WTO chief warns against protectionism

Agence France-Presse

Posted at Feb 23 2009 12:44 PM | Updated as of Feb 23 2009 08:47 PM

SEOUL - The World Trade Organization chief called Monday for collective discipline to stem the spread of protectionism during the global slump, citing "Buy American" provisions in the US stimulus package.

"If you hit imports, your exports will be hit," WTO director general Pascal Lamy told reporters.

"Protectionist pressure is there even though we know isolationism or protectionism does not work for simple reasons," he said.

"Without collective disciplines which the United States has to subscribe to in the government procurement agreement in WTO, the 'Buy American' act would probably have been much more worse for US partners," Lamy said.

President Barack Obama last week signed into law the $787-billion bill designed to rescue the US economy.

The bill includes a controversial "Buy American" clause which, though watered down, has provoked fears of protectionism among US trade partners.

Lamy said that in times of economic hardship people need protection. "But there are many ways to protect people which are better than protectionism, which at the end of the day does not protect anybody. If they protect some, then they hit others."

Several countries are using public funds to rescue stricken automakers, and there are pressures for policies that favour national companies and the local workforce.

Lamy warned that world trade would keep on shrinking, maybe more than output in 2009 and probably 2010. This would be especially damaging for export-oriented economies like South Korea, he said.

"I think we should make sure that we don't exacerbate this situation."