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World Trade Recovers, But Protectionist Pressures Remain

by Ulrika Lomas, Tax-News.com, Brussels

11 April 2011


World trade recovered to pre-crisis levels in 2010, but protectionist pressures in a more uncertain 2011 climate should be resisted, according to the World Trade Organization.

The WTO's latest figures show that world exports saw an unprecedented increase in 2010, with a 14.5% rise. This was accompanied by a 3.6% recovery in global output, representing a strong rebound from 2009's 12% slump. Economies in developed countries saw export growth of nearly 13%, which is lower than that recorded in the rest of the world, where exports rose by 16.5%.

Director General Pascal Lamy stressed that the figures demonstrated the virtues of trade, arguing that the worldwide escape from recession was aided by the flow of trade. Nonetheless, he warned of a continuing "hangover" caused by the financial crisis, evident in high unemployment in developing countries and European budget restraint.

These pressures are in danger of fueling protectionist instincts, something against which WTO members must be vigilant, resisting temptation to raise trade barriers, Lamy warned. Instead, the trend needs to be towards the opening of markets, rather than their closure, he said. According to Lamy, stability ought to be the priority for 2011.

These warnings are reflected in the more modest projections for 2011. The WTO expects a 6.5% increase in exports, but this may be tempered still further by the effects of the recent Japanese disasters.

The importance of open trade channels has also been made clear by Lamy's recent comments on the Doha Round. The WTO's Trade Negotiation Committee (TNC), which chairs discussion of the round, is scheduled to produce new or revised draft texts before the Easter recess, with the aim of agreeing upon these and other legal drafts by June/July, and concluding the Round by the end of the year.

Lamy has frequently warned of the dangers of the failure of the negotiations, and has told members to reflect upon the likely consequences, were this to happen. He now sees a only slim window of opportunity for the negotiations to be completed.

According to the European Commission, if a successful Doha agreement were in place, it could add USD167bn to global output, and increase exports by USD383bn on an annual basis after the full implementation period in 2026.

TAGS: tariffs | World Trade Organisation (WTO) | trade

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