World Trade Organization (WTO) Director General Pascal Lamy on Friday warned WTO member states against taking trade restrictive measures and asserted that it would only lead to tit for tat protectionism.

Delivering a special address on ‘WTO and Doha negotiations: closing the gaps and moving ahead,' organised by the Federation of Indian Chambers of Commerce and Industry (FICCI) here, Mr. Lamy said resorting to trade restricting measures to address the challenge of reducing unsustainable and socially unacceptable unemployment levels was not the right path. “The macro-economic imbalances do not originate in trade. Addressing them through trade restricting measures will not work. It will trigger tit-for-tat protectionism,'' he remarked.

Mr. Lamy said in the short-term, the uneven growth in the world and high unemployment carried the risk of countries diverging from global solutions and embracing go-it-alone measures. Such uncoordinated policies would not result in increased employment. He said trade could increase income or output levels through efficiency gains from specialisation based on comparative advantage, through greater competition and through economies of scale. In turn, an increase in incomes would create jobs in different sectors by increasing demand. He said trade was also likely to contribute directly to the reduction of unemployment in the recovery phase following the crisis. This was because the share of employment which depended on exports and imports was typically large.

Mr. Lamy said recent studies for India showed that nearly 14 million jobs were created directly or indirectly as a result of increased exports between 2003 and 2008. Furthermore, a back-of-the-envelope calculation for India suggested that on the basis of the average pre-crisis growth in real merchandise exports, an average of 7.5 million jobs might be created from exports each year, he pointed out.

“The question ahead of us is clear as to how to supplement what negotiators have already put on the table, with new give and take to build a final package that each member would take to their respective Parliaments. WTO members are now working to translate this political will into the negotiations in Geneva. In recent months they have been testing flexibilities in various formats. This process must now intensify in order to ‘walk the talk'” he remarked.

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