Brussels, 27/03/2009 (Agence Europe) - The second WTO report, published on 26 March, on the financial crisis and trade-related developments in its member countries (for a summary of the first report, published at the end of January, see EUROPE 9837), the WTO denounces the “significant slippage” towards protectionism since January. This trend was already picked up by the World Bank on 17 March (see EUROPE 9865). WTO Director General Pascal Lamy will present his report at the G20 summit in London on 2 April, at which the world's main economies are expected to agree to charge the WTO with producing regular three-monthly reports on the state of trade policies and restrictions.
“There has been significant slippage,” with increased customs duties, new non-tariff measures and increased resort to trade defence action, which hamper free trade, says the report. The WTO is concerned in particular about distortions related to the economic recovery plans drawn up by some major world economies. “The financial and fiscal stimulus packages that have been introduced to tackle the crises clearly favour the restoration of trade growth globally, … but some of them contain elements - such as state aids, other subsidies and 'buy/lend/invest/hire local' conditions - that favour domestic goods and services at the expense of imports,” the WTO notes. Particular attention is drawn to support for the steel and car sectors. The developed countries, the US and some EU member states especially, are the most guilty, but a number of emerging economies - Argentina, China, India and Russia - also stand accused of crossing the red line.
Its first report may have acknowledged its members' resistance of protectionist pressures, but in this second edition, the WTO acknowledges that the pressure was too great to prevent unemployment growing exponentially in the face of the worsening economic situation. In Brussels, where he handed over his document to European Commission President José Manuel Barroso, Lamy nevertheless expressed confidence, stating that he did “not even think that there was a risk of greatly increased protectionism”. He said that current WTO rules restricted that possibility. However, without the conclusion of the Doha Round, these rules still leave member countries with some room for manoeuvre. It was, then, urgent, said former trade commissioner Lamy, to complete the multilateral trade negotiations that were launched in 2001. This was made all the more pertinent, since world trade in 2009 will face its largest contraction since the Second World War (almost 9%, see EUROPE 9869).
The coming months will fully test the commitment expected to be given at the London summit by the world's 20 largest economies, developed and emerging, representing 80% of world trade, to resist protectionism. G20 leaders, in Washington in November 2008, have already made such a commitment, but it has not been observed to the letter, Lamy regretted. Shortly after the WTO secretary general unveiled his new report, Brazilian President Lula de Silva and UK Prime Minister Gordon Brown, who will chair the G20, speaking in Sao Paulo on Thursday, jointly proposed setting up a $100 billion fund to kick start world trade. (E.H./transl.rt)