News banner image

News

IDB: It is imperative that trade continues to flow in the region to mitigate crisis

MONTEGO BAY, Jamaica – IDB President Luis Alberto Moreno and Director-General of the World Trade Organization Pascal Lamy warned against protectionism at the Second Regional Review on Aid for Trade (AfT) for Latin America and the Caribbean.

“The integration of our hemisphere has proven to be one of the most powerful engines of economic growth and human and social development,” said Moreno during the opening session of the AfT conference being held today and tomorrow in Montego Bay, Jamaica.

“It would be a tragedy for the region if the current crisis leads its governments to adopt protectionist measures that curtail trade in goods and services.”

Moreno was among the keynote speakers at the AfT conference. Others included Lamy, World Bank's Vice President for Latin America and the Caribbean Pamela Cox, and Jamaica's Prime Minister Bruce Golding. Participants included ministers and senior representatives from several governments in the region, including Barbados, Peru, Costa Rica, Argentina, Chile, Haiti, Grenada, and from the European Union.

The AfT aims to help developing nations, in particular those less advantaged, generate the trade capabilities and infrastructure they need in order to benefit from more open trade.

Today’s conference builds on the results of the First Review for Latin America and the Caribbean held in Lima, Peru, in September 2007 and will include discussions on the progress made on how the region’s binding constraints on trade, as identified during the Lima conference, are being addressed.

The goals of the meeting include exploring increased private-sector participation in regional development projects and giving trade a central role in the governments' economic development strategies.

“Marshalling private sector support is vital as part of Aid for Trade,” said Moreno. “The technical assistance and finance multilateral organizations such as the IDB can provide to help secure new market opportunities will be determining factors in maintaining and increasing trade flows between countries.”

Lamy pointed out that trade was among the many casualties of the current crisis, with WTO forecasts suggesting that world trade will contract by 9 percent this year.

“The WTO has started monitoring trade-related measures taken by our members during this crisis, as a device to provide transparency and, through peer pressure, pre-empt the threat posed by shift toward protectionism,” said Lamy. “And we know that retaliation would lead to retaliation, further choking trade as an engine of growth.”

He added that the crisis is having a disproportionate impact on the most vulnerable countries and welcomed recent pledges by G20 leaders to contribute to mitigate the impact by ensuring liquidity and boosting trade finance by making $250 billion available over the next two years.

Lamy also commended the IDB for increasing its Trade Finance Facilitation Program (TFFP) from $400 million to $1 billion.

“Trade finance is the oil that keeps the wheel of trade turning, so it is essential to ensure it does not dry up,” said Lamy.

The Jamaica meeting is a prelude to a global review of AfT results that will take place early July in Geneva, when a larger contribution of funds for this initiative from developed countries will be encouraged.