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FACTBOX-Global crisis brings threat of protectionism

Published 03/19/2009, 09:32 AM
Updated 03/19/2009, 09:48 AM
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March 19 (Reuters) - The world economic crisis has encouraged many countries to take steps to support their economies or individual industries, despite fears that protectionism could deepen recession.

Here are some of the measures taken by countries to bolster domestic industries that have been criticised as protectionist:

UNITED STATES - A $787 billion U.S. stimulus package, signed by President Barack Obama last month, was criticised for its "Buy American" clause that says firms must use U.S. steel and other U.S.-made goods.

-- The bill provided for a 25 percent competitive margin for US iron and steel for all expenditures under the bill. Several governments, including Canada and the EU objected to the provisions. A final provision also includes language that requires the U.S. to implement the provision consistent with its trade commitments.

-- A $17.4 billion lifeline to two Detroit carmakers was announced on Dec. 19.

-- On Feb. 17, GM and Chrysler requested a further $22 billion in U.S. government loans as they submitted plans with the government on how they could restructure.

ARGENTINA -- Imposed licensing requirements on products such as auto parts, textiles, TVs, toys, shoes, and leather goods.

BRITAIN - Energy workers staged protests in across Britain in a row over the use of imported labour from other EU countries, saying that they were undercutting British pay rates.

-- The EU's internal markets commissioner has said some European countries were "very upset" about sterling's recent losses, which makes British exports more competitive on price.

-- Britain announced in January it would guarantee up to 2.3 billion pounds ($3.29 billion) of loans to the car industry

CHINA -- Frequent target of complaints that it blocks access to its markets or gives unfair help to exporters, including by keeping its yuan currency weak. The last meeting of G7 finance ministers in Rome praised Beijing for allowing some appreciation of the yuan but maintained calls for the process to continue.

-- China has put in place an import ban on Irish pork, as well as a rejection of some Belgian chocolate, Italian brandy, British sauce, Dutch eggs and Spanish dairy products.

-- China on Wednesday rejected a $2.4 billion bid by Coca-Cola for China's top juice maker, Huiyuan Juice <1886.HK>, blocking what would have been the largest-ever takeover of a Chinese company by a foreign rival. The Ministry of Commerce made the ruling on grounds that the merger would have been bad for competition. However, the ruling has fanned concerns that economic nationalism is on the rise in China.

-- European lobby group BusinessEurope cites changes to VAT rebate system to promote exports and restriction of raw material exports as areas of concern.

ECUADOR -- Raised tariffs on 940 products including butter, turkey, crackers, caramels, blenders, cell phones, eyeglasses, sailboats, building materials and transport equipment.

EUROPEAN UNION - Imposed anti-dumping duties on Chinese screws, fasteners, candles and steel wire products.

-- Reinstated export subsidies on dairy produce.

-- Imposed steep anti-dumping and anti-subsidy duties on imports of biodiesel from the United States.

FRANCE -- Pledged loans of 6 billion euros ($7.6 billion) to struggling car makers PSA Peugeot Citroen and Renault (3 billion euros each) in return for what has been characterised as an unwritten pledge not to close facilities in France. The European Commission has said it is satisfied the guarantees do not amount to protectionism.

INDIA -- Raised tariffs on some imported steel products. Banned imports of Chinese toys for six months, saying it was in the interest of public safety.

-- Also increased rebates under the duty drawback system for exporters.

INDONESIA -- Plans to order its nearly four million civil servants to use local products ranging from footwear to heavy machinery. Officials denied the measures would be protectionist. Limited the number of ports and airports serving as entry points for certain imports, such as electronics, garments, toys, footwear, and food and beverages.

ITALY -- Unveiled a $1.7 billion package for its car industry. Carmakers in turn have been told to maintain their plants in Italy and pay auto parts suppliers.

MALAYSIA -- In January Malaysia banned the hiring of foreign workers in factories, stores and restaurants to protect its citizens from mass unemployment.

MEXICO -- Angered by Washington's move to block Mexican trucks from using U.S. highways, Mexico said on Monday it would raise tariffs on 90 American agricultural and manufactured products, about $2.4 billion worth of exports from 40 U.S. states.

RUSSIA -- Raised duties on imports of used cars to prop up its struggling domestic industry.

-- Set a new seasonal import tariff on rice of 160 euros ($202.4) per tonne from Feb. 15 to May 15, 2009 to protect domestic producers.

SPAIN -- Approved a 4 billion euro ($5.17 billion) package to support its ailing car industry. The support would depend upon carmakers' ability to guarantee jobs and would not grant aid to any company that has laid off workers permanently without first reaching agreements with unions.

Sources: Reuters; tradeobservatory.org; BusinessEurope; World Bank (http://siteresources.worldbank.org/NEWS/Resources/Trade_Note_37.pdf) (Writing by David Cutler, London Editorial Reference Unit; Additional reporting by Carl Bagh, Keith Weir and Jijo Jacob)

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