The former WTO chief says the multilateral response to the pandemic has been woefully inadequateby Alex Dean / June 8, 2020 / Leave a comment
Covid-19 is not just a public health crisis, but also an economic one. Countries the world over are experiencing downturns to rival the Great Depression and there is no knowing when the world economy will be back to full health. Trade is a vital component of that, and it has already taken a knock as logistical chains have broken down and countries have imposed some export restrictions on essential supplies. Will global exports rebound, and what challenges lie ahead for the UK specifically?
Among the best-qualified people to answer these questions is Pascal Lamy, who was director of the World Trade Organisation from 2005 to 2013 and before that, trade commissioner in Brussels. Now 73, the Frenchman has made UK headlines in recent times for frank interventions on Brexit. When we spoke over the phone last week, I asked if he had ever seen the global economy in such a state, and how countries might manage their way out of the crisis.
“I’ve been involved in these international issues since roughly 1985, when I became a G7 sherpa,” Lamy said, “and I’ve never seen such low coordination within the international system in coping with the impact of this crisis, or in coping with the economic impact.”
Countries “rapidly decided that lockdowns were the way to go, but this was not the result of deliberation at the WHO, G7, G20, UN, UN Security Council—where is the UN Security Council in this crisis?—and that’s also true on the economic side. There was very, very little coordination.”
With good reason, national governments unveiled their own huge stimulus packages to support struggling industry. But “subsidisation is happening all over the place with no coordination criteria, no common conditionality, and inevitably this will distort trade… not only during but after the crisis.”
Lamy continued, speaking energetically: these “understandable” but “highly trade-distorting measures taken by sovereign states… will lead to friction and impact international exchange of goods, services and people,” hitting the developed world but also having “a huge impact on developing countries.”
This alone will “of course have an impact on the future… not to speak about the US attitude to the World Health Organisation” and other challenges.
Does our multilateral framework still have the power to facilitate a recovery? The WTO was already dealing with a trade war…