Tokyo: Leaders from the G20 developed and emerging countries should not backtrack on their agreement last year to fight protectionism when they meet in London in April, the head of the World Trade Organisation said on Wednesday.
Despite the G20’s decision in November to refrain from raising new trade barriers, there have been several moves suggesting creeping protectionism is underway.
Those include the “Buy American” provisions in the US stimulus package, export subsidies for dairy produce resumed by the European Union, and a French package for ailing carmakers.
“Their commitments last November to reject protectionism and push for the Doha round conclusion were useful. We will need at least as much this time,” WTO director general Pascal Lamy told a news conference in Tokyo.
The London summit on 2 April follows on from a November meeting in Washington where Group of 20 leaders vowed to act to help their economies, conclude stalled trade talks, reform international financial institutions and clean up the financial system.
“We know too that the credibility of G20 on trade cannot be separated from decisions they must take in other areas of their agenda, including coordination of stimulus packages and the foundation of a proper regulation of international finance to try and avoid future meltdowns,” Lamy said.
Negotiations for a new world trade agreement have foundered partly due to an impasse on agriculture. Developing nations want the industrial world to cut farm supports. The United States says developing nations must remove barriers to farm imports.
On Tuesday, US President Barack Obama called for an end to “direct payments to large agribusinesses that don’t need them”.
Although he was not commenting on Obama’s latest speech to Congress, Lamy said he was waiting for his administration to appoint a new trade negotiation team to find out exactly what Washington will seek via future trade negotiations.
Lamy also noted the discipline induced by WTO rules has, for example, helped soften the US “Buy American” provision, which gave the European Union, Japan and a short list of other trading partners some comfort they could share in the expanded US public works market created by the stimulus bill.
The final version of the “Buy American” measure requires public works and building projects funded by the stimulus package to use only US-made goods, including iron and steel. But it also mandates it be done in a manner consistent with US trade pacts.
A report last month by Lamy found “limited evidence” of trade measures such as tariff increases since the financial crisis exploded in September.
Lamy, in Tokyo to meet Japanese government officials, said the Geneva-based organisation is currently gathering information for an updated report to be released in March.
On the possibility and timing of holding the ministerial meeting for the WTO’s long-running Doha round, Lamy said he hoped to bring negotiations back to the political level as soon as possible.
“We have done 80% of the job, which means 20% still needs to be done. As usual, moving this 20% is complex,” he said, adding that a political push was needed so ministers can negotiate over some trade-offs.