WASHINGTON (October 8, 2014) – Countries’ use of mercantilist economic policies have expanded dramatically, particularly in emerging economies. These practices, such as forced technology transfer, currency manipulation, local production as a condition of market access, and weak intellectual property protection, distort trade and investment and damage both the U.S. and global economies.
Unfortunately, to date, there has been no systematic way to identify which nations are engaged in the most egregious mercantilist practices and which most damage the U.S. economy. To address this issue, the Information Technology and Innovation Foundation (ITIF) has published the Global Mercantilist Index (GMI), which uses a comprehensive model to rank 55 nations in 16 categories to better assess which nations are the most egregious mercantilists and which do the most damage to the U.S. economy and U.S. workers. China is ranked as the worst mercantilist nation followed by India, Argentina, Brazil and Russia.
“The growth of trade mercantilism represents a major threat to the integrity of the global trading system and demands a coherent and bold response,” notes Michelle Wein, Trade Policy Analyst with ITIF and co-author of the Index.“Through this report we hope to better illustrate the extent of the problem and offer a new policy framework that can promote a robust global innovation ecosystem moving forward.”
The Index assesses nations on forced localization, intellectual property, market access, benefits for domestically owned enterprises, currency manipulation, preferences for domestic production, tariffs and import discrimination, as well as their ranking on the National Trade Estimate Report on Foreign Trade Barriers produced by the Office of the U.S. Trade Representative (USTR).
It also proposes new policy tools, for both the U.S. government and multilateral institutions, which will better establish a global trade regime based on rules- and market-based trade, while at the same time promoting an innovation-based global economy. These include the development of a comprehensive trade enforcement strategy with a focus on the most egregious mercantilist offenders; the increase of trade enforcement appropriations for USTR, the World Trade Organization and related agencies; and the requirement that duty-free provisions for developing nations such as the Generalized System of Preferences in the U.S. be tied to a nation’s use of mercantilist practices.
Read the report.
