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Welfare payments better than trade barriers-WTO chief

Published 06/04/2009, 06:53 AM
Updated 06/04/2009, 06:56 AM

* Pascal Lamy prefers jobless benefits to import tariffs

* Says European-style welfare system can help weather crisis

* Negotiations on Doha round deal "80 percent done"

GENEVA, June 4 (Reuters) - Unemployment payments could help vulnerable economies more than protectionist import penalties in the current economic downturn, the head of the World Trade Organisation (WTO) said on Thursday.

WTO Director-General Pacal Lamy, in an interview with the Swiss daily Le Temps, said that "partial unemployment" benefits supported by state welfare systems could help companies avoid job cuts while reducing their costs.

"It is a good example of social protection. It is needed in this crisis," the Frenchman said. "From this point of view, the Europeans, the Swiss included, are better equipped than the Americans who are better equipped than the Chinese who are better equipped than the Kenyans."

Turning to the long-running negotiations over a new global free trade pact, known as the Doha round, Lamy said it was still not clear whether the WTO's 153 members were ready to push again for a sweeping deal on dismantling trade barriers.

It can take at least six months after a change of government -- as occurred in the United States with the inauguration of U.S. President Barack Obama in January -- before newly elected leaders are ready to negotiate in earnest, Lamy said.

"It is true that they are taking their time," he said of the Obama administration's engagement in the Doha round talks.

"We have also just had a change of government in India. I cannot, I do not want to run the risk of restarting the political-level negotiations while they are telling me they are in the midst of reflection," he said.

Disagreements between the United States and India over the use of farming safeguards torpedoed the last high-level drive to clinch a Doha deal, at a Geneva ministerial meeting that Lamy oversaw in July 2008.

Talks that have taken place since then have been focused mainly on technical details related to the would-be agreement, which aims to open up global markets for agricultural and manufactured goods as well as cross-border services.

Lamy told Le Temps that "80 percent" of a Doha round deal had been secured in the negotiations that began in late 2001.

He stressed the need for plenty of energy to wrap up the final 20 percent, which will require governments to tackle sensitive questions such as the repealing of subsidies to farmers in Europe and the United States.

Clinching the global pact will require full consensus among all the WTO's members on all aspects of the deal. (Reporting by Laura MacInnis; Editing by Stephanie Nebehay)

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