The Three Pillars of the New Order

The G20 in Pittsburgh marked a turning-point in the management of the world economy. This was due, most of all, to a desire, expressed by economies representing 85% of world GDP, to stimulate recovery with balanced and coordinated economic policies. Just as important was the coordinated approach that led to the outline of a new governance structure for the management of the world economy.
The G20 was proposed as a center of policy decision-making, a credible forum due to its wide representativeness. The good news is that the G20 aims to carry out its decisions through existing institutions, while strengthening them. IMF is now endowed with better means and is rebalancing its allocation of votes. The Fund resumes its central role in monetary matters and pays renewed attention to the imbalances which were at the root of its founding. The new Financial Stability Board led by Draghi is one of its backbones, an independent arm destined to supervise financial markets and ensure stability, based on specific regulations.
The second pillar is the World Bank, whose mission is to sustain development while reducing poverty.
Lastly, the role of the WTO was enhanced in Pittsburgh. It is no longer the Fund and Bank's younger brother, but is now part of a triad entrusted with supporting the recovery and the role of ensuring a definite framework sustained by shared commitments.
It was under the leadership of Director-General Pascal Lamy that the WTO earned this recognition. Last April in London, the G20 countries had already expressed a serious commitment to a conclusion of the Doha Round by 2010. The negotiations have been dragging on for years in Geneva. In parallel, the G20 have reaffirmed their desire to abstain from protectionist measures, entrusting the role of guardian of this commitment to the WTO.

But what is the outlook in concrete terms? Assessments of protectionist measures are divergent: observers have counted over 100 protectionist measures in recent months, the last and most extraordinary of which being a US customs duty increase of 35% on Chinese tires. The measure, however, was justified by Nobel Paul Krugman as fully legitimate (while The Economist denounced it as alarming).

WTO regulations, in effect, allow for anti-dumping measures in demonstrated cases of unforeseen unbalances in trade and to counter unfair export policies. Even the European Union has intervened, often upon request of Italian industry. The fact is that the feared protectionist turning-point did not occur. International trade did fall by 10%, but this drop was due to a decrease in global demand, not to artificial trade barriers.