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The WTO system is being shaken in its foundations as countries around the world including the United States, China, Japan and the EU provide massive amounts of aid money to their financial, automotive and home appliance industries.

The United States has already set aside US$17.4 billion in rescue funds for General Motors, as well as $1,500 in tax cuts for each car purchase. France, Germany and England also came out with support measures for their automotive industries. The government of Taiwan has decided to assist in the creation of a huge mergers and acquisitions fund for its semiconductor manufacturers.

Shin Seung-kwan, a researcher at the Institute for International Trade, said such massive financial aid from the government violates WTO regulations. If damage arises from government support for a specific industry or business, sanctions may follow according to WTO regulations. In early 2000, Korean chipmaker Hynix received around W6 trillion (US$1=W1,574) in loans from a state-owned bank and was slapped with countervailing duties from the United States, Japan and the EU. Now, the same United States, EU and other countries are giving massive funding to their businesses.

Speaking at the Global Korea 2009 forum on Feb. 23, WTO Secretary General Pascal Lamy warned misguided protectionism cannot protect anyone and isolationist policies are ineffective. But no country, not even the WTO, is able to question, let alone criticize, the government bailouts.

Seo Do-won, an analyst at Hanwha Securities, said a major reason for this is that a majority of businesses around the world are facing difficulties and have just one objective -- to survive. Governments could end up losing footholds in valuable markets or face retaliatory measures if they protest against the U.S. or the EU.

Bark Tae-ho, dean of the Graduate School of International Studies at Seoul National University, said the very foundations of the WTO are being shaken as the organization loses its ability to monitor and deal with trade protectionism. The WTO system "has already collapsed," he said.

(englishnews@chosun.com )