Policymakers sound alarm over protectionism

By Jonathan Lynn

DAVOS, Switzerland (Reuters) - Policymakers sounded the alarm about the growing threat of protectionism on Thursday as new data showed a sharp fall in air freight traffic, signalling a broader slowdown in world trade.

India's trade minister, Kamal Nath, warned at the World Economic Forum that the global economic crisis could fuel protectionism to safeguard national industries and jobs.

He told Reuters that India saw growing signs of protectionism and would respond with its own measures if its exporters were threatened.

"We do fear this because one must recognise that at the heart of globalisation lies global competitiveness, and if governments are going to protect their non-competitive production facilities it's not going to be fair trade," he said.

"If there are protectionist measures India will be compelled to also take commensurate measures against those countries which will be good for no one."

Nath cited Dutch authorities' seizure last week of a Brazil-bound shipment of a generic high blood pressure drug made in India. He said India had taken up the issue with the Dutch authorities and the European Union, and hoped to resolve it.

India has raised tariffs on steel to protect local producers, a measure trade experts say was aimed at China, which India does not regard as a market economy.

Chinese Premier Wen Jiabao warned in a keynote speech at the opening of the Davos meeting on Wednesday that protectionism would only deepen and prolong the crisis.