WTO to Discuss Protectionism Stemming From Financial Crisis By Jennifer M. Freedman Feb. 6 (Bloomberg) -- The WTO will meet next week to discuss potentially protectionist measures taken by governments to help shore up their industries as the global economic crisis deepens. The Feb. 9 meeting is the first of a task force set up recently by WTO Director-General Pascal Lamy. Ambassadors will react to his Jan. 26 report on the financial slump and trade- related developments, a WTO official said today by telephone from Geneva. Lamy said in an interview with Bloomberg News on Jan. 8 that the trade arbiter was “setting up a mechanism of surveillance to watch over the measures that have been taken so far.” At the time, he said “I don’t see anything worrisome.” Protectionist measures “have not reached a macro-economic level so far.” Since then, Lamy has urged U.S. lawmakers to reconsider a “buy American” clause included in stimulus legislation moving through Congress and cautioned against the protectionism that may result from the global economic slump. Global trade grew 4 percent last year, according to Lamy’s Jan. 26 report. The World Bank estimates that trade climbed 6.2 percent last year and will decline 2.1 percent this year.

WTO chief warns of looming political unrest 7 February 2009 AFP--The global economic crisis could trigger political unrest equal to that seen during the 1930s, the head of the WTO said in a German newspaper interview Saturday. "The crisis today is spreading even faster (than the Great Depression) and affects more countries at the same time," Pascal Lamy told the Die Welt newspaper. Questioned about the risks of political instability, Lamy -- who wraps up his four-year term as WTO director-general in September -- responded that that was "the main danger". "This crisis weighs heavily on politics and puts peace in danger," he said. "Some democracies are old and sufficiently stable to overcome such problems, (but) others are going to be confronted by unrest and inter-religious and inter-ethnic conflicts." He went on to warn against protectionism, saying it would be "wrongly easy" for nations to throw up trade barriers in response to the economic and financial downturn. Launched in January 1995, and now with 153 member states, the WTO's mandate is to liberalise international trade. fc/rom/ach

WTO service negotiations to resume despite crisis By Jonathan Lynn GENEVA, Feb 6 (Reuters) - Trading nations have agreed to resume negotiations on liberalising trade in services such as banking and telecoms next month at the WTO despite caution arising from the financial crisis. Hamid Mamdouh, director of the WTO's trade in services division, said on Friday after two days of talks on the sector that a series of meetings would take place between March 30 and April 8 on a range of services issues. These would be the first services negotiations since last July's meeting of ministers seeking a breakthrough in the WTO's seven-year-old Doha round. Although that meeting collapsed without a result, ministers then held an unexpectedly successful "signalling conference" to indicate what they were willing to do in services. Mamdouh told a briefing that the crisis had made negotiators more cautious, but none were rolling back their positions. "Nobody said that we are reversing liberalisation or we're not going to liberalise, nobody said that," he said. "Everybody said we need to move cautiously. "A lot of people said that what is happening makes the success of the negotiations even more important than before." Services, which can range from restaurant or construction work to accounting, software and healthcare, account for two-thirds or more of industrialised economies and often one-half of developing nation economies, but make up only about one fifth of world trade. Reflecting the importance of services, U.S. senators agreed on Thursday to allow service industry and public sector workers to qualify for federal retraining and extended unemployment benefits if they lose their jobs because of foreign competition. Mamdouh drew a distinction between the liberalisation that is targeted under WTO deals and the deregulation blamed by many for the financial crisis. Trade liberalisation simply means giving foreign providers access to your market and then treating them the same way as domestic businesses, he said. Even after opening their markets to foreign competition, countries retain the right to regulate -- as long as they treat local and foreign businesses in the same way. While deregulation and privatisation had often been features of structural adjustment programmes agreed with the International Monetary Fund and World Bank, they were not issues in the trade in services agreement known as GATS, he said. The forthcoming negotiations involve a "cluster" of meetings on a range of services issues, including bilateral request/offer talks between interested countries, Mamdouh said. There will also be special committees on specific topics such as domestic regulation and financial services, finishing on April 8 -- after the summit of G20 rich and emerging nations in London on the financial crisis -- with negotiations among the entire WTO membership.

US service firms urge new approach to WTO talks By Doug Palmer WASHINGTON, Feb 6 (Reuters) - Major U.S. service industry companies frustrated with slow progress in world trade talks want the Obama administration to pursue a much different approach, according to a briefing paper obtained on Friday. 'Moving ahead in the WTO will require new and creative ideas,' the Coalition of Service Industries said in the paper which comes even before President Barack Obama has fully assembled his trade team. The group's membership includes energy services giant Halliburton, express delivery rivals Fedex and UPS, computer technology and software leaders IBM and Microsoft and top U.S. banking, financial services and insurance companies. The paper reflects the sector's frustration that negotiations on its priorities in the seven-year-old Doha round of world trade talks have taken a back seat to agriculture and manufacturing. 'The ... approach has meant that agreements in services hinge on agreements in other sectors that are driven by completely different negotiating dynamics,' the group said. The United States might achieve better results by trying to negotiate sector-specific agreements in areas such as computer and energy services with a smaller group of countries, the group said. These 'plurilateral' pacts could be modeled after the WTO Basic Telecom Agreement and the WTO Agreement on Financial Services, both reached in 1997, the paper said. 'A sector-focused approach may circumvent some of the obstacles that have hampered more comprehensive negotiations,' the group said. The group also recommended the Obama administration explore negotiating a high-standard 'services-only' free trade agreement with Japan and the European Union.

ANALYSIS-Developing countries turn to South-South trade By Jonathan Lynn GENEVA, Feb 8 (Reuters) - Developing countries hoping to compensate for slumping demand in rich countries and falling commodity prices are looking at ways to bolster one of the most dynamic parts of their economies -- South-South trade. In its latest economic forecast last month, the International Monetary Fund said developing countries would grow by 3.3 percent this year, while advanced economies would shrink by 2 percent, with the world economy as a whole stagnating. The U.N. Conference on Trade and Development (UNCTAD) forecasts exports from developing countries, many of whose economic strategies are predicated on strong export growth, could fall by 9.2 percent in 2009. South-South trade is likely to be the only bright spot. UNCTAD Secretary-General Supachai Panitchpakdi said the financial crisis had shaken the economic foundations of the North and was threatening to shatter the growth and development aspirations of the South. "The timing, therefore, is right to explore how greater South-South cooperation can help developing countries to cope with the crisis," Supachai, a former head of the World Trade Organisation (WTO) and deputy Thai prime minister, told an UNCTAD meeting on South-South trade last week. POWER SHIFT The attempt by developing countries, especially big emerging markets such as China, India and Brazil, to rely more on each other is a further sign of a shift in global power away from the United States and Europe as the world tackles the economic crisis. Brazil's Foreign Minister Celso Amorim met Indian Commerce Minister Kamal Nath and South African Trade Minister Mandisi Mpahlwa on the sidelines of the World Economic Forum in Davos on Jan. 31 to discuss how to boost their mutual trade. Amorim told reporters they had agreed that South Africa would host a meeting in the near future to discuss a trade agreement between the Latin American trade bloc Mercosur, the South African Customs Union (SACU) and India. "We also want to study mechanisms that will somehow permit our trade to continue to flow in a way that is not affected by what happens in the financial markets," Amorim said, touching on a key concern of developing countries which have seen credit dry up because of the financial crisis. Amorim said it was too soon to give details but gave the example of trade between Brazil and Argentina which is settled in local currency. Such cooperation will not always be easy as the economic slowdown tempts developing and rich countries to create barriers to each other's exports.

India to ensure ban on Chinese toys Sujay Mehdudia 8 February 2009 The Hindu NEW DELHI: Brushing aside the threat by China of dragging India to the WTO, Commerce and Industry Minister Kamal Nath on Friday plugged the loopholes in the rules that could allow manufacturers in China to dispatch toys into the market through a third country. Officials said here that the Ministry has informed and alerted the customs authorities to ensure that Chinese toys do not enter the Indian ports through a third country route. “Prohibition shall be applicable on all such toys which have originated from China, irrespective of the country of import. Originated shall mean ‘manufactured’ in China,” the Directorate General of Foreign Trade said in a directive to all Commissioners of Customs and licensing authorities. Mr. Nath said the ban on Chinese toys was on grounds of public health and safety and the action was compliant with the WTO rules.

Half of Chinese toy makers wiped out in crisis: report 9 February 2009 AFP--Nearly half of China's toy makers closed last year due to shrinking exports brought about by the global financial crisis, Chinese media reported Monday. At the start of 2008, China had 8,610 companies that produced and exported toys, but by the end of the year, that number had declined by 49 percent to 4,388, the Beijing Times said, citing customs data. Chinese toy exports grew marginally in 2008 by 1.8 percent to 8.6 billion dollars, but the overall figure masked a dramatically worsening performance towards the end of the year, according to the paper.

Colombia urged EU to respect preaccord on lower banana tariffs NoticiasFinancieras 7 February 2009 NoticiasFinancieras Colombian minister of Trade, Luis Guillermo Plata, urged the European Union (EU) this Wednesday to respect the multilateral preagreement signed last July in Geneva to lower tariffs on bananas. Also asked the agreement they are negotiating bilaterally not to be inferior to that proposal. Banana taxes will be debated bilaterally with the EU next week in Bogota, and multilaterally in the WTO. Agreement signed in Geneva established that Europe would reduce gradually its banana tariffs from 176 to 114 euros (227 to 147 dollars) per ton between 2009 and 2014.

China:Won't Use 'Buy China' Policy To Support Demand BEIJING (Dow Jones)--The Chinese government won't employ a "Buy China" policy to boost domestic demand, Commerce Vice Minister Jiang Zengwei said Monday. Jiang said at a briefing international trade remains important and no country can rely solely on its own market to make or sell goods. "I think China won't implement a 'buy China' policy...We will use goods regardless if they are domestic or foreign," he said, when asked whether Beijing intends to use measures similar to the "Buy American" provision in the U.S. stimulus package.

All stimulus measures to be WTO-compliant, says Nath. 7 February 2009 Financial Express Commerce and industry minister Kamal Nath on Friday said the government and the Reserve Bank of India would take further co-ordinated fiscal and monetary steps to stimulate the domestic economy, but stressed that all measures will comply with WTO rules. "RBI has taken some measures in the last few days. RBI will continue to take measures and they have to take calibrated measures. They cannot jump into this (pumping liquidity)." Nath said some sectors are hit because of contraction in demand and non-availability of liquidity internationally. He declined to disclose the fiscal measures that are under consideration saying they are "still under formulation."

Gulf Arab growth to slow by half in 2009-IMF By Daliah Merzaban DUBAI, Feb 8 (Reuters) - Economic growth of Gulf Arab oil exporters is set to slow by almost half to 3.5 percent this year as the Middle East earns about $300 billion less from crude oil exports, the International Monetary Fund said on Sunday. Saudi Arabia and five of its neighbours in the world's biggest oil-exporting region are likely to post fiscal deficits amounting to 3.1 percent of gross domestic product, compared with surpluses of 22.8 percent of GDP in 2008, the IMF said.

IMF Says Advanced Economies Already In Depression KUALA LUMPUR (Dow Jones)--Saying that the advanced economies are in a state of economic depression, the International Monetary Fund's managing director Saturday called upon the U.S. government to coordinate its banking-sector restructuring with its stimulus package. Dominique Strauss-Kahn also said the European Central Bank, which held rates steady at 2% this week, has room to lower rates but questioned the tool's effectiveness. "We are already in depression ... at least for advanced economies," he told reporters at a briefing. Last week, the IMF slashed its 2009 estimate for global growth to 0.5% - its weakest expansion since World War II - from a 2.2% projection two months ago. Strauss-Kahn said there is still downside risk to global economic growth forecasts and the "worst cannot be ruled out." (END)