As head of the World Trade Organization, Pascal Lamy has kept a sharp lookout for fresh outbreaks of protectionism during the global economic crisis, even as he attempts to steer the Doha Round of global trade talks to completion and awaits an agreement on climate change before tackling the thornier trade issues posed by a raft of new environmental rules.
The Doha negotiations have dragged on for eight years, but Mr. Lamy is convinced a deal can be concluded by next year. "We are nearly there, but there remain a few nuts to crack, mostly the U.S." he told The Globe and Mail's editorial board yesterday.
You have been pessimistic in the past about completing the Doha Round. What makes you more positive now?
I'm never optimistic or pessimistic. Neither disease can I afford to contract. ... What I'm saying is, given what's on the table, which is roughly 80 per cent of the deal already cooked, what remains to be done [is]doable.
Are you convinced it can get through the U.S. Congress, given the current protectionist climate and its desire to safeguard farm subsidies?
If we were to conclude a deal in 2010, ratification would not come before 2011. And the implementation of such a deal would take five years in developed countries and 10 years for developing countries. So it's not a big bang overnight. Of course, it's probably one of the reasons the U.S. President is cautious at this stage. You need the package to be accepted by Congress with a mix of sweet and sour tastes. People won't like cotton subsidy reductions, but they will like more services market openings in India and China. ... The good thing is that it's a win-win game.
Where do you see the protectionist hot spots during this crisis?
We've been monitoring trade policy development very closely. ... There have been a lot of protectionist pressures [in terms of rhetoric] There hasn't been a lot of that in reality. Some here and there. Buy America. There is an increase in the use of trade defence mechanisms ... as would be expected. ... There is a huge correlation between the economic cycle and the use of trade defence instruments.
All in all, the system has worked.
But it's too early to reach an assessment of how the system has weathered the crisis.
The jury will be out for at least one or two years. The stress test of the WTO system is not over. As long as unemployment will be on the rise, protectionist pressures will multiply.