- The Washington Times - Friday, January 30, 2009

DAVOS, Switzerland | Business and political leaders attending the annual World Economic Forum expressed fears Thursday that growing protectionist pressures could undermine international trade - one of the few fully functioning pillars of the global economy.

“Everybody here is talking about protectionism. There’s not a prime minister present not talking about protectionism,” said Peter Sutherland, chairman of BP and Goldman Sachs International.

Those fears were aggravated by Wednesday’s addition of a “Buy American” steel provision to an $819 billion economic stimulus package to help the U.S. economy navigate out of recession.

The European Union was quick to put Washington on notice.

“We are looking at this very carefully. If European goods are to be excluded from the U.S., we would not stand idly by,” Peter Power, spokesman for EU Trade Commissioner Catherine Ashton, told The Washington Times.

Governments have been plowing billions of dollars into troubled industries, drawing concerns that the rules of capitalism based on efficiency and competitiveness could be fading away.

But with job losses piling up at an alarming rate, saving jobs has become a national priority for governments around the globe.

The financial crisis threatens to become “a social time bomb,” warned the International Trade Union Confederation (ITUC), which includes the AFL-CIO and represents unions in more than 140 nations.

“The human cost of this crisis is being paid by the appalling crash in employment,” said Guy Ryder, ITUC general secretary.

The International Labor Organization forecast that worldwide unemployment could increase by 18 million to 30 million workers this year and by more than 50 million if the global downturn continues to worsen.

More than 200 million people will be pushed below the poverty line, the ILO estimated.

“We have very few levers to deal with the current economic crisis,” said Mr. Sutherland, a former director-general of the World Trade Organization (WTO). “We all know that one lever we should not use is protectionism.”

“In a time of recession, or depression, if that is the correct description, the forces of protectionism become ever more powerful and their impetus in political terms becomes ever more serious,” he said. “It is also true the way to react to that is to have a functioning international market based upon institutions.”

We have one already, Mr. Sutherland said: the WTO.

Mr. Sutherland, who played a key role in the conclusion of the Uruguay Round of global trade talks from 1989 to 1994, voiced concerns that political leaders are dropping the ball on the trade front.

Mr. Sutherland said last fall’s failure of the Doha round of global trade talks “is nothing short of disgraceful.”

“The world badly needs a confidence boost,” he said, adding that “it also needs an antidote to the protectionism which is already evident in responses in the global slowdown.”

However, former President Bill Clinton told delegates here Thursday that trade is not a priority right now.

“People are frightened out there. … There’s a lot of fear out there in the economy. So I don’t think that now is the best time in the world to get new trade agreements,” he said.

Asked to comment, Mr. Sutherland countered: “Well, it’s obvious it’s not the best time to get agreements, but it’s absolutely the necessary time to get agreements.”

“To say that we’re going to ban multilateral agreements because we’re living in difficult times is a denial of a responsibility. This is not good for global confidence,” Mr. Sutherland said.

Senior trade diplomats speaking in private said Mr. Clinton’s remarks were less than helpful, coming ahead of a meeting on the sidelines here Saturday of trade ministers from 20 nations, plus WTO chief Pascal Lamy, to try to revive the Doha talks.

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