LOS CABOS, Mexico, June 19 (Reuters) -
World leaders extended by one year their vow not to put up new trade barriers
at the Group of 20 summit on Tuesday in a last-minute deal that exposed deep
rifts over protectionism.
The agreement to refrain from new
protectionist measures until the end of 2014 as part of world leaders' efforts
to foster global growth was included in the final G20 communique.
Mexican President Felipe Calderon said it
was hard won and struck only at the very end of two-day talks in the Pacific
resort of Los Cabos.
"There was resistance from some
countries but beyond that we did manage to get a consensus and arrive at an agreement,"
he told a news conference after the meeting.
Brazil, Argentina and South Africa had
resisted extending the trade pledge beyond its current expiry at the end of
2013, while other countries wanted to push it back to 2015, a diplomat with
knowledge of the G20 trade talks said. The deadlock was broken by Russian
President Vladimir Putin, the diplomat said.
ALARM RISING
Ahead of the summit, Japan and the European
Union had sent strong warnings that free trade was under threat as some
countries respond to slowing growth by trying to protect their domestic
industries.
"The EU is sounding the alarm
regarding a worrisome rise in protectionism," EU President Jose Manuel
Barroso said as G20 members arrived in Los Cabos.
Japan's Prime Minister Yoshihiko Noda called
for world leaders to stamp out any efforts to lessen free trade. "I see
signs of protectionism emerging in the G20 debate, so we should deliver a
message to counter (that)," he told reporters.
Fearful that trade protectionism would slow
global growth, G20 leaders at the height of the financial crisis in November
2008 first pledged to refrain from erecting any new trade barriers, often used
to shield domestic businesses from world competition at times of economic
stress.
Despite that effort, a World Bank report
released on Sunday found that G20 nations have accounted for the vast majority
of the more than 1,000 new protectionist measures that have been introduced
between November 2008 and March 2012.
Brazil, for instance, has outraged fellow
G20 partner Mexico by renegotiating a car export agreement earlier this year,
and is also mulling steps to protect its tiny domestic wine industry which may
raise tariffs on many imported wines from countries including Chile, France and
Spain.
And it is not alone: Argentina, another G20
country, has slapped tough controls on imports in a bid to keep factories open
and prop up the trade surplus in Latin America's third-biggest economy.
The United States has complained to the
World Trade Organization that China is backsliding on the path of trade
openness and economic reform that marked its entry to the World Trade
Organization in 2001.
Brazilian President Dilma Rousseff launched
a counter-offensive on trade at the G20 summit by proposing to re-open by 2014
the stalled Doha round of global negotiations to lower trade barriers. The idea
failed to win traction with other G20 leaders.
"Some countries have agricultural
subsidies, some countries think that there is protectionism in services, others
saw problems in industry," she told reporters. "It's obvious that
there is a lot of resistance to reopening the Doha round."
The Doha round was launched more than 10
years ago with the goal of helping poor countries prosper through trade.
However, bitter divisions over how much developed countries should cut farm
tariffs and subsidies in exchange for developing countries opening their
markets have prevented a deal.
Business lobby group the International
Chamber of Commerce warned that the increasingly protectionist climate could
derail efforts to stimulate to world economic growth and development, a message
shared by business leaders meeting on the sidelines of the G20 summit.
"We believe in free trade and free
investment, and that's key to promote growth in the global economy," said Kimberly
Clark Mexico chief executive Pablo Gonzalez.
"We should all combat those decisions
and commit ourselves to open trade and to open investment."
Meanwhile, the United States pushed ahead
on several trade initiatives on the sidelines of the G20 summit. U.S. President
Barack Obama said that America and the European Union took the next steps
toward broadening their trade relationship. The two sides are working on a
possible trans-Atlantic trade pact.
Japan and Canada also joined the
Trans-Pacific Partnership, an initiative championed by the United States aimed
at creating a new free-trade zone.
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