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UPDATE 1-G20 governments containing protectionism-WTO

Published 03/08/2010, 07:48 AM
Updated 03/08/2010, 07:52 AM

* Most G20 countries resisting protectionist pressures

* Vigilance needed as unemployment stokes protectionism

(Adds details, Lamy quote)

By Jonathan Lynn

GENEVA, March 8 (Reuters) - The G20 rich and emerging countries have been broadly successful in holding protectionist pressures in check in recent months but must remain vigilant, the World Trade Organization said on Monday.

Some G20 countries, in contradiction to pledges at their London and Pittsburgh summits last year, have implemented new measures to restrict trade but their scope has been limited and the group has continued to avoid an escalation of protectionism, it said in a report, a copy of which was obtained by Reuters.

The report calls on G20 leaders to reinforce recovery from the crisis by reaffirming their commitment to open markets and putting their many calls for an early conclusion of the Doha trade round into effect.

"The figures we have released today show that G20 governments have, on the whole, managed to contain protectionism. It is clear that if we are to have a sustainable economic recovery we must keep markets open," WTO Director-General Pascal Lamy told Reuters.

The report, prepared with the Organisation for Economic Cooperation and Development (OECD) and the United Nations Conference on Trade and Development (UNCTAD) at the request of the G20, notes that over 200 million people were unemployed in 2009, taking the jobless rate to record levels.

But most G20 countries are managing the political process of keeping domestic protectionist pressures under control, said the report.

IMPORT IMPACT

The WTO is aware that talk of increasing protectionism can encourage other countries to close their borders, and its assessment is less alarmist than some other trade experts. [ID:nLDE61G288]

But the report estimates that new import-restricting measures by G20 governments between September and mid-February, along with new investigations into unfair imports that could result in such measures, affected some 0.7 percent of G20 imports or about 0.4 percent of total world imports.

These were roughly half the impact of G20 trade-restricting measures between October 2008 and October 2009, the period covered in the previous joint report for the G20.

New trade restrictions tend to be concentrated in sectors that are highly protected, such as minerals, textiles and metal products, it said.

These sectors are labour-intensive and so are particularly vulnerable to pressures from unemployment, the report said.

"These are also sectors in which developing countries tend to have a comparative advantage; their own participation in global economic recovery could be delayed or even derailed by increased protection against their key exports," it said.

Several developing countries, led by Argentina and Ecuador, have called on the WTO to examine the trade impact of financial stimulus packages and industry bailouts introduced by rich countries and China during the crisis.

Such programmes, especially if they contain "buy local" procurement elements as in the United States, could attract retaliation, but had generally helped prevent a more dramatic recession by keeping up demand, the report said. But much more work is needed to assess the trade effects, it added.

World trade growth appears to have resumed, with a strong recovery in the Asia-Pacific region in the past few months, after world trade volumes fell by about 12 percent in 2009, taking it back to 2006 levels, the report said. (Editing by Robert Evans)

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