Bridges Weekly Trade News Digest • Volume 13 • Number 5 • 12th February 2009
WTO Warns against Protectionism, Promises Increased Monitoring
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The WTO is set to step up its monitoring of trade policies introduced by governments struggling to cope with the worldwide economic crisis, amidst growing concern that tit-for-tat protectionism could deepen what is already the worst downturn in decades.
WTO Members largely welcomed a recent report describing a wide range of trade-related policies governments have adopted since last September, ranging from tariff increases and licensing requirements to financial and auto sector bailouts, various kinds of export support, and moves to ease the effects of the credit crunch on trade finance.
The secretariat of the Geneva-based global trade body now appears set to issue similar reports every two or three months, with the next one expected in mid-March, just ahead of a major summit of the Group of 20 leading industrialised and developing nations.
The 26 January report, prepared by the office of Director-General Pascal Lamy, said that there had been only “limited evidence” of increased trade barriers thus far, though it warned of protectionist risks. Nevertheless, diminished demand around the world has led the International Monetary Fund to project that global trade volume will shrink by 2.8 percent this year – the deepest decline in over twenty-five years.
Lamy presented the report to a 9 February meeting of the Trade Policy Review Body, a WTO committee charged with examining Member governments’ trade policies.
Describing the monitoring initiative as reflecting “the responsibility of the WTO to play an active and constructive role” in managing the crisis and contributing to the restoration of healthy trade growth, Lamy expressed the belief that it should continue “as long as the global economic situation justifies it.”
The WTO chief acknowledged the report’s shortcomings, particularly inaccuracy springing from the secretariat’s reliance on publicly available news sources. He thanked Korea and Ecuador for providing corrections about their trade policies that were not reflected in the report, and urged Members to provide prompt information about their trade policies in order to support the monitoring process.
Lamy called for vigilance with regard to trade-distorting policies, saying that the world was only at “an early stage in the policy response” to the recession. He praised Brazilian President Lula da Silva and US President Barack Obama for recent interventions “to resist domestic protectionist pressures and make sure their economies remain open to competition from abroad.
Lula blocked a proposal from within his own government to slap licensing requirements on some 60 percent of Brazilian imports; Obama has pushed back against Congressional calls for the US$ 800 billion fiscal stimulus package currently under negotiation to include ‘Buy American’ clauses requiring the purchase of US-made steel and other inputs (see related story, this issue).
Sources say that many delegations pledged to do better at providing the WTO with information about their trade policies. Governments are notoriously unreliable about notifying their own farm subsidy and tariff policies to the WTO, routinely flouting various transparency requirements.
Several developing countries called attention to the crisis’ origins in the West, particularly the US, and called for the next report to have a special focus on how low- and middle-income countries are faring.
Bolivia questioned whether the director-general had overstepped his mandated annual review of the trading environment, saying that there had been inadequate multilateral discussion about the report’s purpose. The Bolivian ambassador also said that monitoring activities should explore the trade distortions resulting from financial bailout, and should clarify whether developing country trade measures are motivated by the crisis or by other domestic challenges. She noted that developing countries often do not have money to provide industrial aid, and thus have to resort to tariffs.
The outgoing chair of the Trade Policy Review Body, Nigerian Ambassador Yonov Frederick Agah, promised that his successor, as well as the new chair of the General Council, would hold consultations with Members about the monitoring process.
The 26 January report, though nominally confidential to WTO Members, was widely reported on in the international press. The same is likely to be true for the next edition.
ICTSD reporting.
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