OECD urges governments to avoid protectionism

With world trade volumes likely to shrink by as much as 13% in 2009 from 2008 levels, the OECD is urging governments to avoid protectionist measures and keep markets open.

Speaking at a meeting in Brussels, 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.’

Consumers would be hurt by higher prices and reduced choice, he said.

Domestic industries would face higher costs, as a huge amount of trade today is in intermediate goods and services.

Exporters would be penalised twice: through higher costs and through retaliation from other countries. The net effect on the economy would be even bigger job losses than otherwise, warned the OECD.

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