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WTO seeks to limit protectionism during economic downturn
The WTO is set to begin monitoring 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 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 2009 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% this year – the deepest decline in over twenty-five years.
Lamy presented the report to a 9 February 2009 meeting of the Trade Policy Review Body, a WTO committee charged with examining Member governments’ trade policies. He 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.
Sources say that many delegations pledged to improve how they provide 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.
Ag talks resume minus new US trade rep
In the meantime, the chair of the WTO agriculture negotiations announced plans to continue his recent series of consultations with negotiating groups, in a bid to restart the faltering Doha farm trade talks. But Members remain cautious about how much progress can be achieved in the absence of a new US Trade Representative, whose nomination has still to be confirmed by Congress.
The chair, Ambassador Crawford Falconer, told a 12 February 2009 meeting open to all Members that he planned to convene ‘carousel’ meetings to explore perceptions of the overall “balance” in his draft text, released in December 2008. Falconer expressed hope that, after two ’rounds’ of such consultations perhaps lasting about a month, a set of issues would then emerge that Members could discuss in small invitation-only meetings involving a cross-section of interests. These would be interspersed by ‘transparency’ meetings to which all Members would be invited.
Trade sources acknowledged, however, that the talks could amount to ‘treading water’ until a new US Trade Representative is in post, briefed, and willing and ready to engage in trade negotiations. Some delegates suggested that it could take much of March for Obama’s nominee, Dallas mayor Ron Kirk, to be briefed on trade policy issues after being confirmed by Congress.
If this were to be the case, delegates said, it would be difficult for Members to reach agreement on more ‘political’ issues until at least April, when twenty major trading powers are due to meet in London for the G-20 meetings. Other negotiators suggested that little might be achieved in the negotiations until after the Indian elections in May.
However, others expressed cautious optimism that progress on technical issues could be achieved through the process outlined by the chair, as groups clarified their positions on complex questions such as the ’special safeguard mechanism’ that developing countries will be able to use to raise tariffs temporarily in the event of an import surge or price depression. Falconer himself indicated that the consultations could allow Members to discuss differences of opinion concerning his December text, as well as misunderstandings.
Parts of this article originally featured in Bridges Weekly Trade News (see sources listed below). They appear here in a modified form.
Sourced from:
• “WTO Farm Talks Restart As Members Await New US Trade Rep,” Bridges Weekly Trade News Digest, Volume 13, Number 6, 18 February 2009.
• “WTO Warns against Protectionism, Promises Increased Monitoring,” Bridges Weekly Trade News Digest, Volume 13, Number 5, 12 February 2009.
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