rise again. In another recent study – based on a survey of Swedish firms – it is concluded that current trends are particularly harmful for small and medium-sized enterprises and that the EU single market is a "safe haven" for many firms.

The question that remains, however, is the extent to which trade restrictive measures impact our own trade. With this new study, Europe Fettered: the Impact of Crisis-Era Trade Distortions on Exports from the European Union, commissioned by the National Board of Trade, that issue is addressed by Professor Simon Evenett and Dr. Johannes Fritz of the University of St. Gallen.

The impact of trade-related measures (discriminatory or liberalising) imposed since the 2008 global financial crisis on the exports of all 28 EU member states is estimated quantitatively.

The overall purpose with this project is to put the spotlight on the negative effects of trade-restrictive measures for EU exports. According to the report, the results underscore the need to renew efforts to curb trade-distorting measures in the context of multilateral trade negotiations.

According to the study, Sweden's export growth compared with China's would have been six percentage points higher in the absence of trade measures (liberalizing and distorting) introduced between 2009 and 2014. When the authors compare with Japanese and US export trends, Sweden's exports growth would have been roughly the same if the measures had never been imposed. Sweden's exports to countries outside the EU were thus held back in the range of 0-6 percentage points during the 2009-2014 period.

For the EU, export growth compared with China would have been seven percentage points higher in the absence of new trade measures, while it would have been three percentage points lower in relation to Japan's export growth. Compared to US export growth 2009-2014, EU export growth in the absence of new measures would have been approximately the same as actual EU export growth. In other words, EU exports to countries outside the EU were stimulated/held back in the range of +3 to -7 percentage points as a result of the new measures.

According to the study, Chinese export subsidies are the dominant explanation for the trade distorting effects that the authors estimate.

The study shows that Sweden's exports to other EU countries have been largely unaffected compared to the export growth of China, US and Japan to the EU, as a result of the introduction of trade distorting measures. The same result applies to the EU as a whole. One reason for this result could be that trade barriers or trade distortions in the EU have been relatively few during the period. Consequently, exports to countries in the EU are not adversely affected, despite the fact that measures that hinder or distort trade have increased globally. The study thus does not support the view that, for example, Chinese export subsidies have had a negative effect on Swedish exports to other EU member states. The same conclusion applies to other EU countries. Insofar as it is possible to speak of an "uneven playing field" because of Chinese subsidies or state-owned enterprises, it is therefore not applicable in the EU's domestic market.

Read the report

Europe Fettered - The impact of crisis-era trade distortions on exports from the European Union

Contact

For more information, contact Per Altenberg: per.alt...@kommers.se, or the authors Simon Evenett: simon.e...@gmail.com or Johannes Fritz: fritz.j...@gmail.com

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National Board of Trade, P.O. Box 6803, SE-113 86 Stockholm. 
Visiting Address: Drottninggatan 89. 
Phone: +46 8 690 48 00     Fax: +46 8 30 67 59

E-mail: kommersk...@kommers.se

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