‘Precautionism’ is risking open trade more than protectionism: Pascal Lamy

The Economic Times, November 18, 2021

“What is risking move on open trade at present is more precaution than protection,” said Pascal Lamy, the former Director-General of the World Trade Organisation (WTO).

While protection is about protecting domestic firms, precaution is about protecting ‘people’ from the risks in health, environment, or digital spaces.

“Precautionism is more difficult to address than protectionism because it relies on cultural, mental, and sometimes ideological difference,” Lamy noted.

He was speaking during the flagship Biennial Conference on Competition, Regulation and Development organised by the CUTS International (one of India’s leading public policy bodies) and CUTS Institute for Regulation and Competition (CIRC) in partnership with OECD, European University Institute (EUI) and Overseas Development Institute (ODI).

This two-day biennial event, held during November 16-17, is seventh in the series, and the theme this year is “Building Blocks for an Inclusive and Resilient Economy”.

Sharing the outcome of the recently held Paris Peace Forum, which Lamy Chairs, he mentioned that for an inclusive and resilient multilateral system in the post-covid world, five existing ‘gaps’ would need to be factored in – vaccine gaps, development gaps, environmental gaps, digital gaps, and the growing East-West (China and the US) gaps.

He was also not very optimistic about WTO reforming itself because of the trade war between two powerful members and a weak secretariat.

“Classical State-to-State diplomacy cannot now do the trick; we also have to involve civil society, businesses, academia and local governments for bridging the gaps,” concluded Lamy.

Speaking on the same panel Frederic Jenny, Chairman – OECD Competition Law and Policy Committee, stressed learning from four events – 2008 financial crisis, covid crisis, climate crisis, and the digital revolution – to inform competition and regulation to contribute towards a resilient, inclusive economy.

“Industrial policy is necessarily complementary of competition policy and it needs to be ensured that they are not antagonistic,” said Jenny.

Emphasising the uncertain sources of financing the economic transition towards more resilience and inclusiveness, Arvind Mayaram, former Finance Secretary and Chairman, CIRC, said “the elephant in the room which nobody wishes to acknowledge is how to finance the economic transition?”

Other panellists in the session on “The Emerging Roadmap for a Resilient and Inclusive Economy” who shared their views included Teresa Moreira, Head, Competition and Consumer Policies Branch, UNCTAD; IoannisLianos, President, Hellenic Competition Commission, Greece; Simon J. Evenett, Professor, University of St. Gallen, Switzerland; and Allan Asher, Chair and Managing Consultant, Foundation for Effective Markets & Governance, Australia.

Pradeep S Mehta, Secretary General, CUTS International, while wrapping up the Biennial opined that “when we speak of resilience, we need to do out-of-the-box thinking. Who will do out-of-the-box thinking? There is a governance deficit, there is a political deficit”.

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