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APEC say no to protectionism, yes to Doha
Updated: 2008-11-23 08:44

LIMA, Peru – Leaders who oversee half the world's economy pledged Saturday to avoid protectionism and promised not to raise new barriers to investment and trade in the next 12 months.

US President George W. Bush and Russia's President Dmitry Medvedev meet in Lima November 22, 2008. [Agencies]

The 21 leaders of the Asia-Pacific Economic Cooperation (APEC) member economies endorsed agreement to resist domestic pressures to protect industries, while ensuring that small and medium-sized companies have enough credit to stay afloat.

In a statement issued in Peru's capital Lima, on the first day of their two-day summit, the leaders admitted the risk that slower world economic growth could lead to calls for protectionist measures which would exacerbate the current economic situation.

"We strongly support the Washington Declaration and will refrain within the next 12 months from raising new barriers to investment or to trade in goods and services, imposing new export restrictions, or implementing World Trade Organization (WTO) inconsistent measures in all areas, including those that stimulate exports," the joint statement said.

They also pledged to reach agreement next month on the outlines of a World Trade Organization pact that collapsed in July after seven years of negotiations. Concern over the global financial crisis injected new urgency into the so-called Doha round of trade talks.

Delegates said, however, that there was little incentive to propose more concrete action without the support of Obama, who takes office in January and did not send representatives to Lima.

"The next US administration must assume leadership in a very firm manner -- not just for Americans but for the whole world," Mexican President Felipe Calderon said in a speech before heading into closed-door meetings that produced the resolution.

Even people who work for the White House's outgoing occupant, George W. Bush, acknowledged that tough issues such as a stalled US-South Korea free-trade agreement would likely have to wait.

"I think the very understandable concern of these foreign governments is, will the new administration do some sort of policy review," Dennis Wilder, senior director for Asian affairs at the National Security Council, told reporters.

Leader after leader spoke out against protectionism, saying it would bring devastating consequences.

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"Companies will go bankrupt and countless jobs will be lost, and poor nations and poor people will suffer the most damage," South Korean President Lee Myung-bak told business executives.

Bush said nations and regions must not respond to the crisis by "imposing regulations that would stifle innovation and choke off growth."

"One of the enduring lessons of the Great Depression is that global protectionism is a path to global economic ruin," he said.

The leaders argued their case with free-trade success stories. Lee, former head of the Hyundai group, said open markets were central to boosting his nation's per-capita annual income from $100 in the 1960s to $20,000 today. Canadian Prime Minister Stephen Harper said the North American Free Trade Agreement has tripled trade and created 40 million jobs.

But Nick Reilly, president of General Motors Corp. Asia-Pacific, said the leaders all will face intense pressure at home to protect their most vulnerable markets.

"The economies haven't yet seen the full impact of unemployment hit. So domestically, the leaders are going to be facing that," Reilly said.

Indonesia's trade minister, Mari Pangestu, said that some protectionist measures are inevitable in the coming year or two. The secret, she said, is to not make them open-ended.

"You will have to end up protecting particular groups," Pangestu said in an interview, giving the example of the agriculture sector in Indonesia, which accounts for 60 percent of its 237 million people.

Canadian Prime Minister Stephen Harper alluded to the tough decisions ahead when he described his recent re-election in terms that could just as easily apply to Obama.

Getting elected these days, he said, "is like winning a vacation to the Caribbean during hurricane season."