PROTECTIONISM – A FAILSAFE WAY TO DEEPEN THE RECESSION

History teaches that in a period of financial market upheaval and pending economic downturn like the one we\'re experiencing, the resort to protectionism advocated by some can only exacerbate the situation, as it did after the great Wall Street Crash of 1929, writes Pascal Lamy, Director-General of the World Trade Organisation (WTO). In this article, the author writes that US protectionist measures after the 1929 crash touched off a domino effect of retaliation and counter-retaliation among trading partners which provoked a severe contraction of international trade, depressed growth, and drove up unemployment around the industrial world. In the US the jobless rate soared to 25 percent. The expansion of trade is a powerful instrument in overcoming economic crises. While it is essential that governments resist the siren song of protectionism, it is even more urgent that they conclude the ongoing WTO trade negotiations under the Doha Development Round, initiated in 2001. The objective of the round, shared by the 153 WTO members, is the creation of a more equitable, ambitious, relevant, and development-oriented trading system.

WORLD TRADE: A LESSON TO AVOID A NEW GREAT DEPRESSION

Policy-makers in the United States and across the globe are desperately seeking to avoid the missteps that accentuated the financial crisis of the 1930s. One of the important lessons is that protectionism and economic isolationism do not work, writes Pascal Lamy, Director-General of the World Trade Organisation (WTO). In this article, Lamy writes at this time of economic distress with soaring world food prices, what impoverished consumers desperately need is to see their purchasing power enhanced and not reduced. Shutting borders does exactly the opposite. There is no doubt therefore that the current hurricane that has hit financial markets must not dissuade the international community from pursuing greater economic integration and openness. Despite the setback that the Doha Round of world trade negotiations suffered last July, talks have restarted with the aim of completing a deal on tariff and subsidy reduction by the end of this year. This would be the best contribution the WTO could make to counteract the current world crisis. A comprehensive WTO deal can help soften the impact of high food prices by tackling the current systemic distortions in international agricultural trade that have stifled food production and investment in agriculture for years in many developing countries.

WORLD TRADE IS INSURANCE AGAINST FINANCIAL TURBULENCES

With clouds darkening over the world economy, the Doha Round of the WTO is the one global initiative that may boost the confidence of world businesses, workers, and consumers and send a powerful signal that more than 150 countries have the confidence to resist protectionism, to create a more just and balanced trading system, and to lay sustainable foundations for growth and development in the 21st Century, writes Pascal Lamy, Director-General of the World Trade Organisation (WTO). In this article, Lamy acknowledges that the economic growth resulting from the expansion of world trade has not been equitably distributed within our societies, which have seen a rise in inequality and disruptions in their economic and social fabrics. If we are to succeed in building on the achievements of the global trading system through more trade opening, it is essential that countries adopt necessary domestic reforms and sequence them properly. This means adequate social safety nets and widespread availability of education and training

HOW TRADE RULES CAN SERVE THE ENVIRONMENT

The relationship between international trade -and indeed the WTO- and climate change would be best defined by a consensual international accord on climate change that successfully embraces all major polluters, writes Pascal Lamy, Director-General of the World Trade Organization (WTO). In this article, Lamy writes that until a truly global consensus emerges on how best to tackle the issue of climate change, WTO members will continue to hold different views on what the multilateral trading system can do on this subject. The WTO tool-box of rules can certainly be leveraged in the fight against climate change, but they would need to be mobilised under clearer environmental parameters, which only the environmental community can set. In the absence of such parameters, the WTO will continue to be pulled from left to right by different players, with only a faint possibility of landing in the centre.

MAKING GLOBALISATION GOOD FOR ALL

Increasing trade restrictions is the wrong response to anxieties generated by the rapid pace of globalization and would cause unthinkable damage, writes Pascal Lamy, Director-General of the World Trade Organization (WTO). In this analysis, Lamy writes that more often than not, the real cause of pain is not trade opening but the failure to accompany the efficiency gains it brings with economic policies that would amplify its benefits. Trade opening involves a built-in asymmetry: while the millions who experience gains in purchasing power from trade opening are usually unaware of the cause, the thousands whom it hurts can easily identify the source of their pain. For politicians, this asymmetry is difficult to cope with and too often the easy way out is to treat foreigners as scapegoats. The multilateral arena continues to be the most cost-effective way to negotiate trade matters. This is especially true for medium and small developing countries, who have much less negotiating power in bilateral negotiations with big partners than they do in a multilateral setting.

SUCCESSFUL DOHA CONCLUSION WOULD BE BOON FOR AFRICA

Failure to successfully conclude the Doha development round would hurt the multilateral trading system but it would more devastating to developing countries, including those in Africa, writes Pascal Lamy, Director-General of the World Trade Organization (WTO). Though agriculture is an important part of the agenda, this Round covers other issues with significant potential gains for Africa. For instance, in industrial products, such as textiles and footwear, improved market access in developed countries would benefit African exports of manufactured goods. The same is true for services, the most dynamic sector in many African countries. Developing the necessary infrastructure and human skills are two of the most important challenges Africa faces in terms of modernising trade. Progress in these two areas is fundamental to building African countries\' capacity to effectively participate in regional and global trade.

GREEN TRADE AND THE WTO

Sustainable development should be the cornerstone of our approach to globalisation and of the global governance architecture that we create, writes Pascal Lamy, Director-General of the World Trade Organisation (WTO). In this article, Lamy writes that the Doha Round of trade negotiations contains a promise to the environment to allow for a more efficient allocation of resources including natural ones on a global scale through a continued reduction of obstacles to trade (tariffs and subsidies). But it also includes a promise to ensure greater harmony between the WTO and Multilateral Environmental Agreements (MEAs): a promise to tear down the barriers to trade in clean technologies and services; as well as a promise to reduce the environmentally-harmful agricultural subsidies. The world must forge ahead with these negotiations as fast as it possibly can. Not because the negotiations are going to save the world\'s environment. But because they are the very modest start that the international community has agreed to make to address environmental challenges through the prism of trade. A failure of these negotiations would strengthen the hand of all those who argue that economic growth should proceed unchecked, that economic growth is supreme and need not take account of the environment. Trade, and indeed the WTO, must be made to deliver sustainable development. They are starting to.

WTO COMPROMISE ON AGRICULTURE WILL UNLOCK MAJOR TRADE BENEFITS

Many proposals have already been presented at the Doha Round Negotiations, but clearly what is on the table today is not enough to lead us to success. All parties need to make a greater contribution, starting with agriculture, writes Pascal Lamy, Director-General of the World Trade Organisation . In this article, the author writes that the US has to accept cuts in its subsidies beyond its current offer, as do the EU and the G-10. India and the G-33 countries also have to show flexibility. Indeed, if we are to reach a result, all Members have to show flexibility. No one is being asked to undertake disproportionate commitments, and certainly there is the flexibility to address for specific needs and concerns. With an additional effort we can unlock agriculture which in turn will open the last stage of talks on the other topics. This Round offers the largest cuts ever on tariffs on the industrial sector, which represents a large part of developed countries exports and holds the promise of reformed antidumping procedures to enhance transparency and predictability. For the first time ever it tackles fishery subsidies which increase capacities and contribute to the depletion of our oceans. It also goes deeper in opening telecommunications and financial, environmental, and a broad range of business services.

CHINA: THE OTHER SIDE OF THE COIN

Since its accession to the WTO five years ago, China has been the fastest-growing trading nation in the world and now the third- largest trading economy, after the EU and US, writes Pascal Lamy, Director-General of the Word Trade Organization (WTO) In this article, Lamy writes that a successful Doha Round can provide China with a stable and predictable global trading environment and offer the prospects for another 10-15 years period of peaceful economic development. In the Doha Round, we are negotiating the trade regime which will apply to all its members for the next 10 years. A trading system based on strong multilateral rules is the least expensive insurance policy against the risks of protectionism available to China and to the world economy. There are some signals that trade protectionism whether in developed or in developing countries could be on the rise. Given China\'s insertion into the world economy, multilateral trade opening and strong multilateral discipline are the best means to safeguard China\'s trade interests whether home or abroad. Without the Doha Round and without a well-functioning WTO, China could well be one of the biggest victims.

WORLD TRADE: THE MOMENT OF TRUTH APPROACHES

The end of this year marks the deadline for negotiations of the Doha Round of the World Trade Organisation (WTO), writes Pascal Lamy, WTO Director-General. The date was not picked out of the air: it is the day the US Trade Promotion Authority Act expires, the author writes in this analysis. The Act gives the US president \'\'fast-track\'\' authority to enter into trade agreements which the US Congress must then submit to an up-or-down vote without amendment. If this deadline is missed, trade liberalisation on the scale envisaged by the Doha Round would become impossible to achieve in the near future. The main loser would be the developing world. The main aim of Doha is \"development\", in other words, redressing the existing imbalances in multilateral trade relations. We are now faced with a difficult situation. The Hong Kong Ministerial Declaration called on countries to complete the \"modalities\" for the agricultural and industrial goods negotiations by 30 April. In the services areas, the Declaration called for revised offers to be submitted by 31 July. For these deadlines to be met, all actors will need to move.

WTO’S LAST CHANCE TO FULFIL DEVELOPMENT AGENDA

The Hong Kong Ministerial Meeting, set for three months from now, is the WTO's last and best chance to successfully conclude the Doha Development Round, the deadline for completion of which is already long past, writes Pascal Lamy, the new director-general of the World Trade Organisation.