Economic crisis far from over, WTO chief says

By Laura MacInnis

GENEVA (Reuters) - The global economic downturn is far from over, and few countries have dismantled the dangerous protectionist barriers they imposed in response to it, World Trade Organisation Director-General Pascal Lamy said on Monday.

In remarks to the WTO's 153 members, Lamy said that import penalties and other border restrictions are closing off markets and causing more difficulty in a time of depressed demand.

"There is no indication yet of governments more generally unwinding or removing trade-restricting or distorting measures that they imposed early on in the crisis," he said.

While saying there was no "outbreak of high-intesnsity protectionism" to date, Lamy raised the possibility of an amplification of trade disputes, retaliatory restrictions, and sanctions if unfair barriers are kept in place.

The WTO is analysing economic stimulus measures to prop up banks, insurers, carmakers and other key sectors in developed markets, where the credit crisis began.

So far, Lamy said, it has not been possible to tell whether the subsidies and bailouts have violated international law by crowding out competition.

"This continues to be a particularly challenging part of the exercise because of the difficulties of collecting hard data in these areas," he said of WTO efforts to assess the stimulus moves. "Without that data, it is not possible to asses the impact they are having on trade flows."

Lamy, who attended the G8 summit in Italy last week where world leaders promised to work to conclude a new global free trade pact in 2010, told WTO members on Monday that it was too early to count on an economic recovery.

"I would caution against excessive optimism," he said. "Although financial markets are showing signs of stabilizing, the crisis is far from over, in particular in many developing countries that are only now starting to feel its full force on their trade and economic growth."

Trade diplomats are due to meet on Monday afternoon at the WTO's headquarters, on the shores of Lake Geneva, for the first Doha Round negotiating session since the G8 plus major emerging countries set the 2010 target.

PACKED SCHEDULE

Negotiators are expected to set a packed meeting schedule for the coming months in line with the Italy agreement to speed up the talks, which have been going on since 2001, and arrange meetings between trade ministers to settle tricky issues.

The communique from the Group of Eight wealthy nations plus China, India, Brazil, South Africa and Mexico raised hopes that countries who had previously squared off in Geneva would be willing to yield enough to make consensus possible.

Two signatories -- India and the United States -- caused the last major WTO push to fail last July when they locked horns about how poor-country farmers would be treated in a Doha deal, which would open up global food, goods and services markets.

Both countries have had a change of government since then, but neither have spelled out any changed negotiating stances.

Lamy has said a global trade deal would give the world economy a $130 billion annual boost.

As in former WTO accords like the Uruguay Round, the Doha Round requires full consensus in all areas for the accord to be clinched.