* WTO, OECD, UNCTAD urge end of "trade defence mechanisms"
* Call on G20 leaders to pry open commerce, investment flows
* Claim protectionist measures may hamper economic restart
(Adds report on restriction measures in pipeline, paras 9-10)
By Laura MacInnis
GENEVA, Sept 14 (Reuters) - Protectionist policies could hold back global economic recovery and weaken key industries long after the current crisis ends, the World Trade Organisation said on Monday.
In a joint report with the U.N. trade and development agency UNCTAD and the Organisation for Economic Cooperation and Development (OECD), the WTO said most leading economies have invoked "trade defence mechanisms" to weather the downturn.
"The fiscal and financial packages introduced to tackle the crisis clearly favour the restoration of trade growth globally, but some of them contain elements that favour domestic goods and services at the expense of imports," the agencies said.
They warned corporate bailouts and other crisis steps could "create a legacy of uncompetitive industries and sectoral over-capacity that will continue to generate protectionist pressures even after economic activity picks up again."
The report, prepared for the G20 leaders' meeting later this month in Pittsburgh, projected the recession would reduce world volumes of merchandise trade by 10 percent this year, and push foreign direct investment 30 to 40 percent lower.
The agencies concluded that so far major economies had avoided "a descent into high-intensity protectionism" but warned policies adopted to date could easily be amplified alongside more job losses in the years to come.
"The main risk is that G20 members will continue to cede ground to protectionist pressures, even if only gradually, particularly as unemployment continues to rise," they said.
"The danger is of an incremental build-up of 'sand in the gears' of international trade that could aggravate the contraction of world trade and investment and undermine confidence in an early and sustained recovery of global economic activity."
A separate study from Global Trade Alert, a research group, said that 90 percent of traded goods have been affected by some kind of protectionist measure, and pointed to another 130 trade restrictive policies are in the pipeline.
"While there is some comfort that the scale of current protectionism is surely less than that of the 1930s ... only the most cavalier observer could dismiss the harm being done to exports and its possible contribution to economic recovery," that study found. It estimated G20 nations have enacted at least 100 "beggar-thy-neighbour" policies since last November.
In their report, the WTO, UNCTAD and OECD urged government leaders to repeal national stimulus measures and instead turn their focus on boosting international commercial and investment flows through a new multilateral trade deal.
Earlier this month, trade ministers meeting in New Delhi pledged to complete the Doha Round accord by the end of next year, a promise that diplomats believe needs a big dose of high-level political support to be achieved. [ID:nL5180113]
"A collective decision by G20 members to bring the Doha Round to a rapid conclusion would be well-received by other WTO members and send an unambiguous signal that protectionist measures are not the solution to this crisis and that measures taken to combat the crisis will be quickly unwound," they said.
"Concluding the Round will substantially narrow the scope for introducing new trade restrictions or raising existing ones," their report found. A Doha deal could boost the world economy by $300 billion to $700 billion a year. [ID:nLF593453]
The joint WTO, UNCTAD and OECD report release coincides with meetings of senior officials in Geneva who are aiming to chart the next steps for the talks on opening global farm, industry and services markets. (Editing by Sophie Hares and Louise Ireland)