PARIS, Nov 8 (Reuters) - The head of the World Trade Organisation urged countries to accept tough new international regulation of finances even if it was an 'ideological revolution' for them to share sovereignty on such issues.
In an interview with French newspaper Le Monde published on Saturday, Pascal Lamy said it was politically sensitive in the United States and in emerging countries to accept supra-national authorities, but the financial crisis required adaptability.
'There are world organisations for trade, health, the environment, telecoms, food. There are two black holes in world governance: finance, with its bursting bubbles, and migration,' Lamy was quoted as saying by Le Monde.
'We need international regulation of finance with binding rules and a mechanism of surveillance and sanctions. A sick cow or a defective lighter don't cross borders, whereas at present a toxic financial instrument can,' he said.
Lamy reiterated that countries should resist the temptation of protectionism, which was one of the factors that caused the Wall Street crash of 1929 to snowball into a worldwide economic depression.
He rejected the notion, voiced by some critics of the U.S. Democratic Party, that under Barack Obama the world's biggest economy would be more protectionist than under the market-friendly Republicans.
'What changes with the Democratic Party are the plans to reduce social insecurity. The feeling of insecurity engendered by free trade is stronger in the United States than elsewhere because the social safety net is thinner there,' he said.
'If the Democrats apply their social programme, that can reassure Americans and help international trade talks. Obviously they have to have the resources to match their ambitions. But in any case I think it would be wrong to equate Republicans to liberalism and Democrats to protectionism,' he said.
Lamy announced on Nov. 4 he would seek a second term as director-general of the WTO and renewed his vow to conclude the Doha round of talks to open up world trade. Lamy's current term began in September 2005 and expires on Aug. 31, 2009.
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