Thursday, September 3, 2009

WTO's Lamy says crisis barriers hurting trade

By Jonathan Lynn

NEW DELHI (Reuters) - The World Trade Organisation must remain vigilant about protectionism as job losses continue to mount in the wake of the global crisis, Director-General Pascal Lamy said on Thursday.

Many countries had raised trade barriers -- mostly legal under WTO rules -- to counter the crisis, Lamy said before a meeting of trade ministers to advance the WTO's Doha round.

"None of them has triggered so far a tit-for-tat chain of retaliations, but there is no denying the fact that they have some kind of trade-chilling effect," he told India's main business lobby FICCI.

Lamy said completing the Doha round would be an effective measure to tackle the crisis and prevent protectionism, adding that the talks, now in their eighth year, had entered the "beginning of the end-game".

The meeting, called by India, had to draw up a clear road map for the Doha talks and provide direction to officials negotiating the details in Geneva to realise repeated pledges of political leaders to complete the deal in 2010, he said.

"Given the sort of 2010 deadline which leaders have given us... given what's happening and not happening in the Geneva kitchen, we need a stronger linkage between what the dining room says and what the kitchen does," he said.

Indian Commerce and Industry Minister Anand Sharma said the Delhi meeting would not negotiate specific issues but tackle the mismatch between words and action.

"Let's be frank in acknowledging that even the unequivocal expression of political resolve has not yet been translated into action. Many of you have shared your concerns with me over the imperceptible progress in re-energising the negotiations," he told ministers in a welcome address.

European Union Agriculture Commissioner Mariann Fischer Boel said it was realistic to aim to reach a deal by the end of 2010.

But she said the EU opposed efforts to reopen the agriculture package as it now stands, following an ultimately abortive meeting of ministers in July 2008 and subsequent revised negotiating draft.

"I think that would be a very, very risky business if someone should be tempted to try and reopen... I can guarantee that from the European Union there's no more juice to get out of this lemon," she told Reuters in an interview.

Lamy said trade was a victim not a cause of the crisis, and recalled that the WTO now expects trade volumes to contract 10 percent this year under the impact of shrinking demand in the crisis, protectionist measures and lack of trade finance.

But trade is a motor of development, said Lamy, a French socialist who was previously European Union trade commissioner.

Mindful of his presence in New Delhi -- itself undergoing rapid modernisation as a result of India's economic growth and great-power ambitions -- Lamy recalled that trade expansion over the past five years had created 14 million jobs in India.


The Doha round was launched in late 2001 to help poor countries prosper through more trade, but has missed deadline after self-imposed deadline since then as rich and poor countries and exporters and importers squabble over details.

Ministers came near to a breakthrough in July last year but the talks have made little substantive progress since they collapsed amid rancour between the United States and India.

But Lamy said it was an oversimplification to see one of the issues behind the collapse -- a safeguard for developing countries to block a flood of food imports temporarily to help poor farmers -- as a clash between India and the United States.

"It's not a north-south issue," he said, pointing out that developing country food exporters such as Thailand and Paraguay had been alarmed by the safeguard proposals laid out by less competitive agricultural states such as India and Indonesia.

As he spoke, 700-1,000 farmers marched in protest outside the FICCI building. "Save farmers, save farms" read one placard.

"This WTO is a monster. We will be finished. The government should do something," Het Ram, a farmer aged 48, told Reuters.

(Additional reporting by Surojit Gupta)

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