No Outbreak of 'Protectionist Disease': WTO's Lamy
Assistant News Editor, CNBC.com
The number of disputes handled by the World Trade Organization (WTO) tripled in 2012 but it's not a sign of creeping protectionism, WTO Director-General, Pascal Lamy, told CNBC.
The latest data from the WTO shows that the number of trade disputes rose from nine in 2011 to 25 in 2012, but Lamy said that the figures did not mean a massive increase in trade protectionism.
"What we've seen recently is a reasonably good picture," he told CNBC's Ross Westgate in Geneva. "Although, since 2008 there have been more trade restrictive measures than trade opening measures - which is a signal that protectionist pressures are there - we haven't had a big tsunami."
"There's been no outbreak of a protectionist disease" he said, though he added that "we're not out of the woods yet."
Lamy, who was appointed Director-General of the WTO in 2005, admitted that there were some countries that were more of the "usual suspects" than others and that an increase in WTO litigation had grown up out of socio-economic and political pressures on states having to show they are "tough" on competitors.
"We have had a growing number of disputes but I think this is explained by the fact that governments who reasonably successfully resist protectionist pressures have to show that they are acting against unfair competitors."
The U.S. remains the most active participant in WTO disputes, lodging the most disputes and being the recipient of the most trade complaints each year. Lamy told CNBC that, expectedly, the bigger the trade flows, the bigger the frictions between nations.
"The best case is China," he said. "Trade disputes with, and by, China, have grown steadily as the proportion of China in world trade has grown."
In the WTO's latest research released in November, world trade growth for 2012 was downgraded to 2.5 percent from April's forecast of 3.7 percent. Lamy told CNBC that the euro zone's economic crisis had weighed on the forecasts.
"The reality is that the main export markets on the planet which is Europe is not doing well, the U.S. is not doing that well, not to mention Japan. This has a slowdown effect which then reverberates on emerging economies."
Reflecting on the news that Italy's technocratic leader,Mario Monti, has said he will resign as soon as Italy's 2013 budget is approved, a move that could pave the way for more political and economic instability, Lamy hoped it would not destabilize Europe, a region he said had improved over the last year.
"We were starting to see a crisis exit by Europe, I hope this does not destabilize [it]. I think the Italians are reasonably rational-they know what Monti brought them in terms of reducing the Italian over-price on the market, that's big money," he said.
"Europe was probably starting to exit the crisis, which is unfortunate, but the euro system is now stronger than it was a year ago."