Protectionism not way out of economic crisis: Forum

BEIJING. March 24. KAZINFORM Economicsts attending the just concluded China Development Forum 2009 in Beijing agreed protectionism is not the way out of the current economic crisis while asking for a more active role of G20.

Liu Zunyi, president of the Chinese University of Hong Kong, said, in order to avoid the mistakes made in 1930s, the international community should joint hands to fight against trade protectionism. The lesson of the 1930s mistakes is, Liu said, trade barrier, including tariff barrier, would only aggravate the global economic recession. "World countries should strengthen cooperation," he suggested, "and G20 is a good platform." But, according to the World Bank, since the signing of commitment banning resort to trade protectionism by G20 in November, some countries in the group have already adopted 47 restrictive measures at the cost of other countries' interests. "Protectionism is now creeping in again," Caio Koch-Weser, Vice Chairman of Deutsche Bank Group, agreed at the forum. "One of the great lessons of the great depression 70 years ago was that there was a vicious circle of protectionism amid further economic decline." In this setting, he suggested China has a very important role to play as one of the largest trading nations to bring about awareness about protectionism. "I heard Premier Wen Jiabao's speech in Davos, Switzerland. He made a very good statement on the need for open markets and multilateral trade. I am an old friend of China, and I encourage China to be more proactive in assuring leadership roles and promote open trade," Weser said. "There is a serious danger now that trade protectionism might arise globally, because all national economies are coming under pressure, and very normally most quick response very often is protectionism," Dr. Dirk Messner of German Development Institute told Xinhuanet. And as you know, we had a conference in Washington in November between G20 countries and they all promised not to go into protectionistic way, but what you saw during the last few months is 17 of those 20 countries have become protectionists, so this is real danger," Dr. Dirk Messner continued, "protectionism is not the way out." "This is a very serious problem, Many of the industrial countries after going to the G20 have engaged in direct and indirect protectionism," Joseph Stiglitzk, Nobel laureate and Professor of Columbia University, made the same criticism on trade protectionism in his talks with Xinhuanet. "Direct, I mean things like 'buy America' provision, indirect, as in subsidies that destroyed the level playing field. It is not done for protectionist reasons, but it has protectionist effects." William R. Rhodes, Chairman, President & CEO of Citibank, also warned that the world is now faced with "the most dangerous protectionism trend since 1930s." This not only happens in trade area, but also concerning the financial sector, he added. The measures adopted by some developed countries to restrict capital outflow for assisting their own banks will lead to the results that capital will be withdrawn from burgeoning market and developing countries, and finally causing the capital shortage in the burgeoning market, he causioned. However, Murilo Portugal, Deputy Managing Director of the International Monetary Fund, held different views on the issue. He said the G20 leaders "made an important commitment to anti-protectionism" at the Washington summit last November. Without this commitment, the condition of free trade would be much worse, he said. In addition, he forecast, if the Doha round trade talks can be achieved at an early date, then it can play an important role in accelerating the trade liberalization and shoring up the world's confidence amid the global economic crisis. The three-day China Development Forum 2009 under the theme "China's Development and Reform in the Global Financial Crisis" began Saturday, Kazinform refers to Xinhuanet.