World Trade Organization (WTO) Director-General Pascal Lamy speaks at the WTO headquarters in Geneva July 6, 2009.

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 Organization Director-General Pascal Lamy said Monday.

“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-intensity 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 analyzing 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 assess 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.”

Packed schedule

Meeting schedules will be packed, as negotiators speed up talks, and set policy between trade ministers. These deliberations are part of the Doha Round sessions.

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.

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

Source: Reuters