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Jan 23, 2010, 12.14 PM IST | Source: Reuters

WTO members differ over bailout impact on trade

Rich-country members of the World Trade Organisation blocked calls on Friday by developing countries to examine the possible protectionist impact of bailouts and financial stimulus packages.

WTO members differ over bailout impact on trade

Rich-country members of the World Trade Organisation blocked calls on Friday by developing countries to examine the possible protectionist impact of bailouts and financial stimulus packages.

Developing countries believe bailouts can have an unfair protectionist effect by helping industries in states that can afford them; typically high-income countries and some major emerging countries like China.

At a meeting of the WTO's trade policy review body, the United States and Japan blocked proposals for future WTO analyses of trade measures to cover fiscal measures such as bailouts, according to an official who attended the meeting.

The European Union did not reject the proposal completely but said it required further study so it could be conducted in a realistic and pragmatic manner.

The chairman of the WTO, Hungary's ambassador to the body Istvan Major, said he would continue discussions on this issue, but did not set a timeframe for further moves.

The WTO's regular protectionism reports, introduced in response to the financial crisis, have focused on conventional trade measures such as tariff increases and anti-dumping duties.

The call to include bailouts and stimulus packages was led by Argentina, backed by Ecuador, Cuba, Brazil, India and China.

But members agreed to continue the regular reports, calling for one in June and one in November this year.

"They said they want to continue the trade monitoring exercise because they consider it a good deterrent against protectionism," said the official.

The members endorsed the latest report, issued by WTO Director-General Pascal Lamy in November, the official said.

They also said exit strategies from support packages needed to be monitored carefully and called for more transparency in regional trade agreements.

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