China & G7 concerned about US trade protectionism

 
Baku– APA-ECONOMICS.
China said on Monday it was deeply concerned over trade protectionist measures a range of countries were adopting amid the economic crisis, singling out the United States for special criticism.
Following a "Buy American" clause in the huge US economic stimulus package and an Indian ban on Chinese toys, China’s commerce ministry warned it was looking to the World Trade Organisation to guard against rising protectionism.
"Some countries raised clauses to prioritise the purchase of products of their own countries in their economic stimulus packages," ministry spokesman Yao Jian told reporters.
 "We express deep concern about these (measures)."
Although Yao was commenting on unnamed countries, he then spoke out when asked specifically about the "Buy American" clause in the US economic stimulus package that lawmakers in Washington passed on Friday.
"Under the current financial crisis, measures issued by all countries should not cause negative impacts, and especially they should not send out wrong messages," Yao said.
His comments came on the same day the state-run China Daily newspaper published a front-page story citing another commerce ministry official criticising the "Buy American" clause.
 "Trade protectionism will rise definitely," said Mei Xinyu, a trade expert with the ministry, according to the English-language paper, which the government often uses to send messages to foreign audiences.

"The trend will last for some time."

 The "Buy American" clause of the 787-billion-dollar stimulus package requires the use of US iron, steel and manufactured goods in public works projects funded by the bill.
Mei reportedly said that as China supplied bulk goods to the rest of the world, the Asian nation could become "a victim of such protectionism".
The report in the China Daily followed a scathing weekend editorial by the state-run Xinhua news agency saying protectionism was "poison".

"History and economics have told us, facing a global financial crisis, trade protectionism is not a solution, but a poison to the solution," Xinhua said.

"Experience has shown trade protectionism can protect nothing. During the Great Depression in the 1930s, the protective measures taken by countries like the United States triggered trade wars, further hurting international trade and the world economy."

The language of the "Buy American" clause was softened to say the provision on using US products must be applied in keeping with World Trade Organisation obligations.
US President Barack Obama had also said he did not want the stimulus packages to lead to protectionist measures.

But the diluted clause has still attracted concern from various powerful interests aside from China, including Canada, the United States’ biggest trading partner.
The Consumer Electronics Association (CEA) in the United States also warned on Friday that the "Buy American" clause could make the United States vulnerable to a trade war.
"The ’Buy American’ provisions in the stimulus bill will signal to our trading partners around the world that the United States is returning to the bad old days of protectionism and economic nationalism," CEA president Gary Shapiro said.

China has also already expressed concern over India imposing in January a six-month ban on Chinese-made toys, and threatened WTO action over the issue.
Without mentioning the US or Indian moves, Yao said China was looking to the WTO to ensure trade protectionism did not bite too deeply.

"The Chinese side supports the WTO adopting measures to curb the spread of trade protectionism and strengthening the supervision of bailout plans by different countries," he said.

Group of Seven nations have "collectively taken exceptional measures" to address the global economic downturn and are committed to avoiding protectionist measures, G7 finance ministers and central bank governors said at the end of talks in Rome.

"The financial measures taken by each of us are helping to stabilize extremely volatile financial markets," they said in a statement Saturday after two days of meetings. The leaders said that kind of stability remains their highest priority in light of an economic slump that has led to significant job losses, which they said were expected to persist through most of 2009. The G7 finance ministers agreed on the need to get their respective stimulus packages flowing as quickly as possible and to improve access to financing, Canadian Finance Minister Jim Flaherty said. The joint communique also cautioned against trade protectionism.

"I don't mind saying that I made the point quite strongly to my colleagues in the G7 that any protectionist measures that were taken now would be regretted later," Flaherty said in a conference call from Rome. "It's populist politics — it always is — to cater to short-sighted, short-term demands like protectionist measures within a particular country," he said. Democrats in the U.S. Congress, New Democrats in Canada and at least two major Canadian labour unions have pushed for domestic buying provisions in the two countries' respective recession-fighting stimulus packages. Flaherty, pointing to the lessons of the Depression era, said modern history has proven that protectionism is counter-productive for a sustained economic recovery.

"I encouraged all of my colleagues to resist that kind of populist political temptation," he said. "An open system of global trade and investment is indispensable for global prosperity," the communique said. "The G7 remains committed to avoiding protectionist measures, which would only exacerbate the downturn, to refraining from raising new barriers and to working towards a quick and ambitious conclusion of the Doha Round."

The Group of Seven industrialized nations includes Canada, France, Germany, Italy, Japan, Britain and the United States. The G7 leaders meeting in Rome said they welcome action from other countries, including China, to boost the global economy. The meeting marked the international debut of U.S. Treasury Secretary Timothy Geithner, who assured his counterparts that President Barack Obama's $787 billion US plan to resuscitate the economy, approved Friday, would not violate in any way the United States' commitment to free trade.

More in detail
China says no to protectionism
http://news.xinhuanet.com/english/2009-02/09/content_10790328.htm

Sources
http://www.cbc.ca/world/story/2009/02/14/g7-economy.html
http://www.apa.az/en/news.php?id=97220