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WTO’s Lamy warns against contingency measures, says global trade to drop

22nd July 2009

By: Chanel de Bruyn
Creamer Media Online Managing Editor

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The pressure on policymakers to resort to contingency measures and other actions that could restrict trade were likely to increase going forward, particularly if unemployment rates continued to grow, World Trade Organisation (WTO) director-general Pascal Lamy said on Wednesday.

Speaking at the launch of the WTO's 2009 ‘World Trade Report', in Singapore, Lamy emphasised that governments would have to be realistic about the challenges awaiting them in the coming months.

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The report, which dealt with trade policy commitments and contingency measures, highlighted that the response of governments around the world would play a big role in determining the magnitude and the duration of a decline in trade volumes.

The WTO has made a further downward revision of its forecast for world merchandise trade to a decline of 10% for 2009, compared with its previous estimate of a 9% decline.

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Asia was likely to be the first region to emerge from the crisis, with the WTO noting that there had been a rebound in trade in the region.

Lamy highlighted that well-balanced trade contingency measures, such as antidumping duties or safeguards, acted as safety valves to help WTO members deal with a number of unanticipated market situations.

However, these measures had to be "used with care", especially in times of crisis, he said, adding that, "there needs to be a balance between flexibility and commitments".

"We know very well that today's crisis - just like the last crisis of this magnitude back in the 1930s - was not caused by trade policy. But, we also know that protectionist trade policy played a significant role in deepening and prolonging the economic downturn back then," Lamy stated at the launch of the report, in Singapore.

He noted that, while the world has, so far, been more fortunate, there has been an increase in "restrictive" trade measures since the start of the latest global economic crisis.

"There is no room for complacency. I do not think we are in a situation where we need to cry wolf, but we need to remain vigilant and open with one another," he commented.

He emphasised that a widespread use of contingency measures during times of crisis could lead to governments resorting to these measures just because other governments do so and not necessarily in response to a particular unforeseen difficulty.

"I believe that if we are to exit the crisis successfully and at a minimum economic cost, it will be important that governments show a willingness to reverse actions they took to manage the crisis. It would be unfortunate if measures justified by particular circumstances were to linger once those circumstances had passed," he stated.

 

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