Protectionism is like cholesterol: WTO Chief Pascal Lamy
ADDRESSING the Thai Chamber of Commerce in Bangkok yesterday, Director General of WTO Pascal Lamy said,
Protectionism is like cholesterol: the slow accumulation of trade restrictive measures since 2008 - now covering almost 3 per cent of world merchandise trade, and almost 4 per cent of G20 trade - can lead to the clogging of trade flows.
The global trade landscape is also changing and it now looks very different from only 15 years ago. New players have emerged on the world scene such as China, India, Brazil, Indonesia and many others.
By overseeing the rules that govern international trade, the WTO guarantees the openness, transparency and predictability you need to conduct business across borders. In an increasingly globalized and inter-related world economy, a rules-based global trading system ensures a stable environment to conduct your business. The WTO is, to a large extent, a guarantee against bad surprises.
Most Asian economies have been able to adapt quickly to a changing demand structure that requires firms to locate various stages of their production process in the most cost-efficient markets. The high degree of complementarity between the economies in this region has provided an ideal basis for the rise of what has come to be known as “Factory Asia”, where parts and components move through cross-border production networks before being assembled and exported for final consumption. This has opened market opportunities for countries with a narrow export base. Products are no longer “Made in China” or “Made in Japan”; more and more products are now “Made in the World”.
A company's competitiveness depends today not only on its own productivity, but also on the competitiveness of its suppliers, access to services and efficient infrastructures. This implies that competitiveness in goods is more closely linked to competitiveness in the services sector. It also means that imports matter as much as exports, contrary to good old mercantilism according to which “exports are good and imports are bad”. Under this scenario, it is clear that protectionist measures — in whatever disguise they may appear — have the potential to do even more serious harm than in the past.