3:45 PM Apr 26, 1995

SUTHERLAND DECRIES 'FLAT-EARTHISM'

Geneva 26 Apr (TWN) -- Outgoing WTO head, Peter Sutherland decried Wednesday the rise of protectionism, cloaking itself as "economic nationalism" in an era of global trade opportunities opened by the WTO and characterized such views as "flat-earthism".

Speaking in London, Sutherland said protectionism was the extreme form of this nationalism and the greatest evidence of this was found in the industrial world where, after having lectured the world for decades on the superiority of free markets, there were now some who threaten to succumb to the seductive appeal of "a secure world behind national or regional walls".

Blaming economic difficulties on low-cost imports, he said, "is a typical flat-earth reaction" and a demonstrably untrue one.

The European Community present and future health was intimately linked to expanded trade opportunities, and the East Asian market was a case in point.

In 1960, its share of world economic output was four percent, while now it was 25 percent. Between 1992 and 2000, forty percent of all new purchasing power created in the world would come from this region and it would take between 35-40 percent of all new imports.

This was a great opportunity for Europe which was the world's largest exporter.

Neverthless, there was a persistent tendency in some quarters to blame unemployment and low wages on low-wage competition from the poorer countries, he said, noting that the EU had faced the same sort of arguments over Spanish and Portuguese accession.

Every new job in Europe over the last five years had been created by trade with the developing world and export jobs paid better - around 17% more according to recent US estimates. Protecting low-paid jobs in the import-competing sector at expense of higher paying jobs in the export sector was a prescription for economic stagnation or worse.

The danger of overloading the industrialized world's economic and political circuits is all too apparent and needs to be faced squarely, Sutherland said. With already high levels of unemployment, appeals to keep cheaper foreign products off the supermarket shelves and make the taxpayer help exports compete may sound a "seductively easy way out, but in effect it is a trap".

Resisting adjustment on grounds of discredited theories that "pauper labour" would impoverish and divide industrialized societies all the faster. Its moral repugnance as a theory was self-evident.

What was needed to make well-paid new high living standards broadly available throughout society was steady, non-inflationary real economic growth, through improved productivity, open competition and vigorously competing for a share in the global market place, Sutherland said.