UPDATE 1-WTO’s Lamy warns of trade impact of stimulus measures

* WTO to review stimulus, bailout packages in early 2011

* Protectionist dangers persist

(Adds countries concerned by bailouts, latest trade data)

By Jonathan Lynn

GENEVA, Dec 1 (BestGrowthStock) – Stimulus and bailout packages
undertaken to cope with the economic crisis can have an impact
on trade and investment and need to be managed carefully,
according to the head of the World Trade Organization.

Director-General Pascal Lamy said the WTO would hold a
special meeting in early spring of next year to examine the
effect of those measures on trade and competition.

“In the meantime, exit strategies to unwind them should be
transparent and accountable and should not be used as a pretext
to discriminate, directly or indirectly, against foreign traders
or investors,” he said in his annual report to the WTO on the
international trading environment.

WTO members will review the report, published on the WTO
website last week, on Dec. 9.

Argentina, Ecuador, India and South Africa have expressed
concern that stimulus packages or bailouts for industries like
automobiles or banking undertaken by rich and emerging economies
amounted to subsidies that poor nations could not afford and
which in other times would be open to challenge under WTO rules.

Lamy’s report also repeats previous recent warnings of an
increase in protectionist pressures generated by global
imbalances. [ID:nLDE69I1KQ] [ID:nLDE6A22B5]

Large trade imbalances, high unemployment and disorderly
currency moves had macro-economic causes, he said.

“Restricting trade cannot correct those problems, but it
could easily provoke retaliation which would seriously threaten
jobs and growth worldwide,” Lamy said.

Another danger to international trade was the accumulation
of restrictive measures, which since the end of 2008 had grown
to cover 1.9 percent of total imports while only 15 percent of
measures introduced since the crisis have been removed.

New measures introduced between November 2009 and October
2010 cover around 1.2 percent of world imports, especially in
base metals and products, machinery and transport equipment.

Lamy confirmed the WTO’s forecast that world trade (measured
by export volume) would grow by 13.5 percent this year, despite
weaker growth in recent months, with the strongest growth seen
in developing countries in Asia.

World trade recovered to pre-crisis levels in the middle of
the year following a record 12 percent contraction in 2009.

But in value terms it has not yet fully regained pre-crisis
levels, data issued by the WTO on Wednesday showed. World trade
in the third quarter of this year was 18 percent higher than a
year earlier, slowing from a 26 percent year-on-year increase in
the second quarter.

But economic recovery has not been strong enough to have
much impact so far on unemployment levels in many countries,
where the consensus in favour of open trade and investment was
under strain from high jobless rates, he said.

Despite an improvement in the environment for trade finance
since mid-2009, traders in low-income countries, especially
Africa, still faced difficulties accessing funds at affordable
prices, he said.

New regulatory requirements were also deterring
international banks from doing business in these areas, he said
in an apparent reference to stricter international banking rules
known as Basel III. [ID:nLDE6AE0S6]
(For full WTO report go to http://link.reuters.com/fec97q )
(Editing by Ron Askew)

UPDATE 1-WTO’s Lamy warns of trade impact of stimulus measures