Three charts on: G20 countries’ stealth trade protectionism


Giovanni Di Lieto, Monash University and David Treisman, Monash University

It is clear that trade protectionism is alive and well in the G20, whose countries account for 78% of global trade. But this protectionism isn’t in the form of tariffs, which are duties placed on imports, making imported goods and services more expensive than they would be otherwise. Instead, trade protectionism is being pursued through “non-tariff barriers” such as import quotas, restrictive product standards, and subsidies for domestic goods and services.

This shows that while countries are reducing the obvious barriers to trade, like tariffs, they are still pursuing stealth forms of trade protectionism through non-tariff barriers.

Our research on trade protectionism in the services sector shows that the lower the barriers to trade, the greater company profits. Lower trade barriers create a larger market for Australian goods and services.

We also found that increased domestic regulation leads to higher profits as standards improve across the sector. For Australia this is very significant because the services sector employs four out of five Australians and accounts for 20% of Australia’s total exports.

Eliminating trade protectionism is also good for consumers, as it means a larger market for goods and services. This leads to lower prices and more choice of goods and services.

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The World Trade Organisation uses the term “trade restrictive activity” for measures like the imposition of a tariff. “Trade facilitation” refers to the simplification of export and import processes, making it easier to trade across countries. “Trade remedies” refers to actions taken by states against certain imports that are hurting domestic industries.

For example, in 2016 the Australian Anti-Dumping Commission slapped duties on Italian tomatoes that were being sold in Australia for less than they sold in Italy.

The data show that tariffs have been declining in the G20 over the past few years, while countries have been easing the processes of exporting and importing. However there have been a lot of trade remedies, as countries try to protect their domestic industries.

But looking at data on non-tariff barriers to trade tells a very different story.

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Until 2015 there was a huge increase in non-tariff measures, which then sharply declined. Since then not many measures have been removed. This shows that non-tariff barriers are currently the major mechanism for trade restrictions in the most developed economies.

As in the case of technical standards and regulations, non-tariff barriers can be used as a form of covert trade protectionism.

Technical standards and regulations can be quite legitimate and necessary for a range of reasons. They could take the form of a limit on what gases cars are allowed to emit, earthquake standards in regions prone to seismic activity, and even nutritional information on food and drinks.

But having too many different standards makes life difficult for companies that wish to access a market, as one product or service will need to comply with different standards in many countries.

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What has occurred in Australia echoes what has happened throughout the G20. There has been little activity recently in tariffs, but a significant use of non-tariff and technical barriers to trade.

This is a huge shift in Australia’s economic policy, which had until recently emphasised trade liberalisation as a recipe for growth.

According to the Australian Productivity Commission, trade restrictions directly raise the cost of both foreign and domestic goods and services, negatively impacting both Australian consumers and businesses.

Where to from here?

President Donald Trump’s trade agenda aims to distance the United States from the World Trade Organisation, which was setup to remove barriers to international trade.

In response, companies in the United States are now filing a huge number of anti-dumping cases against foreign goods and services.

At first glance, Australia appears to be off the hook when it comes to Trump’s hardline approach. We already have a bilateral trade agreement with the United States, not to mention a US$28 billion trade deficit with the US.

The ConversationBut the dangers of Trump’s trade doctrine could affect other countries and this disruption to global supply chains and financial security would eventually flow on to Australia.

Giovanni Di Lieto, Lecturer, Bachelor of International Business, Monash Business School, Monash University and David Treisman, Lecturer in Economics, Bachelor of International Business, Monash Business School, Monash University

This article was originally published on The Conversation. Read the original article.

Massive global ransomware attack highlights faults and the need to be better prepared



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Wana Decrypt0r 2.0 Ransomware Screen.
Avast

David Glance, University of Western Australia

A massive malware attack was launched on Friday, affecting at least 75,000 computers in 99 countries. Computers running Microsoft Windows were infected with “WanaCrypt0r 2.0 or WannaCry” ransomware. Once infected, all of the files on the computer are encrypted by the malware, which then displays a ransom demand of between US $300 and $600 in bitcoin that needs to be paid before the files can be decrypted. The Conversation

The WannaCry ransomware is being spread through a weakness in Microsoft Windows that was originally exploited by the US National Security Agency (NSA) as part of their arsenal of cyberweapons in a tool called “Eternal Blue”. Unfortunately, this tool, along with many others, was stolen by hackers and leaked to the world in April 2017 by a hacker group calling themselves the “Shadow Brokers”.

Microsoft had already released a fix for the Eternal Blue vulnerability in March, but the extent of the WannaCrypt attack has highlighted how many organisations have failed to apply the fix, or are running copies of Windows that are so old that there wasn’t a fix for them.

Russia, Ukraine and Taiwan have been the countries most affected by the attack. In the UK however, the attack hit the National Health Service badly enough that services to patients were disrupted.

At the time or writing, one of the bitcoin addresses used by the malware showed that only a few people had paid the ransomware so far but the number has been slowly ticking up.

The spread of the first wave of WannaCry ransomware may have been halted by a cybersecurity researcher who, by registering a domain with a particular name, effectively activated a “kill switch” in the malware software that stops it from spreading further.

Ransomware has become the biggest threat to organisations and governments trying to protect critical infrastructure. According to a study by IBM ransomware attacks increased by 6,000% in 2016 and at least 40% of spam emails now carry ransomware. The study also found that 70% of businesses infected with ransomware would pay the ransom. In many cases, this is because they either did not have backups, or they believed it was a faster way of getting their business back up and running.

The NHS has come in for particular criticism about the consequences of the attack because they knew about the risks and had been warned repeatedly to take steps to protect their networks and computers.

Finding out who was behind the malware is going to be very difficult. The malware communicates using the anonymising Tor network and demands payments in the equally anonymous currency, bitcoin, making tracing those behind the attack more complicated.

The NSA has also been held partly to blame for the attack because it had not alerted Microsoft about the weakness in its system until the NSA’s software that exploited it had been stolen and leaked to the public. Had the NSA told Microsoft when it discovered the weakness, the patch to fix the vulnerability would have been available in enough time for even the slowest of organisations to have patched their computers.

Ironically, large scale attacks such as these do have the effect of highlighting the threat of malware attacks and cybersecurity in general. This is true at the national level as well as amongst businesses. The frequency and scale of attacks also gives us a measure of how effectively companies and countries are prepared for cybersecurity attacks of any kind. Governments can act to enforce cybersecurity protective measures on companies, especially those that provide critical services or infrastructure. They can also act to direct their security services to disclose weaknesses in software systems, rather than keeping them secret in order to exploit them themselves against some future enemy.

Companies and their employees can help protect themselves from future attacks of ransomware by taking the following steps:

  1. Back up computers. This doesn’t stop a computer from being attack but effectively renders it ineffective because it is easy to re-install the system from a backup should it become locked by ransomware.
  2. Don’t click on links in emails unless you are expecting the email to contain a link. If you don’t know, double check with the sender. Equally, if you open a document and it asks to run macros, just say no. Avoid putting people into this situation in the first place by not sending links unless you have agreed prior to sending the email.
  3. Always update systems and software with the latest security updates. Better still, set the system to automatically do this on your behalf.
  4. Use antivirus software to protect systems.
  5. If infected, disconnect the computer from the network so that other computers are not infected.

David Glance, Director of UWA Centre for Software Practice, University of Western Australia

This article was originally published on The Conversation. Read the original article.