Ahead of the G20 Summit in Cannes (France) on November 3-4, the World Trade Organisation (WTO) has warned against the spectre of trade protectionism as “political reaction to current local economic difficulties — difficulties that trade restrictions are very poorly equipped to resolve, such as the case of currency fluctuations and macroeconomic imbalances”.

In a report released in Geneva on Wednesday as a purely factual report under the sole responsibility of the Director-General, WTO, Mr Pascal Lamy, the world trade monitoring body said the political climate in some regions is turning towards “a retreat into protectionism and that a tendency towards industrial support, combined with trade-restrictive measures, is emerging in some countries”.

It also referred to calls made by some political leaders to give preference to domestic products over imported ones, or “not to import what can be produced at home”. Though these political statements, seldom followed by specific trade measures, would nevertheless “inject uncertainty into world markets”, it said.

Over the period under review between May to mid-October 2011, it found that “there is no indication that recourse to new trade restricting measures by the G20 as a group has slackened nor that efforts have been stepped up to remove existing restrictions, particularly those introduced since the onset of the financial crisis”.

Deploring the various signs of a revival in the use of industrial policy to promote national champions and of import substitution measures, the WTO cautioned “unilateral actions to shield domestic industries, although appealing from a narrow short-term perspective, will not solve global problems; on the contrary, they make things worse by triggering a spiral of tit-for-tat reactions in which every country will lose”.

Pointing out that the pace of implementation of new trade restrictions by G20 economies has not decelerated over the past six months, it however said the number of such measures and those that have the potential to restrict or distort trade introduced since the inception of May 2011 has declined to 108 from 122 logged during the preceding six months.

It noted that around half of the total measures recorded over this period could be deemed trade restrictive but conceded that not all G20 economies took trade restrictive steps while “some took the welcome step of introducing new measures to facilitate trade by reducing import tariffs”.

It said new import restrictive measures taken during May to mid-October 2011 cover around 0.6 per cent of total G20 imports, which is the same recorded during the previous six months. Restrictive measures mainly affected machinery and mechanical appliances, articles of iron and steel, electrical machinery and equipment, organic chemicals, plastics and man-made staple fibres.

While the previous monitoring report focused on the uptrend in the imposition of export restrictions by G20 countries, affecting mainly food products and some minerals, this trend has been confirmed over the past six months too.

“Although the majority of these actions were justified on the grounds of national responses to rising food prices, to secure domestic supply or to address resource depletion, they nevertheless go against the G20 standstill pledge in this respect and have the potential to seriously affect trading partners”.

Recalling that during 2008-09 global crisis G20 economies were for the most part able to resist protectionist pressures, it said their collective commitment is now being sorely tested by “weaker economic growth, high unemployment and fiscal austerity”.

Under this uncertain circumstance, it held that “the best way to further open trade in a global, predictable and transparent manner remains the multilateral route” by appealing to all that the process of global trade opening continues.

For this to happen, it said, G20 leaders as well as other participants to trade negotiations need to show leadership, pragmatism and determination to find a way out of the current impasse in the Doha Round”.

The forthcoming 8th WTO Ministerial Conference provides “a possibility to find a path forward”, it added

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