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Leaders call for more free trade and not curbs

GOVERNMENT efforts to shield local companies from the global economic crises through trade barriers will only strangle growth and prolong the recession, Asian and European financial leaders warned yesterday.

The comments by top officials at a forum in Hong Kong came a day before President-elect Barack Obama takes office amid fears his administration and Congress will erect trade barriers in the United States - a vast consumer of exports that drive Asian growth.

"Protectionism or (currency) manipulations do not help us escape from the financial crisis at all," said Shin Je-yoon, South Korean deputy finance minister. "It's a very easy trap."

Any trade restrictions by the US and other countries would deal a significant blow to Asia, where economies are suffering slower growth or already in recession.

South Korea and the US are still awaiting approval by their respective legislatures of a deal, signed in June 2007, to slash tariffs and other barriers to trade.

Statements by American politicians, including Obama, have raised concerns in South Korea that the US will seek to renegotiate parts of the accord, most notably the auto sector. If passed, it would be the largest trade pact for the US since the North American Free Trade Agreement.

Antonio de Lecea of the European Commission echoed Shin's concerns yesterday. He noted that leaders attending a summit of Group of 20 economies in November had vowed to combat protectionism and refrain from raising new barriers this year.

"Reduction in trade, or protectionism, is going to kill one of the sources of growth," said de Lecea, director of economic and financial affairs for the EC. "We should all maintain our determination to keep our markets open."

Since the global financial crisis erupted in September, some countries have taken protectionist measures.

In November, India imposed a 20-percent duty on crude soybean oil. Indonesia also has hinted it may enact trade limits, at least temporarily, to weather the downturn.

Eisuke Sakakibara, who was in charge of Japan's currency policy in the late 1990s and known as "Mr Yen," said he expected the global slump to last 2 years to 5 years as companies reduce their debts and cut their investments.


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