With a U.S. Congress in the control of Democrats and the World Trade Organization's Doha round of talks in tatters, former president Bill Clinton's chief economics adviser said free trade was under threat. Former U.S. treasury chief Robert Rubin warned Tuesday the global economy faces a backlash from Europe and the U.S. against trade liberalization.
At a gathering of bankers in Hong Kong Rubin called on the U.S. Congress and President George W. Bush to work together more effectively to ward off the pressures of protectionism and said China could play a key role by easing its currency exchange rate.
"China has a great incentive to introducing a more flexible exchange rate," he said. "It would help reduce the U.S. fiscal deficit. If that isn't balanced then there is likely to be an increase in protectionism in the U.S. and that wouldn't be good for anyone."
He dismissed fears that Nancy Pelosi, the new leader of the House of Representatives, would continue to take as tough a stance on trade with China as she had when she was a backbencher. In the past the San Francisco politician opposed the granting to Beijing of most favorable trading nation status fearing it would hasten the migration of American jobs to cheap labor countries like China. "I don't think she is anti-Chinese," Rubin said. "She has some serious concerns about trade and they are concerns that are not unwarranted or unfounded; the median wage of the American worker has not improved while at the same time GDP has gone up."
Rubin served first as assistant economic policy adviser to Clinton before being promoted to Secretary of the Treasury. He is now a senior adviser to the chairman of Citigroup, the world's largest bank.
Copyright Agence France-Presse, 2006
