OTTAWA (Reuters) - Canadian Finance Minister Jim Flaherty said on Friday that world leaders gathered in Davos, Switzerland, agreed that protectionism is the “last thing the world needs” right now, referring to the U.S. “Buy American” steel policy.
“One of the strong messages -- and it’s a strong message here today -- is that the last thing the world needs now is protectionism,” Flaherty told BNN television from the World Economic Forum meeting in Davos.
“That was the mistake that was made in the 1930s. We don’t want to go there,” he said.
Flaherty said he did not know the details of the legislation now moving through Congress, but said he hoped Washington would uphold world trade rules.
The U.S. House of Representatives approved a measure this week as part of a $825 billion bill to reactivate the economy. It includes a provision that would require all public works projects funded by the stimulus package to use only U.S.-made iron and steel.
European steelmakers reject the plan and so have some U.S. business groups, who warn of retaliatory measures by U.S. trading partners.
Flaherty also participated with his U.S. and European counterparts in discussions about creating so-called bad banks, which would separate toxic assets from other banks. But he said there was no evidence of the need for such a move in Canada.
U.S. policy-makers are studying the possibility of the government warehousing bad mortgage securities and other bad investments that are weighing down banks’ balance sheets as a way to get credit markets flowing again.
The German government is believed to be mulling a similar program for an ailing lender in that country.
Reporting by Louise Egan; editing by Rob Wilson