Friday, March 6, 2009

Protectionist measures could sink world trade by 8%

World Trade Organisation director-general Pascal Lamy gave some serious warnings in an interview with Brian Fallow in the NZ Herald this morning.
Lamy was blunt - the stakes in the Doha trade talks have increased substantially as nations seek to protect their own economies. In layman's terms, it could be worse if it wasn't for Doha.
Lamy said we were 80% towards achieving the outcomes from that round but his organisation has also released information showing that if nations were to push the boundaries of present tariff levels, world trade could sink by up to 8%.
There are then two concerns:
1 As the squeeze gets tighter I think we can assume many will push those boundaries
2 This will lead to a deeper recession yet and if we don't think we're really in as much poo as other countries that will soon change.
And finally, I wholeheartedly agree with comments on about protectionism, considering the furore of Swazi last week and the complete farce the bailing out of Mascot Finance has become.
Here's what Ele Ludemann had to say:
"Protectionism comes in many forms, not just direct subsidies. Feel-good campaigns which encourage people to buy-local and outrage when local firms lose out to foreign competitors as happened last week when Swazi lost the contract to supply our Defence Force are protectionist too.
We can not expect others to open their borders to our produce if we shut our doors to theirs and we will pay a very high price if we give our trading partners an excuse to buy local themselves.
New Zealand has a lot to lose if short-term recession-busting measures result in subsidies and tariffs which will protect our competitors and reverse the painfully slow but steady progress towards global free trade.
But every other country will lose out in the long term too because the only fair trade is free trade."
PS - congrats to Ele for just completing her 2000th outstanding blog. If you haven't yet, get online and read her blog. It is quite simply superb!

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