EU leaders address trade barrier fears

23 February 2009

23 February 2009 | Andy Allen

European leaders yesterday pledged to avoid protectionism as concerns grow that some countries are erecting barriers to international trade.

In a joint statement, European leaders and ministers meeting in Berlin ahead of the Group of 20 summit said they would take only measures that keep distortions to competition "to an absolute minimum".

"And we expect the other G-20 states to behave likewise," the statement added.

Fears have grown that world governments will respond to the global downturn with trade barriers. A "Buy American" clause in President Obama's $787 billion stimulus package has prompted accusations of protectionism in the US.

The clause has been watered down from an original version that obliged all public sector construction projects receiving money from the package to use only US-made goods. Now it stipulates that these projects should do so while at the same time respecting existing trade agreements.

Yet while the full details of the "Buy American" clause are still unclear, countries that do not have trade agreements with the US are worried this will lead to new trade restrictions.

EU countries such as Czech Republic have also protested against a plan by the French Government to lend 3 billion euros (£2.6 billion) to carmakers PSA Peugeot-Citroen and Renault. The money comes with the condition that firms avoid closing French production plants or laying off French workers. French president Nicolas Sarkozy has also said French carmakers should close plants in countries such as the Czech Republic and move back to France.

SMfeb2009

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