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Davos turns to trade amid fears of protectionism
2009-01-31
DAVOS, Switzerland - World leaders looking for hope amid recessionary gloom turned their attention Saturday to a long-stalled global trade deal, increasingly seen as a necessary bulwark against the rising threat of protectionism. British Prime Minister Gordon Brown warned at the World Economic Forum that unease about the global financial crisis was no reason to recoil from free trade, calling cooperation the only path forward. "This is not like the 1930s. The world can come together," he said. "This is a global banking crisis and you've got to deal with it for what it is, a global banking crisis." Brown reiterated the need for new systems to deflect future crisis, a key focus of a meeting of the Group of 20 richest nations in London in April. Brown and other leaders believe an international early alert system might have prevented the rapid planetary contagion in financial markets last year. France's finance minister -- whose country faced massive strikes and protests on Thursday by workers angry over the government's handling of the crisis -- stressed the challenges of helping atrophying industries without damaging free trade. "We're facing two major risks: The first is social unrest. The second is protectionist risks," French Christine Lagarde said. The director of the World Trade Organization, Pascal Lamy, was to take the stage later at the gathering of more than 2,500 business and political leaders in this elegant Alpine resort. Trade negotiators from about 20 countries were meeting on the sidelines of the forum Saturday to discuss ways to advance the eight-year Doha round of trade talks. Japanese Prime Minister Taro Aso said his country would do its part: "We will resolutely fight protectionism." Top CEOs and politicians at Davos have urged the new U.S. administration, the world's market, to steer clear of new barriers to foreign imports in dealing with a recession. Such moves could push other countries to respond in kind. "Protectionism is probably one of the most contagious diseases," Brazil's Foreign Minister Celso Amorim said in an interview with the AP. The fear of policy makers and businessmen in the U.S. and abroad is that Washington may revert to the strategy it employed at the beginning of the Great Depression, when it hiked tariffs on thousands of foreign goods to protect American business. In the end, the U.S. Smoot-Hawley Act of 1930 led to worldwide retaliation and the devastation of international commerce. World powers after World War II tried to guard against a repeat of the experience by setting up the Bretton Woods global financial institutions. President Barack Obama faces a dilemma over "buy American" provisions that favor U.S. steel, iron and manufacturing in a massive economic stimulus bill moving through Congress: backing the measures could set off a trade war; opposing them could trigger a backlash from his supporters. Beyond trade, the leaders at Davos heard fervent appeals on behalf of the "bottom billion" people in the world economy. Aso also spoke about development aid at the World Economic Forum, where business and political leaders chastened by crisis are seeking ways to fix the financial system amid pleas not to forget the world's poorest. Aso said Japan was ready to generously commit aid to needy Asian nations, and will stick to pledges to double aid to Africa. The global meltdown has already sapped the developed world of some of its generosity: forecasts calculate a precipitous drop in international investments in poor and developing nations, while charities are resizing their own operations as donations drop. ___ Associated Press writer Matt Moore in Davos contributed to this report. ___ On the Net: http://www.weforum.org
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