Geneva, Sep 30 (Inditop.com) Global trade, projected to fall by a full 10 percent this year, could be dealt an even bigger blow if members of the World Trade Organization were to adopt the full range of protectionist measures they are allowed, the head of the WTO has warned.
Exporters could be faced with tariff hurdles twice their current level, Pascal Lamy told delegates at the annual WTO public forum.
Lamy said the WTO’s ‘radar screen’ monitor had shown that countries had responded to the current financial climate by adopting a large number of “low-intensity” protectionist measures.
“But there should be no complacency. Rising unemployment will continue to usher-in the inevitable protectionist pressures,” he said opening the forum Tuesday.
“In fact, if the entire WTO community of nations were to decide to raise its applied tariff levels all the way up to WTO legal ceilings, this would raise the world’s average tariff hurdle to about twice its current level.
“In other words, exporters would become 100 percent worse-off than they are today if the full policy-space that the WTO provides were to be exploited,” he said.
His warning echoed the growing concern voiced by India and other major developing countries that recent protectionist measures adopted by rich nations – including huge subsidies in the financial services sector – risked setting back world trade.
Lamy said the WTO’s response to the financial crisis has been to caution governments against “beggar-thy-neighbour policies”.
“The impulse to go ‘local’ in answer to the financial crisis must be resisted,” Lamy said, adding the conclusion of the stalled Doha Round of world trade talks could open new markets and help lower the cost of goods and services to the final consumer.
Lamy said trade finance, which had been rolled back by financial institutions in response to the financial crisis, was “now beginning to shore up”.
“It is my hope that we will soon see previous levels of trade finance restored, especially where it is most needed. In other words, for small businesses and least-developed countries,” he said.
