Protectionism gaining ground, WTO ministers warn

Protectionism is a growing threat as the global economy falters and could cost hundreds of billions of dollars (euros), ministers and officials told a World Trade Organization meeting Thursday. "Some protectionist signs have (become) apparent in many parts of the world today," Nigerian Trade Minister Olusegun Aganga said at the opening. "To bow to such pressures would be the worst response to the present economic challenge." He called on ministers to stress that WTO's rules were preventing countries from resorting to the type of protectionist measures that plagued the world in the 1930s' Great Depression. "What is even more important is that you, ministers responsible for trade globally, send out a clear message that trade openness is particularly important during such challenging economic times as we have today," Aganga urged. WTO head Pascal Lamy warned that the cost of "high intensity protectionism" could be in the region of $800 billion. "The strong storm waves are loosening the anchor and now risk dislodging it. This would be very bad news," he added. Meanwhile, a group of countries including EU states and the United States made a pledge to "roll back any protectionist measures introduced since the start of the gloal financial crisis in 2008." "Furthermore, we will continue to exercise maximum restraint in implementing measures" which are allowed under WTO rules but which could "have a significant protectionist effect," added the pledge. However, emerging giants Brazil, China and India did not figure on the list of signatories. Australian Trade Minister Craig Emerson shrugged off the absence of the three developing powers, noting that other countries may yet join the pledge in coming days. Faced with an onslaught of cheap imports, some countries have slapped tariffs on foreign goods in a bid to protect domestic production. Brazil's recent move to impose a 30 percent tariff on all vehicles that are not at least 65 percent made in Mercosur, the South American trade bloc, has raised eyebrows. On the eve of the WTO conference, Beijing also announced duties on certain US vehicle imports, to the dismay of the United States. Chinese Commerce Minister Chen Deming defended Beijing's decision and challenged those who disagreed to take the case to the WTO. "China according to WTO rules ... conducted in an open manner and rule-based manner investigations into US car imports in China and decided to impose anti-dumping and countervailing measures," he said. "This is in line with WTO rules and not a form of protectionism. "If anyone begs to differ, the best solution is to ask the WTO experts to rule," said Chen, adding that China will respect the trade watchdog's verdict. The three-day ministerial conference is taking place at a time when the nerves of free trade proponents are being tested. The WTO had earlier cut its forecast of world export growth in 2011 to 5.8 percent from 6.5 percent. With the Doha Round of negotiations for a free trade pact deadlocked, Russia's 18-year bid to join the trade body is likely to be the main bright spot of the meeting. The 153-member organisation is expected to give its final nod to Russia's application on Friday. The Russian parliament would then be asked to approve the membership that would usher in the last of major economies still outside the trade club. Meanwhile, a group of WTO members reached an agreement on Thursday to widen a deal on public work contracts that could unlock up to 100 billion euros-worth of new market access. The accord boosts a public tender market worth 600 billion euros, up from 500 billion euros previously, and includes new coverage of industries such as telecommunications as well as offering full access in construction services. The figures are based on the 42 countries who are current signatories of the existing government procurement agreement. A separate WTO study, which includes several other countries plus China and Brazil, shows that the new agreement could lead to up to $970 billion of new market access annually. For the five major emerging economies -- Brazil, Russia, India, China and South Africa, who are not signatories of the current accord on government procurement -- the amount of potential market access could be as high as $596 billion.