The global bailout arms race (comprehensively documented by our John Horner) has finally come to the attention of the World Trade Organization. And as the orgy of national subsidies, loans, stimulus, clunker-culling and assorted industry handouts roars along unabated, old mother WTO is making feeble threats about the dire, dire consequences. “Nothing can be said for the time being about the likely trade impact of these measures, many of which are still lacking publicly announced details,” WTO Director-General Pascal Lamy tells Reuters. “It must be recognised that some of the measures at least, which in most cases constitute some form of state aid or subsidy, may eventually have negative spill-over effects on other markets or introduce distortions to competition between financial institutions.” And in one epic equivocation, Lamy ensured that the WTO would not be the stout bastion of free trade principle in the face of an “economic stimulus” epidemic. Which means John’s list is going to keep getting longer, as the race to the bottom is replaced by a race to re-capitalize national auto industries. The only way that this trend won’t end in trade wars is if there’s no moral high ground to go around. The WTO can’t do much of anything to prevent the convulsions of bailout mania, but a few grown-up words of warning and history would have been nice.
The only way that this trend won’t end in trade wars millions of unwanted vehicles is if there’s no moral high ground to go around the earth opens up and swallows them.
There fixed that for you.
The WTO is the trade equivalent of the UN. It’s just somewhere for countries to squabble. That’s it.
Given that the United States, Canada, Germany, France, the United Kingdom and (soon) Italy are organising their bailouts stimulus packages will the WTO take action against all of them? Highly unlikely.
Want proof? Look at how hard they came down on China regarding intellectual property….
P.S. I thought I imagined “Wait ’till your Father gets home” cartoon! It was crap! I mean, really crap. As crap as a Vauxhall Vectra…..
Simple: If Europe or Japan would abstain, they would go to the WTO and complain. They are not abstaining. Japan will do their bailout also. Ergo, no WTO action.
I thought I imagined “Wait ’till your Father gets home” cartoon! It was crap! I mean, really crap.
Heh.
I remembered it, too. Occasionally the theme goes through my head, usually when I get the “please come home, your son is driving me crazy” call.
Don’t quite understand this news item. The WTO is not a proactive organization. It sits on its hands until a member country submits a formal trade complaint against another.
To quote them directly: “A dispute arises when a member government believes another member government is violating an agreement or a commitment that it has made in the WTO. The authors of these agreements are the member governments themselves — the agreements are the outcome of negotiations among members. Ultimate responsibility for settling disputes also lies with member governments, through the Dispute Settlement Body.”
So old Pascal Lamy is just venting hot air and hoping his organization and job doesn’t disappear. Counties are edgy and not likely to complain about anyone else in case it backfires on them; i.e. nobody is clean, everybody backs off — nothing happens at the WTO.
I could very well be wrong to over simplify this but the countries would stand before the WTO with the attitude of “Dudes, we just gave them LOANS (or secured financing), we didn’t SUBSIDIZE them.”
It’s not a subsidy until the loan is not repaid and the debt forgiven.