WTO chief sees trade war risks from economy barriers

By Laura MacInnis

GENEVA (Reuters) - The global economic downturn is far from over, and few countries have dismantled the dangerous protectionist barriers they imposed in response to it, World Trade Organisation Director-General Pascal Lamy said on Monday.

In remarks to the WTO's 153 members, Lamy said that import penalties and other border restrictions were closing off markets and causing more difficulty in a time of depressed demand. All of these could be challenged in WTO courts if they persist.

"There is no indication yet of governments more generally unwinding or removing trade-restricting or distorting measures that they imposed early on in the crisis," the Frenchman said.

While saying there has been no "outbreak of high-intensity protectionism" to date, Lamy raised the possibility of a rash of trade disputes, retaliatory restrictions, and sanctions in response to unfair barriers that are kept in place.

He also warned that difficult economic times could persist.

"I would caution against excessive optimism," Lamy told the WTO meeting. "Although financial markets are showing signs of stabilizing, the crisis is far from over, in particular in many developing countries that are only now starting to feel its full force on their trade and economic growth."

Lamy last week attended the G8 summit where leaders pledged to conclude the Doha Round -- a global free trade pact he has estimated is worth $130 billion a year through saved tariffs and expanded commerce -- by 2010.

Trade diplomats gathered on Monday afternoon at the WTO's headquarters, on the shores of Lake Geneva, for the first Doha negotiating session since the G8 plus emerging countries set the fresh target for the talks that began in 2001.