Policy report

As geopolitical tensions have increased in recent years, international trading relationships have become more politicised. Coercive trade practices have emerged as one of the nascent, and more concerning, expressions of this trend.

Trade coercion involves the arbitrary application of trade measures – such as quotas, anti-dumping measures and/or phyto-sanitary barriers – with the deliberate intent of economically harming a trade partner. It differs from other restrictive trade measures in that the objective is not to address a legitimate trade concern, nor to protect domestic industry. Rather, the goal is to impose economic costs and thus apply political pressure on a trade partner as part of a broader diplomatic dispute.

Trade coercion is a serious threat to the global trading system. It breaches the core WTO principles of non-discrimination and transparency. It asymmetrically affects small and medium countries, who lack the size to respond effectively to larger players. It also undermines confidence in rules-based approaches to trade, at a time when the global trading system is under enormous stress.

This paper outlines ten policy options – at the national, like-minded coalition and WTO levels – which can help governments design effective strategies. Developed by an international group of eminent trade policy thought leaders, these policy options offer credible and effective responses that governments can implement individually and in concert with others. The ten policy options are complementary, and governments may choose from the menu combinations which work best for them given their particular circumstances. Most importantly, if implemented, they can go a long way in supporting the integrity of the global trading system, which enables all countries to enjoy the economic benefits of transparent, non-discriminatory and rules-based trade.

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