Governments warned against protectionism

The director-general of the World Trade Organisation has warned governments not to retreat into agricultural and trade protectionism in the face of the global financial crisis.

Speaking at a conference in Seoul, Republic of Korea, Pascal Lamy urged national powers to rebuild confidence and work together to develop world trade, rather than adopting protectionist policies.

"Today we are experiencing the worst economic recession since World War II. No country is immune from this crisis. Trade is shrinking; growth is declining and unemployment is on the rise," he said.

"One thing is clear: the depth and scope of the crisis will be a function of the capacity of individual countries to come to global joint action and to re-inject confidence in our economic and social systems."

Reiterating calls for a conclusion to the WTO Doha round of free-trade negotiations, which collapsed last year following disagreements about agricultural tariffs, Lamy said that a global free-trade agreement would be "the best insurance policy against protectionist moves."

He added that tariffs applied on trade today could double if they were raised to existing bound ceilings, but under the proposals currently on the table in the Doha round, tariff ceilings would be halved and rich country agriculture subsidy ceilings reduced by 70-80%.

Lamy said that governments should resist the temptation to raise trade barriers in times of economic difficulty, adding that doling out subsidy packages or imposing "buy local" conditions would have similar problematic effects.

"Rejecting these moves is not a question of ideology. Rejecting isolationist pressures is today a matter of self-interest," he said. "Beggar-thy-neighbour policies bear the risk of prompting retaliation by other countries and driving down the overall level of trade - thus destroying output and jobs around the world."