Director-General of the World Trade Organisation, Pascal Lamy, in presenting his second report on recent trade developments associated with the financial crisis to an informal meeting of the Trade Policy Review Body, said that the best contribution to reviving economic growth is to conclude the Doha Development Agenda (DDA), which is one of the most appropriate collective stimulus packages.
Some key excerpts from his presentation:
“Since we last met in this same body, the world economy has continued to deteriorate. The World Bank estimates that world economic growth will decline this year by 1.7%. OECD estimates decline by 2.7%. We at the WTO have forecasted that world trade will contract by 9%. And there are many other indicators painting a gloomy picture. We are indeed in the midst of very stormy waters, and the waves that are hitting our global economic vessel are unprecedented. Unfortunately, we cannot yet see when and how this global ship will finally be able to reach a safe shore. Two weeks ago, the G20 decided to steer a common course toward a safe harbour; and part of this common path is called ‘avoid protectionism and national isolationism’.”
“This is a global crisis which requires global solutions. We are seeing that no economy in the world is immune to the impact of the current turmoil. We must therefore not forget that developing countries, which are far from the world's financial centres, will also suffer from the repercussions of the crisis, and that most of them do not have the financial means to assist their people.”
“As you know, I participated in the G20 meeting in London. I can tell you that the leaders of the world's largest economies are all, with no exception, aware of this situation and fully understand the potential repercussions for the entire world. I welcome the G20 consensus to avoid protectionism and support global trade flows with assistance to finance trade. The G20 commitment to provide US$ 250 billion for trade finance demonstrates the capacity of the international community to address urgent global needs by helping to restore trade as an engine of economic growth. The G20 also reaffirmed its commitments on Aid for Trade, which is a vital complement to our trade-opening agenda.”
“It is not my intention to repeat what is already explained in the Report. I would rather prefer to hear your views about it. However, allow me just to highlight its main thrust. As I said earlier, the economic crisis has continued to worsen around the world, and there has been an increase in protectionist pressures globally since September 2008, driven by demands to protect domestic jobs and businesses. In such circumstances, a large premium must be attached to avoiding policies that restrict trade.”
“The monitoring exercise being carried out by the Secretariat shows that there is no indication of an imminent descent into high intensity protectionism, involving widespread resort to trade restriction and retaliation. The multilateral trade rules under the WTO continue to provide a strong defence, and a unique insurance policy, against that happening.”
“We should nevertheless remain vigilant and avoid nationalistic responses to the crisis, which will just shift problems to neighbours and risk them bouncing back. Experience has shown us that protectionism does not protect. On the contrary, the danger today is of an incremental build-up of restrictions that could slowly strangle trade and undercut the effectiveness of policies to boost world demand and restore sustained growth globally.”
“The Report indeed illustrates some recent slippages. The main risk is that governments will continue to give way to protectionist pressures, even if only gradually and temporarily, as long as the global economic situation continues to deteriorate. This would affect all countries. But developing countries, reliant on exports to drive growth, would be hardest hit should governments move to restrict trade as a way of surviving the global crisis.”
“WTO members should reiterate their strong call to resist protectionism around the world. The G20 leaders reaffirmed earlier this month their commitment to resist protectionism and to reaching an ambitious and balanced conclusion to the Doha Development Round.”
“Indeed, the best contribution to reviving economic growth around the world is to conclude the DDA as one of the most appropriate collective stimulus packages. An ambitious and balanced conclusion to the Doha Development Round, which is needed now more than ever, could result in tariff cuts of at least USD150bn per annum, which could directly benefit the consumers. And as I have said many times, completing the DDA is also the surest way we have of safeguarding our individual trade interests and the multilateral trading system against the threat of an outbreak of protectionism.”
The full report is available on the WTO website.
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