Protectionist pressures building as global economy falters

Protectionist pressures that will impact the flow of freight around the world are building once again as the world economy struggles to recover from the recession, warns World Trade Organisation (WTO) director general Pascal Lamy. Speaking at a meeting of the CUTS Geneva Resource Centre in Delhi recently, he said WTO monitoring had found that the expected rise in protectionism in order to protect jobs and local businesses hit by the 2008 recession had not materialised. “The situation was kept under control and it remained that way throughout 2010. But, over the past six months, we have spotted some worrying developments,” he said. Protectionism would also change the nature of global trade as it has evolved. “The geographical fragmentation of the value chain is leading to a structural change in international trade, moving from the old theory of ‘trade in goods’ to a new ‘trade in tasks’ paradigm.” As a result, the existing systems for measuring trade no longer tell the full story: “Defining and conducting trade policy in this context calls for a new measurement of trade flows based on value added, which will indicate the domestic content of exports after subtracting direct and indirect imported inputs,” he says. Global value chains also require “taking a closer look behind border rules and regulations. As tariffs are gradually reduced, divergences in domestic regulatory frameworks require greater attention”. A “proliferation” of “complex” preferential trade agreements is also posing challenges for freight forwarders and customs clearing houses. “The 2011 WTO World Trade Report which we have just published shows that, while there is slow convergence on tariffs, the risk of divergences in regulatory frameworks in preferential trade agreements is growing,” he says. Other “global challenges” which fall outside of the ambit of the WTO include “the blurring of the edges between trade policy and others. Exchange rate policies, climate change policies, food security policies or energy policies will require the attention of WTO members. “The same can be said of the expansion of the WTO Government Procurement Agreement. “Or the unfinished task of integrating the world’s poorest countries fully into the global economy in a far more convincing way than is the case at present,” he said.