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Washington under fire for 'damaging' trade curbs

Washington under fire for 'damaging' trade curbs

Author: Guy de Jonquieres in Paris
Publication: Financial Times
Date: May 16, 2002

The heads of the world's three main multilateral economic institutions on Thursday joined forces to condemn rising US protectionism, saying it harmed global growth and set back economic reform and open markets.

The unprecedented display of disapproval came in a joint statement by Horst Köhler, managing director of the International Monetary Fund, Mike Moore, director-general of the World Trade Organisation, and James Wolfensohn, World Bank president.

Although the statement did not mention the US by name, it comes amid increasing international condemnation of US decisions to boost farm subsidies and curb steel imports. Their words reveal the fear that Washington's actions could set off a chain reaction of worldwide protectionism that would particularly hurt developing countries.

"Any increase in protectionism is damaging," the statement said. "Such actions will hurt growth prospects where fostering growth is most essential. And they send the wrong signal, threatening to undermine the ability of governments everywhere to build support for market-oriented reforms."

"How can leaders in developing countries or in any capital argue for more open economies if leadership in this area is not forthcoming from wealthy nations," it said. It called for liberalisation of trade in agriculture and textiles, which are protected US markets.

The statement was delivered to a meeting of ministers from more than 40 countries at the Organisation for Economic Co-operation and Development in Paris, at which the US was attacked for increasing agricultural-support spending in its farm bill and for the steel import restrictions.

Many ministers warned Washington that its actions had put at risk the world trade round launched at the WTO's meeting in Doha in November. Pierre Pettigrew, Canada's trade minister, accused the US of destroying the multilateral trade system, saying the talks were at a "very, very crucial juncture".

Mr Moore would not comment directly on the US actions but he warned ministers that "storm clouds" were hanging over the trade system and urged them to avoid undermining the round.

"The messages during the discussions on trade were very clear, and those who needed to hear have certainly heard," said Guy Verhofstadt, Belgium's prime minister and chairman of the meeting.

The ministers underlined their anger by publishing a final communique that pledged to "reject the use of protectionism". The wording was agreed despite objections by Washington, which says its farm bill and steel curbs comply with WTO rules.

US representatives, on the defensive throughout the two-day talks, sought to stem the criticism by insisting their country was committed to international trade leadership and agricultural liberalisation. They also promised to report back to Washington other governments' criticism.

Meanwhile, Japan on Friday notified the World Trade Organisation of its decision to impose sanctions worth $4.88m in retaliation for US duties on steel imports.

This is the first time Japan has taken such retaliatory action. It is also likely to increase tensions with Washington, which has been saying that early retaliation would violate WTO rules.

The widely expected decision came after Washington rebuffed Tokyo's last-minute plea for compensation for its tariffs.

The notification follows the European Union's decision to notify the WTO of a range of US products, including steel, textiles, and fruit, worth E378m ($345m) on which it plans to impose sanctions.
 


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