GENEVA – TRADE safeguards used by countries to protect their industries risk doing more harm than good in the current global economic crisis, the WTO said on Wednesday.
‘Members have an uncontested right to use contingency measures that are consistent with WTO (World Trade Organisation) rules’ and in normal times are used infrequently, the global trade body said in its annual report.
‘But at a time of global crisis, a proliferation of such measures among trading partners would have adverse economic effects with few of the positive offsetting advantages.’ Contingency measures are built into international trade rules overseen by the WTO.
They include restricting imports to avoid a balance of payments crisis, imposing higher taxes against certain imports to protect fledgling industries, and measures to protect domestic products from unfairly priced foreign imports.
Such measures allow countries to legally apply restrictions in certain cases. In the economic crisis, more countries have resorted to these methods, according to a recent report by the WTO.
In 2008, the number of anti-dumping investigations increased 28 per cent compared to 2007, it said. While anti-dumping investigations are not illegal, they can hinder trade flows.
Countries have been warning against the threat of protectionism in the worldwide recession, with several international pledges made to resist it.
The WTO also said recently that the global trade contraction would be sharper than earlier forecast, with trade volumes to shrink 10 per cent instead of the March forecast of nine per cent.
Trading volumes of developed economies are expected to shrink by 14 per cent instead of 10 per cent while those of developing economies would contract seven percent, rather than the earlier forecast of two to three per cent. — AFP
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