Bank Bail-Outs Promote “Deglobalization”: WTO Chief
Source: The Post Chronicle
Government bail-outs of the world’s big banks pose a threat to free trade, Pascal Lamy, head of the World Trade Organization (WTO), told the Financial Times newspaper
in an interview on Monday.
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“There is a danger that the finance industry will be on the side of the forces of deglobalization,” he said.
Lamy said the bail-outs had “constrained risk-taking” outside the familiar territories of national markets and this was already affecting Foreign Direct Investment, now forecast to fall 50 per cent this year.
“If there is less FDI there will be less trade,” Lamy told the paper, speaking from the annual conference of France’s Cercle des Economistes in Aix-en-Provence.
The WTO head warned that free trade faced its severest test, with protectionist pressures poised to rise.
“I am convinced the worst is yet to come,” he said. “The real stress test is for the future when the shrinking of economies translates into unemployment and social hardship and that translates into a political reaction that could influence trade policy. The toolbox for protection is a wide one,” he told the paper.
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