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WTO Chief Warns Against Rising Protectionism in Fight Against Crisis

Many G20 nations have imposed protectionist measures, leading the head of the WTO to warn that if something isn't done, global commerce could be put at risk, which could ultimately lead to another Great Depression.

WTO Director-General Pascal Lamy

Lamy warns that protectionism could lead to another Great Depression

As the global credit crunch continues, governments around the world are facing immense pressure to implement protectionist measures in order to keep jobs at home, putting international commerce at risk, warns the head of the World Trade Organization (WTO).

WTO Director-General Pascal Lamy, in a report issued to WTO members in the run-up to the G20 meeting of the world's leading economies in London, said he specifically noticed an increase in tariffs, non-tariff measures and anti-dumping actions.

Lamy was careful to point out that there were no signs of an imminent descent into intense tit-for-tat protectionism, but warned that "the danger today is of an incremental build-up of restrictions that could slowly strangle international trade and undercut the effectiveness of policies to boost aggregate demand and restore sustained growth globally."

Addressing the stimulus packages some countries have introduced to address the economic downturn, Lamy said, that these would aid economic growth by increasing demand, but some contained elements that favoured domestic goods and services.

Preventing another 'Great Depression'

A life preserver is seen with the German parliament building in the background representing Germany's bailout of banks and some industry

Some national stimulus packages are affecting global growth

The report, issued a week before the G20 meeting, highlights one of the key issues for the summit: how to prevent job-shielding trade restrictions that could turn the global recession into a long lasting depression leading to unrest and even war, as happened after Wall Street collapsed in 1929.

While the WTO has rules for its members on how high they can raise tariffs or boost subsidies, many countries keep their applied rates below the ceiling, giving them varying amounts of room to maneuver. This means states could implement protectionist measures without actually violating their commitments.

A recent World Bank report found that 17 of the G20 leading economies had implemented 47 protectionist measures since pledging not to at a summit last November.

In his report, a copy of which was obtained by the German Press Agency dpa, Lamy called for the completion of the Doha Round of trade talks and said that, pending the conclusion of negotiations, countries should not use new trade restrictions and trade-distorting subsidies.

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