NAIROBI, Kenya, Apr 29 – African governments have been cautioned against employing protectionism measures that will hinder trade as this will only prolong the effects of the global recession on their countries.
World Trade Organisation’s (WTO) Director for Economic Research Patrick Low said on Wednesday that developing countries, in particular, need to keep trade channels open else they would deepen the impact of the credit crunch.
“To the extent that we can do about it, it is important not to make the mistake of turning inwards and forgetting about the contribution that trade can make. That’s the message that many people are trying to convey, don’t start restricting trade,” he warned.
While appreciating that majority of the countries in the world were grappling with fragile economies, the Geneva-based adviser pointed out that States need to urgently address the emerging issue of the absence of trade finance which is projected to lead to a nine percent contraction of the global trade volumes this year.
He explained that this contraction, which is the highest that the world has experienced in many decades had occurred partly because 80 to 90 percent of trade transactions require credit.
Mr Low however expressed confidence that the recent decision by the G20 meeting in London to commit $250 billion behind this was a positive development that would go a long way in easing this problem.
“Things like the drying up of trade finance have to be acted upon not just by national governments but we need an international effort to deal with that. The World Bank is putting together some package to try to help with this,” he stated.
Mr Low who spoke to Capital Business after a workshop on the ‘Multilateral trading system’ however said the implementation of measures would require political will and leadership if they are to have the intended impact of expanding the economies.
“It is very hard to do. It needs political courage; it needs focus and a good understanding of what the implication of doing the reverse is,” he urged.
Despite the challenges that these countries were facing, Mr Low underscored the conclusion of trade negotiations such as the DOHA Development Agenda which sets out a bold agenda for putting development at the centre of multilateral trade discussions.
“The longer this goes on, the more negative is the signal about the resolve of governments to cooperate to be serious and to get things done,” he warned.
Failure to do so, he said creates an atmosphere which is not very ideal for international cooperation.
“The leadership should strive to conclude these talks even more because of the recession. It will also have a positive stimulus effects on the world economy to the extent that it involves getting rid of trade barriers and it increases the degree of business confidence in trade,” he explained.
Kenya’s Trade Assistant Minister Omingo Magara concurred and observed that the fulfilment of these promises would mark the beginning of progress in exploiting the potential in international trade.
“The main focus of the negotiations at this stage has been the establishment of modalities in the areas of agriculture and non-agricultural market access. This will pave way for the conclusion if the entire DOHA round of discussions,” Mr Magara said.
He expressed the country’s commitment to the multilateral trading system and to the successful conclusion of the talks, which have been pending since 2001.