MercoPress. South Atlantic News Agency

OCDE estimates world trade likely to shrink 13% in 2009

OECD Director for Trade and Agriculture Ken Ash

The organization for Cooperation and Development in Europe, OCDE, estimates that world trade is likely to shrink by as much as 13% in 2009 from 2008 level and urged governments to avoid protectionist measures and keep markets open in order to allow economies to benefit from the recovery when it comes.

Speaking at a meeting in Brussels to present a new OECD publication on trade policy, “International Trade: Free, Fair And Open?”, OECD Director for Trade and Agriculture Ken Ash warned that government actions to discriminate against foreign goods, services, firms or workers “could have a devastating effect in terms of prolonging and deepening the recession.”

Ash argued that consumers would be hurt by higher prices and reduced choice, while domestic industries would face higher input costs, as huge amount of trade today is in intermediate goods and services.

He said exporters would be penalized twice: through higher costs and through retaliation from other countries. The net effect on the economy would be even greater job losses than otherwise.

European Trade Commissioner Catherine Ashton, speaking at the same event, stressed the need to help citizens better understand the role of trade in contributing to economic growth and job creation.

The new OECD publication, International Trade: Free, Fair and Open?, was written with that objective. The publication is aimed at a wide public and explains that while open markets are a necessary condition for growth and prosperity “they are not sufficient on their own to guarantee positive outcomes”.

Trade policy must be accompanied by other policies if the potential benefits are to be realised and the negative impacts of liberalisation on vulnerable individuals and sectors are to be addressed. “Today, in particular, effective labour market policies need to be in place to assist those that need to adjust,” Mr. Ash said.