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(GENEVA) Global trade will shrink by 9 per cent this year in the most devastating collapse since World War II, the World Trade Organization said on Monday.
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The WTO said commerce in rich countries would fall furthest, by about 10 per cent. But poorer nations may suffer the most because they are more dependent on exports for growth.
Trade has grown unabated since 1982. 'For the last 30 years trade has been an ever increasing part of economic activity, with trade growth often outpacing gains in output,' WTO chief Pascal Lamy said. 'The depleted pool of funds available for trade finance has contributed to the significant decline in trade flows, in particular in developing countries.'
The sharp drop in world trade has increased calls in Europe, Asia and Latin America for a quick conclusion to the Doha round on the basis of texts proposed in December.
Mr Lamy, who is in Washington, pressed US trade officials for a strong commitment to finishing the Doha round, while a US business leader warned against accepting a 'phony deal' just to wrap up the talks.
But the Obama administration has said that it cannot agree to proposals for cutting US farm subsidies and politically sensitive manufacturing tariffs until advanced developing countries, including Brazil, India and China, make better offers to open their markets to US goods and services.
A US trade official, speaking on condition of anonymity, said US Trade Representative Ron Kirk and Mr Lamy 'had a very productive meeting to get acquainted and establish a relationship for working together'.
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The official shared no further details of Monday's meeting, which was Mr Kirk's first opportunity to talk in person with Mr Lamy since winning Senate approval of his nomination last week. The Doha round was launched in November 2001 with the goal of helping poor countries prosper. Since then, it has suffered one setback after another even as negotiators have narrowed many differences. Mr Lamy has argued a quick conclusion to the nearly seven-year-old Doha round would boost economic growth and provide an 'insurance policy' against future protectionism by ratcheting down the maximum tariff and subsidy levels now permissible under WTO rules.
Last week, the International Monetary Fund predicted a trade decline of nearly 3 per cent, but the WTO's forecast was far bleaker. It said the sharp deterioration in trade was already evident late last year as demand sagged and production slowed. Although trade registered 2 per cent growth in volume terms, it stagnated over the final six months.
'As a consequence, many thousands of trade related jobs are being lost,' Mr Lamy said. He urged governments to avoid making the situation worse by boosting failing companies at the expense of foreign competitors.
Policymakers fear a rise in isolationist economics could deepen the recession just like the Great Depression of the 1930s. 'The use of protectionist measures is on the rise,' Mr Lamy said. 'The risk is increasing of such measures choking off trade as an engine of recovery. We must be vigilant because we know that restricting imports only leads your trade partner to follow suit and hit your exports.'
The report said even China will be unable to insulate itself from the trade collapse, as all its major trading partners are likely to show weak import demand for the foreseeable future. It noted that China's exports fell 26 per cent in February from a year earlier, and 28 per cent from January.
The report said that Germany kept its place as the world's leading exporter in 2008. It sold merchandise worth US$1.47 trillion, holding off a challenge from China at US$1.43 trillion.
The US was third at US$1.3 trillion in exports. Japan, US$782 billion, and Netherlands, US$634 billion, rounded out the top five. While imports fell by 4 per cent in the US, it remained by far the world's largest importer last year, purchasing US$2.17 trillion worth of foreign goods. -- AP, Reuters
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