UPDATE 3-Trade assistance could reignite growth, help the poor
* U.N. secretary-general says trade can stimulate recovery
* WTO says trading environment has worsened dramatically
* World Bank, IMF says exporters must be ready for rebound
(Adds comments on trade finance, regional breakdown)
GENEVA, July 6 (Reuters) - International trade could ignite and propel a global economic recovery, top United Nations and multilateral lending officials said on Monday.
At a World Trade Organisation conference on aid-for-trade, World Bank President Robert Zoellick said that poorer countries whose exports have fallen sharply need to be ready to ship their wares again once the downturn bottoms out.
"Trade was one of the first sectors decimated by contracting consumption in high-income countries. But it will also be one of the first sectors to recover once the global economy picks up steam," Zoellick told diplomats at the WTO's headquarters.
"Those countries that position themselves now to take advantage of renewed trade will accelerate out of recession with the fastest momentum," he said, calling trade one of "many planks upon which recovery will be built."
U.N. Secretary-General Ban Ki-moon took it a step further, saying rebounded commerce "had tremendous potential as an engine of sustained economic growth and development."
"Trade can and must be part of our efforts to stimulate a recovery," Ban told the conference meant to identify developing countries' commercial infrastructure and financing needs.
Efforts to improve roads, upgrade electrical grids and speed up customs procedures can put developing countries in a stronger position when the economy does rebound, the U.N. chief said in remarks later echoed by the International Monetary Fund.
"Trade can start up quite quickly, as quickly as growth, once the recovery starts in developed countries," IMF Managing Director Dominique Strauss-Kahn said, calling for targeted aid to ensure poor-country exporters were primed for a rebound.
Aid-for-trade was promised to poorer nations in 2005 during negotiations over the Doha Round, a global free trade deal that WTO Director-General Pascal Lamy hopes to wrap up next year.
Many developing countries are reluctant to opening their markets to more competition under that deal, which requires consensus among the WTO's 153 members to be agreed.
Most funds disbursed to date have gone to India, Vietnam, Afghanistan and Iraq, and have supported mainly infrastructure projects such as upgrades to roads, bridges and ports.
STIMULUS EFFECT
Lamy told the start of the two-day Geneva conference that the global downturn had made aid-for-trade even more important for poor-country businesses who need help accessing markets.
But he said it was difficult to say whether exporters were currently suffering because of a lack of loans, suppressed consumer demand, or a combination. The current trade financing gap has been estimated at roughly $250 billion.
At the official launch of a World Bank-led facility that could support up to $50 bilion in trade, Zoellick said there was uncertainty about that total shortfall. The liquidity programme also supported by donor governments and banks including Citibank and Standard Chartered "will make a good contribution" to meeting immediate needs," he said.
A report prepared by the WTO and Organisation for Economic Cooperation and Development for the conference said that efforts to jumpstart exports could have "an immediate stimulus effect" for the economy, which Lamy described as fragile. [ID:nL2900818]
Merchandise trade is expected to drop 10 percent in 2009.
Between October and April, the World Bank estimates that Latin American exports dropped 20 percent, East Asian exports fell 25 percent, and Central and Eastern European exports were down 35 percent.
Zoellick said that protectionist steps imposed during the downturn could cause long-term harm for poor countries that rely on certain products for their prosperity -- such as Bangladesh and Cambodia, where garments make up 75 percent of exports. (Additional reporting by Katie Reid; Editing by Richard Williams)
