By  on February 2, 2009

DAVOS, Switzerland — Major business and political leaders expressed widespread fears at the annual World Economic Forum here that pressure is escalating on governments to resort to protectionist trade measures.

These fears were fanned by the addition on Jan. 28 of a “Buy America” steel provision to an $819 billion stimulus package to help the U.S. economy emerge from its deepening recession.

Japan’s Prime Minister Taro Aso, in a keynote address Saturday, asserted, “In keeping with the lesson of the 1929 Great Depression, we will resolutely fight protectionism. A major precondition for overcoming the crisis is that the flow of trade and investment not be inhibited.”

With anxiety gripping many of the 2,500 participants here — including more than 40 government leaders and 1,400 top business executives — World Trade Organization chief Pascal Lamy warned: “We are witnessing huge drops in world trade.” Hardest hit, he noted, are the developing countries, which are being buffeted by trade finance drying up.

Last week the International Monetary Fund predicted the volume of trade in goods and services would contract for the first time since 1982 — by 2.8 percent.

In light of the gloomy global setting, ministers from 20 trading powers, who met on the sidelines, failed to come up with any concrete resolution as to how to move forward on the troubled Doha Round of global trade talks.

Howard Dean, until recently chairman of the Democratic National Committee, in a session on global trade commented that it would be difficult for the U.S. Congress to pass any Doha deal without labor and environment provisions. However, Indonesia’s trade minister countered, “All developing countries would say ‘no.’”

In an interview Dean said “the playing field should be leveled,” and observed low environmental standards and poor labor regulations — such as not having safety and health standards — were forms of hidden subsidies.

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