World Bank Head Warns of Protectionism

World Bank President Robert Zoellick warned Monday that more governments may try to impose protectionist trade measures in the months ahead if the global economic recession continues.

"High-income countries have used subsidies for troubled industries, while low-income countries are using selective increases in border barriers," Zoellick told a World Trade Organization conference in Geneva.

"These trends could easily spin out of control in coming months as unemployment rises and one country feels compelled to respond tit-for-tat to the policies of another," Zoellick said, adding that such behavior was like "playing with fire."

Zoellick said developing countries such as Bangladesh and Cambodia, whose economies depend on trade in a narrow range of products, could face especially hard times as a result of such actions.

“When global growth recovers, protectionist actions that prevent developing countries from benefiting from the pickup will protract the suffering," he said. Zoellick, who served as the U.S. trade representative under President George W. Bush, said the revival in global trade will play a major role in the recovery.

"Trade was one of the first sectors decimated by contracting consumption in high-income countries. But it will also be one of the first sectors to recover once the global economy picks up steam," he said. 
"Those countries that position themselves now to take advantage of renewed trade will accelerate out of recession with the fastest momentum."

Contact Alan M. Field at afield@joc.com.