Protectionism Is Not Right Response to the World's Problems, Says Merkel -- Update

By FeaturesDow Jones Newswires

German Chancellor Angela Merkel emphasized the need for multilateral approaches to deal with challenges stemming from globalization, saying protectionism would be the wrong response to solve problems.

Speaking at the World Economic Forum in Davos, Switzerland, the acting German chancellor defended multilateralism after it has recently come under increasing attacks.

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"We believe that isolation isn't helping us. We believe that we must cooperate and that protectionism isn't the right response," Ms. Merkel said.

"And we believe that if we come to the conclusion that things aren't fair, that mechanisms aren't reciprocal, that we should then look for multilateral solutions and not unilateral ones as they would ultimately promote isolation and protectionism."

Ms. Merkel didn't name the U.S. but her comments come shortly after President Donald Trump signed orders to curb cheap imports from China and other Asian manufacturers that he said unfairly harmed American manufacturers. He announced Monday steep tariffs aimed at protecting U.S. makers of solar panels and washing machines.

Mr. Trump is due to outline his "America First" policies at the gathering of world leaders and top corporate leaders, which has been a fierce defender of globalization for decades.

Germany's powerful BDI federation of industry, which represents a sector relying heavily on exports, also expressed concern about U.S. trade policy.

"An escalating trade dispute between the U.S. and China could take a substantial hit at the entire global trade and especially Germany as a major export nation," BDI President Dieter Kempf said Wednesday. "World trade is not a zero-sum game, not even for the U.S."

The lobby group called on the European Union to push ahead with free trade agreements with other strategic partners.

"Europe should continue to turn to open markets in Asia and other parts of the world," he said.

Germany isn't the only country to express concern about U.S. policies.

Earlier this week in Davos, Canadian Prime Minister Justin Trudeau hailed the Trans-Pacific Partnership, an accord among Pacific-Rim countries that the U.S. didn't join.

At the same location, Indian Prime Minister Narendra Modi was critical of societies and countries that have become self-focused, while globalization was shrinking.

Since taking office 12 months ago, Mr. Trump has urged changes to existing multilateral trade agreements that he regards as treating the U.S. unfairly. His administration has said the moves are aimed at improving the international economic system, not destroying it.

Write to Andrea Thomas at andrea.thomas@wsj.com

(END) Dow Jones Newswires

January 24, 2018 10:05 ET (15:05 GMT)

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