* Currency tensions risk fuelling protectionism
* Protectionist pressures intensifying
(Adds details, background, byline)
By Jonathan Lynn
GENEVA, Nov 3 The global economy faces an
increased threat of protectionism because of tensions over
exchange rates, the heads of three international organisations
will warn leaders of the G20 in a forthcoming report.
The warning is contained in a report on trade and investment
from the World Trade Organization (WTO), Organisation for
Economic Co-operation and Development (OECD) and United Nations
Conference on Trade and Development (UNCTAD), commissioned by
the G20 for its summit in Seoul next week.
"Protectionist pressures clearly have intensified because of
currencies for one thing and current account imbalances," said a
source familiar with the report, who asked not to be identified.
The report marks growing concern among senior policy-makers
over the disputes over currencies.
Last month WTO Director-General Pascal Lamy, who has
previously refrained from getting involved in arguments about
exchange rates, said disputes about currencies could threaten
trade and economic recovery. [ID:nLDE69I1KQ]
The United States is calling on China to let its undervalued
yuan currency appreciate, while China is complaining that easy
U.S. monetary policy, likely to be reinforced by the Fed later
on Wednesday, is destabilising other countries. Many other
governments are also complaining about these and other
countries' currency policies.
The comments also signal a significant change in the WTO's
assessment of the environment for trade. In previous reports for
earlier G20 summits it has argued that G20 countries had largely
kept protectionism under control.
Lamy, OECD Secretary-General Angel Gurria and UNCTAD
Secretary-General Supachai Panitchpakdi will argue that G20
countries have continued to resist protectionist pressures since
the last summit, the source said.
But they will say that high unemployment in many G20
countries, macroeconomic imbalances between them and exchange
rate tensions are fuelling protectionist pressures.
They will urge G20 leaders to address the threat to the
stability of the global trading system from perceptions that
currencies may be moving to pursue comparative advantage.
The three will also point out that the number of new
restrictive measures in trade and investment has been increasing
only slowly but this steady accumulation has not been matched by
the removal of emergency measures since the crisis ebbed. They
will call on G20 leaders to give priority to removing them.
UNCTAD and the OECD will publish a report on investment
measures, and the WTO a report on trade measures, at 1400 GMT on
Thursday, Nov. 4. The reports will be accompanied by a joint
letter from the three organisation heads to G20 leaders.