Governments must ensure they avoid discriminating against foreign suppliers in economic policy and financial regulation as the global economic crisis ebbs, the World Trade Organization said. “There has been no systemic breakdown in the international trading system and WTO members have resisted the allure of protectionism,” it said in a report circulated to members late on Wednesday, a copy of which was obtained by Reuters. The global trade body said the worst of the crisis, which has led to an even faster contraction in world trade than occurred in the 1930s Great Depression, now appeared to be over. But in working on their exit strategies from the crisis, governments must take steps to help revive international trade flows and strengthen the international trading system. Economic policies must be designed not to favor home suppliers relative to foreign suppliers, it said in the report, an annual review of developments in international trade by Director-General Pascal Lamy. As global imbalances are unwound, export-oriented emerging economies will need to rely more on domestic sources of growth, it said in a reference to countries like China. Regulatory changes in the financial sector must also avoid discrimination, it said. “Countries that have provided support to their financial sector during the crisis must ensure that as part of their exit strategy it does not leave an uneven level-playing field between national and foreign-owned institutions,” it said. The WTO's 153 members will be looking at its contribution to recovery and development, as well as taking stock of its other activities such as monitoring trade policies for protectionism and the long-running Doha negotiations to open world trade, at a three-day ministerial conference starting Nov. 30. The report said that only a few members had raised tariffs in response to the crisis, but there had been increases in other trade policy measures. WTO members reported 217 new anti-dumping investigations - probes into unfairly priced imports - between July 2008 and June this year, a 15 percent rise over the previous year and reversing a decline between 2001 and 2007, it said. But the WTO said it was difficult to analyze the impact on trade of fiscal stimulus packages and financial sector bailouts - something of growing concern to developing countries. Climate change could have an enormous effect on trade by affecting transport and distribution chains and the geographical pattern of production, particularly in farming, it said. But it said trade could also help mitigate climate change by spreading environmental goods and services -- one of the topics in the Doha round coming increasingly into prominence. However, the WTO warned that failure by countries to reach an international agreement on tackling climate change could lead some governments to use trade measures to keep their industries competitive in the face of climate measures. “The absence of an international environmental solution may spill over into the trade arena, stoking trade tensions and reducing the potential growth of international trade,” it said. The WTO noted that unemployment was likely to rise until at least next year even as the recovery takes hold, and called on governments to increase social spending. In rich countries hit by the crisis, social safety nets could underpin public support for open trade, and increased social spending in emerging economies would reduce the need for private citizens to save so much, which has contributed to the imbalances underlying the crisis, it said. On Wednesday, the WTO also assessed that the slump in trade volumes was slightly worse than the 10 percent decline it had forecast earlier for 2009. “The secretariat believes now that this may slightly underestimate the decline in trade,” it said, without giving a revised numerical estimate. The WTO also urged member states to push for a conclusion of the Doha Round of negotiations for a world trade liberalisation pact, reiterating that it would give a boost to the global economy.
