Service on WTO and Trade Issues (Apr09/12)
calls at WTO to resist protectionism, more vigilance
These views emerged at the informal meeting of the Trade Policy Review Body (TPRB), which was convened to discuss WTO Director-General Pascal Lamy's second report on recent trade and trade-related developments associated with the financial and economic crisis.
According to trade officials, Members, in their interventions, also supported the urgent conclusion of the Doha Development Agenda as the best way to provide a "collective stimulus package" to the world economy.
The Director-General's second report was released on 26 March; the first was issued late January.
In his second report, Lamy had said that there has been "significant slippage" towards protectionism since the start of this year, and that "there have been increases in tariffs, new non-tariff measures, and more resort to trade defence measures such as anti-dumping actions." (see SUNS #6669 dated 27 March 2009.)
According to trade officials, in their interventions at the informal TPRB meeting, Members noted an improvement in this report, as compared to the first report, in that it was more balanced and objective. Members called for regular reports and regular transparency meetings like Tuesday's to be organized in the future.
Trade officials said that Members stressed that there is no immediate danger of a serious crisis of protectionism and counter-protectionist measures, but there is no room for complacency and governments need to remain vigilant and committed to open markets.
While some Members were of the view that there has been significant slippage into protectionism, other Members did not share this view, saying that there has only been some slippage.
Members also highlighted the important role of the WTO in defending the open trading system and in monitoring Members' trade policies.
According to trade officials, there were some criticisms of some trade remedy measures taken recently, such as anti-dumping measures, Sanitary and Phyto-Sanitary measures, and other Non-Tariff-Barrier measures.
There was also some criticism of the stimulus packages (provided by the developed countries) that have put developing countries at a disadvantage because they have less resources to provide stimulus packages.
officials said that many Members including
Hong Kong-China said that it "and some other like-minded members - with economies of various sizes and at different stages of development - are exploring an initiative of making a set of 'standstill' commitments and these would entail our voluntarily giving undertakings, to refrain, for a period of time, from taking specific measures that are trade-restricting or may have an adverse impact or a distorting effect on trade."
"These would be in addition to our existing WTO commitments," Hong Kong-China added.
In his remarks at the informal TPRB meeting, Lamy said that since Members last met in the TPRB in February, the world economy has continued to deteriorate. The World Bank estimates that world economic growth will decline this year by 1.7%. The OECD estimates a decline by 2.7%. The WTO has forecasted that world trade will contract by 9%. And there are many other indicators painting a gloomy picture.
"We are indeed in the midst of very stormy waters, and the waves that are hitting our global economic vessel are unprecedented. Unfortunately, we cannot yet see when and how this global ship will finally be able to reach a safe shore."
This is a global crisis which requires global solutions, said Lamy. "We are seeing that no economy in the world is immune to the impact of the current turmoil. We must therefore not forget that developing countries, which are far from the world's financial centres, will also suffer from the repercussions of the crisis, and that most of them do not have the financial means to assist their people."
The Director-General welcomed the G20 consensus to avoid protectionism and support global trade flows with assistance to finance trade. The G20 commitment to provide $250 billion for trade finance demonstrates the capacity of the international community to address urgent global needs by helping to restore trade as an engine of economic growth. The G20 also reaffirmed its commitments on Aid for Trade, which is a vital complement to the trade-opening agenda.
Highlighting the main thrust of his report, Lamy said that the economic crisis has continued to worsen around the world, and there has been an increase in protectionist pressures globally since September 2008, driven by demands to protect domestic jobs and businesses. In such circumstances, a large premium must be attached to avoiding policies that restrict trade.
"The monitoring exercise being carried out by the Secretariat shows that there is no indication of an imminent descent into high intensity protectionism, involving widespread resort to trade restriction and retaliation. The multilateral trade rules under the WTO continue to provide a strong defence, and a unique insurance policy, against that happening."
"We should nevertheless remain vigilant and avoid nationalistic responses to the crisis, which will just shift problems to neighbours and risk them bouncing back. Experience has shown us that protectionism does not protect. On the contrary, the danger today is of an incremental build-up of restrictions that could slowly strangle trade and undercut the effectiveness of policies to boost world demand and restore sustained growth globally," said Lamy, adding that his report indeed illustrates some recent slippages.
The main risk is that governments will continue to give way to protectionist pressures, even if only gradually and temporarily, as long as the global economic situation continues to deteriorate. This would affect all countries. But developing countries, reliant on exports to drive growth, would be hardest hit should governments move to restrict trade as a way of surviving the global crisis.
WTO Members should reiterate their strong call to resist protectionism around the world, said Lamy, adding that the G20 leaders reaffirmed earlier this month their commitment to resist protectionism and to reaching an ambitious and balanced conclusion to the Doha Development Round.
"Indeed, the best contribution to reviving economic growth around the world is to conclude the DDA (Doha Development Agenda) as one of the most appropriate collective stimulus packages. An ambitious and balanced conclusion to the Doha Development Round, which is needed now more than ever, could result in tariff cuts of at least US$150 billion per annum, which could directly benefit the consumers. And as I have said many times, completing the DDA is also the surest way we have of safeguarding our individual trade interests and the multilateral trading system against the threat of an outbreak of protectionism."
Lamy expressed satisfaction that the second report provides answers to the questions and concerns raised at the last meeting in February. The coverage of trade and trade-related measures is much wider and the accuracy in reporting them has significantly been enhanced. The report may still contain gaps, and some fine tuning may be required, he said.
its intervention at the informal TPRB meeting,
important feature of the London G20 communique is its treatment of protectionism,
The G20 Members have also resolved to minimise any negative impact on trade and investment of domestic policy actions in support of the financial sector. There is also an agreement to notify such measures to the WTO who, along with other international bodies, has been asked to monitor and report on whether these undertakings are being adhered to.
some general comments based on the analysis presented in the Director-General's
there are positive indications, noted
flows are therefore, a function of the deep structural changes taking
place in the global economy, added
some concluding remarks,
Recent developments have clearly demonstrated that WTO disciplines have played a strong role in deterring protectionist forces. The role of the WTO as a bulwark of the global trading system stands reinforced. "We, therefore, need to continue our discussions on these issues in the WTO."
to say, said
that economic forecasting does not enjoy too high a reputation nowadays,
"I would, therefore, request [the] Director-General to provide us some details of these forecasts, including about who the beneficiaries will be."
to journalists after the informal meeting, Ambassador Ujal Singh Bhatia
On subsidies, Ambassador Bhatia said that they are wrong but perhaps you can seek to try to justify them when there is such a deep crisis. "But when the crisis is over, we have to ensure that the subsidies disappear because they distort competitive conditions." He was of the view that if they do not disappear, they would burden the WTO dispute system enormously.
He pointed out especially to the adverse nature of agriculture subsidies which is being highlighted in this crisis, because these are counter-cyclical, and because they are counter-cyclical, to that extent they do not allow agricultural reform to take place in developed countries.
The Indian envoy also noted that there are disciplines on subsidies in manufacturing and we are now negotiating disciplines on subsidies in agriculture. "Where are the disciplines on subsidies in services," he asked, adding that there is "a gaping hole in the WTO in terms of disciplines on subsidies in services and we need to start discussing that."
its intervention at the informal TPRB meeting,
that the recent G20 London Summit announced an unprecedented array of
coordinated measures in the fields of finance regulation, stimulus packages,
reform of the international financial system and trade finance,
stimulus packages, an instrument of choice of developed members, they
are necessary in the present circumstances as a means to boost falling
demand and to sustain the level of economic activity. "Best practices"
in this area should preferably involve non-target subsidies to consumption
rather than to production, said
"We wish to put on record that vague statements to the effect that such packages are 'WTO compliant' should not be taken at face value."
assessment that the
its intervention, the
Director-General this morning used the term 'some slippage', which we
think is more accurate. Overall, in the face of strong pressures in
many capitals, major protectionist measures have been avoided. Our monitoring
has also made us aware of numerous restrictive measures being considered
by our trading partners but which have ultimately been rejected. We
appreciate such decisions," said the
At the end of the informal meeting, the Director-General made some concluding remarks in which he said that the purpose of the exercise is now clearer - it is a monitoring exercise that creates more transparency with the effect of achieving greater public scrutiny of government policies, and something that puts pressure on governments not to resort to protectionism.
He said that this chain of events is now better understood and we should not fall into the trap of trying to define exactly what is, or is not, a protectionist measure. We should not discuss whether a measure is protectionist, but whether a policy is protectionist.
In reference to questions by India and the United States on whether the Director-General can explain the figure of $150 billion in his report with respect to the market access package on industrial and agricultural goods that is on the table in the Doha Round, Lamy said that the figure is not "exact astrology" or "rocket science". It is a calculation of duties foregone as a result of the implementation of the July package and considering trade flows in previous years.
He offered for members to sit down with the Secretariat and some technical people to study where the figure of $150 billion comes from and share the details with the other members.
Lamy also said that the next report will be completed by mid-June for another review by members at an informal TPRB session before the end of that month. +