Protectionism to be disastrous for world trade: WTO chief Pascal Lamy

Economic Times, September 07, 2011
NEW DELHI: Echoing India’s concern over inward looking trade trends, WTO chief Pascal Lamy today said protectionism would lead to “disaster” with the weakening of global demand.

Cautioning that world trade growth may slow down this year, Lamy said, the multilateral trading system is likely to feel the protectionist pressures. ” (But) trade protectionism would be a recipe for disaster…” the WTO chief said at a function organised by the think tank,CUTS International here.

On much delayed Doha trade deal, Lamy asked the WTO members to be ready for “give and take”. The world trade grew by a record 14.5 per cent in 2010 and the WTO projected it to expand by 6.5 per cent this year. “With the demand weakening,later this month we are likely to be revising downwards the prospects for the world trade in 2011,” he said.

What Lamy said reflected concerns raised by India and other developing countries over protectionist policies being followed by several rich nations.

The WTO chief said while the countries are reducing tariffs unilaterally or through preferential trade agreements, “divergences in domestic regulatory frameworks require greater attention”.

Lamy, who had consultations with the industry bodies,FICCI and CII earlier in the day, reiterated that the WTO member countries need to show pragmatism and spirit of compromise for resolving the “impasse” on the Doha trade negotiations.

“There has to be a give and take. There has to be flexibility…”, he said. He also indicated that the level of ambitions for a multilateral deal for opening trade has be realistic.

“Asking for the moon and using empty rhetoric is normal in any negotiation but we are now past that point. We must now seek realistic and creative solutions. To stand behind redlines waiting for others to move only breeds mistrust and stalls the negotiations…”

He asked the trade ministers of the 153 WTO member countries to be frank at the next Ministerial Conference in December. “Ministers will have to talk turkey…the challenge before us is to find the political courage.”

In the 10-year old Doha Round, rich countries want the emerging economies like India to show flexibility in opening their markets, both in the agriculture and industry.

But the developing nations do not want to give market access on less-than-reciprocal basis.

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