Washington Post, “WTO Says Protectionism Could Prolong Recession“:
Facing pressure to keep jobs at home, leaders around the world have edged closer to protectionism, which could eventually choke global trade and prolong the recession, the head of the World Trade Organization warned yesterday.
Addressing protectionism ranks high on the agenda of the G20 summit next week in London. At their last meeting in November, the leaders of 20 industrialized and developing nations pledged to fight anti-trade policies. In January, the WTO reported no significant increase in protectionism. But a World Bank report released last week found that of the G20 members, 17 have failed to keep that promise, prompting calls by world leaders and others for the group to adopt a tougher stance this time.
Earlier in the week, the WTO also issued a news release, “WTO sees 9% global trade decline in 2009 as recession strikes.” Excerpt:
“For the last 30 years trade has been an ever increasing part of economic activity, with trade growth often outpacing gains in output. Production for many products is sourced around the world so there is a multiplier effect — as demand falls sharply overall, trade will fall even further. The depleted pool of funds available for trade finance has contributed to the significant decline in trade flows, in particular in developing countries,” said Director-General Pascal Lamy.
“As a consequence, many thousands of trade related jobs are being lost. Governments must avoid making this bad situation worse by reverting to protectionist measures which in reality protect no nation and threaten the loss of more jobs. We are carefully monitoring trade policy developments. The use of protectionist measures is on the rise. The risk is increasing of such measures choking off trade as an engine of recovery. We must be vigilant because we know that restricting imports only leads your trade partner to follow suit and hit your exports. Trade can be a potent tool in lifting the world from these economic doldrums. In London G20 leaders will have a unique opportunity to unite in moving from pledges to action and refrain from any further protectionist measure which will render global recovery efforts less effective,” Mr. Lamy said.
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