Jun 10, 2010
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WTO report to show protectionism under control

Jun 10, 2010

(Reuters) - Protectionism is still a risk as unemployment remains high in many countries despite the recovery but it has so far not caused the serious damage that some feared, a World Trade Organization report will argue next week.

WTO Director-General Pascal Lamy has been reporting since early 2009 on trade measures by the WTO's 153 members to monitor whether the financial crisis was leading to tit-for-tat steps of the kind that caused the 1930s Great Depression.

The latest report, due to be published on Monday 14 June or Tuesday 15 June, will show that WTO members have taken fewer trade measures in the last six months than in the previous period affecting a smaller share of world trade.

"The basic story is that this is all under control," said one trade expert.

The report will reinforce the conclusions of previous documents that the global trading system -- and its rules umpired by the WTO -- has so far held up relatively well to the stresses of the crisis.


Some independent economists disagree, with the Global Trade Alert website (www.globaltradealert.org ) tracking dozens of protectionist measures.

But the fact remains that despite deadlock in the eight- year-old Doha round talks to open up world trade, and continuing lively activity at the WTO's dispute settlement body, the world has not descended into beggar-thy-neighbor protectionism.

Trade is rebounding strongly from the crisis, with the WTO forecasting trade in goods will expand by nearly 10 percent this year after contracting 12.2 percent in 2009.

For instance, Taiwan announced on Monday 7 June that its exports in May were 58 percent higher than a year earlier while its imports jumped 71 percent.

Argentina and Ecuador have been pushing for the WTO to examine the impact on trade of various bailouts and stimulus packages carried out by rich countries, but also some emerging nations like China, to counter the crisis.

WTO economists have argued that such an exercise would be extremely complex and so far the call has not been backed by the rest of the membership.

For instance a bailout of car companies in a country will help that country's domestic automobile producers, arguably distorting trade, but will also benefit their suppliers in other countries.

However, the report will include special sections looking at trade measures in the automobile, steel and textile sectors, which were particularly affected by bailouts.

Next week's report will be accompanied by a short document on trade measures in the G20 countries.

This will be issued together with papers on trade and investment in the G20 by the Organization for Economic Cooperation and Development (OECD) and the United Nations Conference on Trade and Development (UNCTAD) prepared for the G20 summit in Toronto on June 26-27.

(Editing by Myra MacDonald)

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