As the world continues to deal with the global economic downturn, Pascal Lamy, the Director-General of the World Trade Organization, publicly urged all nations to overcome protectionist instincts as they work to return growth to their national economies.

Lamy made his remarks while speaking to the Lowy Institute for International Policy, Australian think tank.

Director-General Pascal Lamy said protectionist instincts are completely understandable in the current economic climate but that such regulations would be equivalent to “shooting their own foot.”

“People want to protect their jobs, they want to protect their pensions, or their money in the markets,” Lamy said in a speech at the Lowy Institute for International Policy in Sydney. “But smart protectionism is a total oxymoron. It doesn’t work.”

The only answer to the economic crisis, Lamy said, is to stimulate trade and spending.

Director Lamy singled out nations with a known history of being protectionist in their trade policies for the patience they are exhibiting.  Lamy gave credence to Australia and New Zealand for all they have done to ensure trade routes remain free, as well as Southeast Asian economic powerhouses Japan and South Korea.

Special recognition was given to Brazilian President Luiz Inacio Lula de Silva who turned back proposed increases quotas and tariffs on nearly 60 percent of imports to Brazil.   Lamy also acknowledged U.S. President Obama’s efforts to streamline the economic stimulus package’s “Buy American” provision as welcome sign from America, but also raised concern about how these provisions would be enforced.

The runner-up prize, Lamy said, would go to President Barack Obama for his $787 billion economic stimulus package that honors international trade commitments, softening a restrictive “Buy American” policy that was written into the initial package. The plan still favors U.S. steel, iron and manufactured goods for government projects funded by the package but would require Washington not to violate trade agreements when implementing the law.

But Lamy was guarded in his endorsement of the American package.

“We all know the devil isn’t in the details, its in the implementation,” Lamy said. “Let’s be cautious.”