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22 July 2009 

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WTO Urges Countries to Resist Protectionist Measures

22 July 2009

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The World Trade Organization is urging countries to keep trade open and not give in to protectionist pressures during this period of economic turmoil. In its annual World Trade Report, the WTO says measures that restrict trade can lead to a dangerous escalation and worsen the global economic crisis.

Today's global economic crisis is the worst since the 1930s. But the World Trade Organization argues the current crisis, like that of the Great Depression, was not caused by trade policies.

WTO Deputy Director-General Alejandro Jara says protectionist trade policies back then played a significant role in deepening and prolonging the economic downturn. He says the same thing is not happening now, but this could change.

"We have seen an increase in restrictive trade measures since the onset of the crisis, so there is no room for complacency. I do not think we are in a situation where we need to ring the alarm bells. But, we need to remain vigilant and open with one another," he said.

Under WTO rules, countries are allowed to suspend or waive trade commitments when facing economic difficulties.

One report author, Roberta Piermartini, says the use of these so-called contingency measures increases during times of economic slowdown. She notes such measures provide temporary relief from import competition and give domestic firms time to make necessary adjustments.

While they confer benefits, she says these measures also involve costs.

"In the context of the current crisis, this implies that there is a risk that contingency measures can be used as protectionist measures ... So far, we have seen an increase in the use of anti-dumping measures, countervailing measures and safeguards, but against the general background of restraint. But the risk still exists and we call for vigilance," Piermartini said.

The report finds world economic growth slowed abruptly in 2008 and in the early part of 2009. It says growth last year was the slowest since 2001 and well below the 10-year average rate of 2.9 percent.

WTO economists predict a 10 percent drop in world merchandise trade for 2009, but say trade prospects should improve during the last quarter of the year.

The report finds developed economies put in a dismal performance last year. Europe and North America each grew only about one percent. While developing countries also suffered from the economic downturn, the report notes their output still expanded by 5.6 percent.

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