Protectionism will benefit no one, experts warn ahead of G20 summit
Ahead of the two-day G20 summit in the Japanese city of Osaka on Friday, the international community is calling for joint efforts by major economies to help maintain global growth as the world is increasingly threatened by protectionism.
In the name of protecting domestic industries, the United States has slapped steep tariffs on billions of dollars' worth of products from its partners, heightening trade tensions worldwide and rocking the foundation of the multilateral trading system.
"Today uncertainty is not so much about integration but about disintegration. Multilateralism and free trade have come under pressure, for example, with international trade conflicts," said Burkhard Balz, a member of the executive board of Deutsche Bundesbank.
Moving toward isolationism and unilateralism damages the G20 spirit significantly, said Lee Hee-ok, a professor of political science at Sungkyunkwan University in Seoul.
Finance ministers from the G20 economies on June 9 issued a joint statement, saying global growth "remains low and risks remain tilted to the downside" and listing trade tensions as the key factor.
The latest World Trade Outlook Indicator reading, at 96.3, is at the weakest level since 2010, signaling continued falling trade growth in the first half of 2019, said the World Trade Organization.
According to a key UN trade report released earlier in June, global foreign direct investment, or FDI, slid to 1.3 trillion dollars in 2018, its third straight annual decline.
Factors such as escalating trade tensions "risk continuing to weigh on FDI in 2019 and beyond", said Mukhisa Kituyi, secretary-general of the UN Conference on Trade and Development.
"Economic prospects are now weaker in nearly all G20 countries than previously anticipated," said the Organization for Economic Cooperation and Development, or OECD, in its recent interim economic outlook.
There are other major risks such as geopolitical tensions and climate crises.
Kituyi said the main drag on FDI in Europe is the "negative pull of Brexit in Britain", which has created considerable uncertainty.
In its latest monthly report, the US Energy Information Administration cut its 2019 world oil demand growth forecast by 0.2 million barrels per day (bpd), to 1.2 million bpd, amid escalating tensions in the Middle East.
"According to the World Bank, air pollution costs societies more than 5 trillion dollars every year," said Joyce Msuya, deputy executive director of the UN Environment Program.