Protectionism fears dominate economic forum

More than 100 demonstrators carried banners in a peaceful protest at the World Economic Forum, in Davos, Switzerland, on Saturday.(Peter Klaunzer/Associated Press)

The global economic crisis is no reason to shun free trade, British Prime Minister Gordon Brown said Saturday at a meeting of government and business leaders in Davos, Switzerland.

Speaking at the World Economic Forum, Brown warned about the rising threat of protectionism and recommended co-operation to address the problem.

"This is not like the 1930s. The world can come together," the prime minister said.

"It is possible for world leaders to make decisions that will make a difference to the projected development of the world economy.

"Now, of course, we've got to get the right ideas and, of course, we've got to build on the right principles. I believe we're in a global economy. You cannot now do without the global institutions that are necessary to make that global economy work," he said.

Peter Sutherland, former head of the World Trade Organization, said every political leader at the forum is talking about fears that countries will go into a protectionist spiral and introduce more tariffs on imported goods, a policy that would restrict trade between countries.

"We've seen the repercussions of that in the 1930s, the loss of jobs, the loss of trade and, over all, taking longer to get out of a recession," said freelance journalist John Zaracostas, who's covering the World Economic Forum.

"There's a lot of pressure to try to revive the stalled global trade talks, the Doha Round, so things get moving on that front and more buffers are put into the system," he said.

Zaracostas said there are concerns over the decision by some international banks to pull back from developing countries, leaving them without the funds to stimulate their economies.

G-20 leaders to discuss protectionism

Brown told the Davos forum this is the wrong way to go and he's looking forward to hearing ideas on reversing the trend at the April 2 summit of G-20 leaders in London.

Canadian Finance Minister Jim Flaherty, who's in Davos, told CBC News there is also "overall concern" about Washington's Buy American clause in its stimulus package, which is before the U.S. Congress.

White House Press Secretary Robert Gibbs said Friday the Obama administration will review the provision to make sure it doesn't violate international trade agreements.

The provision would require all public works projects funded by the stimulus package to use only U.S.-made iron and steel.

Canadian International Trade Minister Stockwell Day, who's also at the economic talks, sounded hopeful that a retaliatory trade war might be averted.

Day said he's hearing supportive messages from American officials in Davos, including from the acting U.S. trade representative, Peter Allegeier.

"I'm cautiously optimistic that something can be worked out," Day said in a conference call. "In no uncertain terms they're telling us, 'We hear you, we recognize you've got concerns with this, we're doing some work.'

"'Keep talking to us and stay tuned' is sort of the message I'm getting from the U.S. trade representative."

Gibbs has said trade issues will be discussed when President Barack Obama meets Prime Minister Stephen Harper in Ottawa on Feb. 19.