Merkel warns 'protectionism not the answer' to world problems

DAVOS, Switzerland — German Chancellor Angela Merkel insisted on Wednesday that "protectionism is not the answer" to the world's problems, while addressing the Davos economic summit ahead of an appearance by US President Donald Trump.

"We think that shutting ourselves off, isolating ourselves, will not lead us into a good future. Protectionism is not the answer," Merkel said in a speech, a day before the arrival of the US president whose "America First" trade policies have raised concern among defenders of globalization.

Merkel, while lobbying for multilateral solutions to global problems, told leaders here that there is too much "national egoism" at the moment. She said that the meeting's motto of "creating a shared future in a fractured world" was "exactly right" for 2018.

She added, "We believe that isolationism won't take us forward. We believe that we must cooperate, that protectionism is not the correct answer."

On climate change, for example, she said efforts are going on "sadly without the United States" after Washington's decision to withdraw from the Paris agreement.

Merkel also told leaders that Europe should not complain when other countries, like the United States, overhaul their tax systems but instead respond with reforms of its own. She pointed to efforts by France and Germany to forge a common corporate tax regime, and said European countries would need to cope with a more competitive tax environment.

She also said right-wing populism in Europe is a "poison" that is driven by unresolved problems, adding, she hoped support would not rise further for such parties, and that her government is trying to get right-wing populism "under control, but it is a poison."

Merkel said that with Britain's decision to leave the European Union the remaining countries in the bloc need to speak with one voice on the world stage.

She said Wednesday that the EU's remaining 27 member states need one voice on foreign policy "if we Europeans want to be taken seriously." She added the so-called Brexit decision has invigorated the EU, and that only as a bloc can it tackle big challenges like that posed by China's growing influence.

She said, however, that Europe "regrets" the British decision to leave and is looking forward to keeping close ties. She said "we are available for any form of partnership."

She reiterated that access to the bloc's common market is tied to freedom of movement. "We can't make any compromises there," she said.

Spain's King Felipe VI said the recent Catalan push for independence was an attack on the country's democratic system and should serve as a lesson for democracies around the world on the need to preserve the rule of law and national sovereignty.

Speaking at Davos, the king said Wednesday that what happened in Catalonia was "an attempt to undermine the basic rules of our democratic system." Spain experienced its worst political crisis in a decade late last year, when the Catalan parliament declared independence. Spain fired the regional government, dissolved Catalonia's parliament and called regional elections in December.

Italy's prime minister, in his speech, said he understands US President Donald Trump's "America First" mindset. But he insists it shouldn't come at the expense of free trade. Paolo Gentiloni told reporters: "I consider legitimate for each country to say, 'My country first'. I could say 'Italy first,' why not?"

But, he added, if economic growth is the goal, then that means trade — and protectionism runs counter to that. He said: "It is legitimate that each and every single one of us thinks of protecting some sectors for their own markets, but these choices across all sectors can never translate into protectionism."

Gentiloni said he believed the improving global economy stems from free trade, international treaties and the "free-market union formula we have in Europe."

Meanwhile, US Commerce Secretary Wilbur Ross thinks Canadian Prime Minister Justin Trudeau used his speech to put pressure on the U.S. in the renegotiation of the North American Free Trade Agreement.

In an address to the forum Tuesday, Trudeau said his country and the 10 remaining members of the Trans-Pacific Partnership had revised their trade deal in the wake of the US withdrawal. He said he is "working very hard" to convince Trump about the merits of NAFTA.

Ross said Wednesday that Trudeau's speech was designed "to put a little pressure on the US in the NAFTA talks."

Treasury Secretary Steven Mnuchin insisted the Trump administration believes in "bilateral trading agreements" but that it wants to make sure "U.S. opportunities are equal to other people's opportunities in the US." — Agencies