Pascal Lamy, director-general, WTO, is known for putting his point across candidly. In an interview with FE?s Ronojoy Banerjee, he talks about how uncooperative monetary developments being adopted by some countries run the risk of a retaliation. He also discusses how the WTO has managed to reflect changing times over the last ten years. Excerpts:
In the recent past, the US has been criticised for not being serious enough in resolving the Doha deadlock, especially because of the time it took to appoint an ambassador to the WTO. What do you think?
It is true it took them a bit of time before they appointed a chief negotiator to WTO. But the US has now fully engaged in the discussions in Geneva . President Barack Obama has been pretty clear that the US was subscribing to the common view that it is time to enter the end game.
The world has changed since the Doha stalemate. How has WTO reflected the changing times?
If you look at the last ten years, world trade has increased. This has helped emerging countries to develop. Look at how many jobs have been created because of the growth in world trade. More open trade has given rise to specialisation and greater efficiency. Opening of trade by countries like India and China has been a major factor in poverty reduction.
How was WTO tested during the economic crisis?
Our system has been tested by the crisis. It was a stress test for the WTO system and it has proven that despite a major storm, the boat of trade openness has been maintained. Trade is today as open as it was two years ago. The existence of a network of global trading rules has helped. Trade is the only area in global economic governance where there is a worldwide set of rules which are implemented and subject to a dispute system. The crisis has proven the value of this system.
In the recent past, there has been a rising rhetoric of imposing carbon tax on emerging economic like India and China. How do you see these issues in the light of WTO?
We cannot decide on rhetoric. The WTO is about rules and disciplines . The position of WTO members is that in order to address the climate change issue and the huge necessity to reduce carbon emissions a multi-lateral approach is the best way out.
Any areas in which you would like to see more engagement from India?
India?s overall political position since two years has been to pursue its offensive and defensive interests. India has been very offensive in services while being more defensive in agriculture. I am persuaded this will not change overnight. What counts now is for all WTO members to enter into give and take to build a final package.
How do you view the rising anti-free trade measures that some countries have adopted recently?
I know protectionist pressures are still there because of unemployment, especially when it as high as 10% in the US. This creates huge political difficulties which many non-US citizens do not correctly evaluate. I also know that in recent months, there have been uncooperative monetary developments, which may in turn, risk a tit for tat protectionism. We are still on high alert.
China?s devalution of its currency has caused a lot of concern. Does this bother you?
Exchange rate policies are with the IMF. The IMF has has said for quite a long time that the Chinese currency is undervalued. They are the experts. The question is how much revaluation is necessary and what its impact on China?s trade would be. It is a bit more complicated than what many people believe because Chinese exports in large parts are a re-export of Chinese imports.
