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Business

Pascal Lamy warns against protectionist measures

Latest update : 2009-02-23

French WTO Director General Pascal Lamy has warned countries that adopt protectionist measures in their stimulus plans. Lamy has said these clauses might help the individual countries' economies but they hurt those of others.

AFP - The World Trade Organisation chief called Monday for collective discipline to stem the spread of protectionism during the global slump, citing "Buy American" provisions in the US stimulus package.

"If you hit imports, your exports will be hit," WTO director general Pascal Lamy told reporters.

"Protectionist pressure is there even though we know isolationism or protectionism does not work, for simple reasons," he said.

"Without collective disciplines which the United States has to subscribe to in the government procurement agreement in WTO, the 'Buy American' act would probably have been much more worse for US partners," Lamy said.

President Barack Obama last week signed into law the 787-billion-dollar bill designed to rescue the US economy.

The bill includes a controversial "Buy American" clause which, though watered down, has provoked fears of protectionism among US trade partners.

Lamy said that in times of economic hardship people need protection.

"But there are many ways to protect people which are better than protectionism, which at the end of the day does not protect anybody. If they protect some, then they hit others."

Lamy warned that world trade would keep on shrinking, maybe more than output in 2009 and probably 2010. This would be especially damaging for export-oriented economies such as South Korea, he said.

"I think we should make sure that we don't exacerbate this situation."

In a later speech to an economic forum, Lamy called for the Doha Round of world trade liberalisation talks to be concluded as quickly as possible.

"This round is the best insurance policy available on the market against protectionist moves," he said.

WTO members came close to a deal last July in Geneva but talks fell apart amid mutual recriminations between developed and developing countries.

Several countries are using public funds to rescue stricken automakers, and amid severe job losses there are pressures for policies that favour national companies and the national workforce.

A new trade pact is seen as a way of preventing this, by binding countries to rules monitored by the Geneva-based WTO.

"Maintaining an open, fair and transparent global trade environment is vital for economic recovery," Lamy said.

He urged the world to resist temptations to raise trade barriers, to extend more aid to poor countries hit hard by the economic crisis and to help them ease a "dire" situation in trade financing.

Lamy declined to predict when negotiations on the Doha Round would be concluded but said he was awaiting the formation of a new US trade team.

Date created : 2009-02-23

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