Pascal Lamy: If we go down the road of protectionism, disaster awaits

Share
Related Topics

Trade has become another casualty of the global economic crisis. The slump in demand and the difficulties to access trade finance have led to a significant contraction of the world trade. According the current estimates, world trade will contract by some 3 per cent in 2009, the first decline in trade growth since 1982. Just as trade tends to grow faster than output in good times, it typically contracts faster in times of recession.

This means that one of the most powerful engines of global growth is hampering efforts to lift people out of poverty. And this is affecting both developed and developing countries. It is affecting the 12m jobs in the US which are dependent on exports. It is affecting 6.2m jobs in France . Not to mention 100m or so jobs in China.

I think it is important to reflect on this as we think of devising responses to the current crisis and as we hear talk about "protecting domestic jobs". The reality is that today a huge proportion of domestic jobs are reliant on access to export markets and without trade, these jobs risk disappearing. This is why we hear many voices against isolationist measures. Is it credible to imagine that one country can protect its domestic market without others doing the same?

Let's imagine for a second that the US decides to close its automobile market to imports, let's say Chinese, Japanese and European automobiles, worth $80. It is highly probable that the Chinese, Japanese and Europeans would decide to close their markets to American planes, cranes and chemicals, all this worth $120bn.

The domino effect that such moves could cause would be devastating. And this is why isolationism, even "smart" isolationism as some are advocating, is a recipe for global slump. And this is why resisting protectionism and avoiding an aggravation of the current crisis is an imperative today. The reality is that protectionist measures by individual countries are unlikely to help in the recovery efforts. Instead, what is necessary is to co-ordinate the domestic stimulus packages, to co-operate in addressing global challenges, and to think of using the least harmful trade-policy instruments.

Taken from a speech given by the Director-General of the World Trade Organisation at the Lowy Institute in Sydney yesterday

React Now

  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

Ashdown Group: Client Accountant Team Manager - Reading

Negotiable: Ashdown Group: The Ashdown Group has been engaged by a highly resp...

Recruitment Genius: Account Manager

Negotiable: Recruitment Genius: You will also work alongside their seasoned sa...

Recruitment Genius: Assistant Property Manager

£15000 per annum: Recruitment Genius: Are you looking for your first step into...

Recruitment Genius: Mechanical Design Engineer

£25000 - £40000 per annum: Recruitment Genius: This innovative company working...

Day In a Page

Read Next
Former Marks & Spencer boss Sir Stuart Rose  

So, the people who always support the Tories... are supporting the Tories? Has the world gone mad?

Mark Steel
Crofter's cottages on Lewis. The island's low population density makes it a good candidate for a spaceport (Alamy)  

My Scottish awakening, helped by horizontal sleet

Simon Kelner
General Election 2015: The masterminds behind the scenes

The masterminds behind the election

How do you get your party leader to embrace a message and then stick to it? By employing these people
Machine Gun America: The amusement park where teenagers go to shoot a huge range of automatic weapons

Machine Gun America

The amusement park where teenagers go to shoot a huge range of automatic weapons
The ethics of pet food: Why are we are so selective in how we show animals our love?

The ethics of pet food

Why are we are so selective in how we show animals our love?
How Tansy Davies turned 9/11 into her opera 'Between Worlds'

How a composer turned 9/11 into her opera 'Between Worlds'

Tansy Davies makes her operatic debut with a work about the attack on the Twin Towers. Despite the topic, she says it is a life-affirming piece
11 best bedside tables

11 best bedside tables

It could be the first thing you see in the morning, so make it work for you. We find night stands, tables and cabinets to wake up to
Italy vs England player ratings: Did Andros Townsend's goal see him beat Harry Kane and Wayne Rooney to top marks?

Italy vs England player ratings

Did Townsend's goal see him beat Kane and Rooney to top marks?
Danny Higginbotham: An underdog's tale of making the most of it

An underdog's tale of making the most of it

Danny Higginbotham on being let go by Manchester United, annoying Gordon Strachan, utilising his talents to the full at Stoke and plunging into the world of analysis
Audley Harrison's abusers forget the debt he's due, but Errol Christie will always remember what he owes the police

Steve Bunce: Inside Boxing

Audley Harrison's abusers forget the debt he's due, but Errol Christie will always remember what he owes the police
No postcode? No vote

Floating voters

How living on a houseboat meant I didn't officially 'exist'
Louis Theroux's affable Englishman routine begins to wear thin

By Reason of Insanity

Louis Theroux's affable Englishman routine begins to wear thin
Power dressing is back – but no shoulderpads!

Power dressing is back

But banish all thoughts of Eighties shoulderpads
Spanish stone-age cave paintings 'under threat' after being re-opened to the public

Spanish stone-age cave paintings in Altamira 'under threat'

Caves were re-opened to the public
'I was the bookies’ favourite to be first to leave the Cabinet'

Vince Cable interview

'I was the bookies’ favourite to be first to leave the Cabinet'
Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat