WTO chief backs call for new Bretton Woods meeting

The head of the World Trade Organisation (WTO), Pascal Lamy, has backed a call by British Prime Minister Gordon Brown for a new Bretton Woods meeting to redesign the world financial system.

"If a new Bretton Woods means re-looking at the governance of the world economy, I'm fine with that," Lamy told reporters. "And I know where an effort has to be made and this effort has to be made in finance," he said late on Monday. Lamy was referring to the landmark meeting in the United States towards the end of World War Two that drew up the plans for a global economic system designed to avoid a repeat of the disasters that led to the 1930s Great Depression.

Earlier on Monday Brown called for a new Bretton Woods agreement to make the architecture of the global financial system fit for purpose in the 21st century. Lamy, an ascetic Frenchman who says one of his hobbies is thinking about global governance, said the problems of designing a new system should not be under-estimated. "It's formidably complex. Trade is simplistic as compared to prudential regulations, rating agencies and the rest," he said.

A major question is who would regulate the system -- the International Monetary Fund, Bank for International Settlements or some other body. "How can you build a system of international governance in global finance with central banks who are independent from government?" Lamy asked. "Who will sign? Will it be a treaty? What sort of commitment? Who will monitor all this? -- plenty of ideas for the agenda!"

With links to French Socialist politicians such as former Prime Minister Pierre Mauroy and former Finance Minister and EU Commission President Jacques Delors, Lamy has spent his time at the WTO pushing to open up world trade. But he draws a distinction between market opening and deregulation. For instance a country can open its market to foreign providers of financial services, but set its own regulatory standards as long as they do not discriminate against foreigners, he argues. Similarly a country may import food or toys from abroad while maintaining its own safety standards. "Opening your market and regulating it are two different things," the former EU trade commissioner said.

Over 700 delegates from 44 allied nations met in Bretton Woods, New Hampshire, in the United States in July 1944 to design the postwar economic system. The meeting gave birth to the International Monetary Fund and World Bank, as well as leading to the creation of the WTO's predecessor. (lse, Reuters, 10.14.2008, Jonathan Lynn) http://www.lse.co.uk/PoliticsNews.asp?ArticleCode=hctxv59294zowsw&ArticleHeadline=wto_chief_backs_call_for_new_bretton_woods_meeting