28 May 2009

Brown Says Global Trade At Risk

The following is excerpted from the 28 May 2009 edition of "New York Times".

Global trade could collapse if the world does not take coordinated, concrete steps to finance trade flows, Prime Minister Gordon Brown said in comments published on Thursday.

Writing in the Wall Street Journal, Brown said the global financial crisis had become a trade crisis, with major exporting countries among the worst affected by the downturn and developing countries hard hit by falling demand.

Japan lost half its export market in the first quarter of this year and Chinese exports have fallen 17 percent over the past year, resulting in 26 million lost jobs, he said.

"The simple truth is that trade is the most serious casualty of the global financial crisis, with a vicious circle emerging of falls in exports leading to falls in production and rising job losses, leading to further falls in consumer demand, exports, etc," he wrote.

"There can be no recovery in the global economy without a revival of world trade. Trade was the driver of post-war recovery in Japan, Germany, the rest of Europe and the United States, and the engine of growth in Asia in recent decades."

In order to revive growth, Brown proposed a series of steps, including a massive injection of funding to finance trade flows. At the G20 summit Britain hosted in early April, governments agreed to provide $250 billion (157 billion pounds) of trade financing in 2009-11.

"While credit markets have loosened up, our second step must be to ensure that governments and international organisations honour the commitments they made," Brown wrote, referring to the $250 billion. "Indeed, we may need to go further and provide even more money to finance international trade."

He also reiterated his call for countries to avoid protectionism in trade policy, and said the need to conclude the Doha round of international trade talks was ever more pressing.

"The collapse of global trade is the most immediate issue we face," he wrote, saying that 100 million more people had been thrown into poverty as a result of the economic crisis....