EU trade chief urges U.S. candidates to think globally

By Daniel Trotta

NEW YORK (Reuters) - European trade commissioner Peter Mandelson on Monday urged U.S. presidential candidates not to retreat into protectionism and also warned world trade talks could run out of steam without a deal soon.

"Who would have thought, 10 years ago, that you would hear serious U.S. presidential candidates putting NAFTA in question? Or calling into question the desirability of concluding a world trade round?" Mandelson said in prepared remarks before a business luncheon in New York.

"We need to be straight with Americans and Europeans about just how badly disengagement from the global economy would hurt their political and economic interests. And that means being honest about the extent to which protectionism is a dead end," Mandelson said.

Presumptive Democratic nominee Barack Obama has urged renegotiating the North American Free Trade Agreement linking the United States, Canada and Mexico. He has also promised not to sign any new trade agreements that does not include strong protections for labor and the environment.

Republican John McCain opposes changing NAFTA, backs free trade pacts with Colombia, South Korea and Panama, and wants to negotiate a new free trade pact with the European Union.

The U.S. debate over the direction over the future of trade policy comes as key players in the Doha round of world trade talks are making another stab at reaching a deal in the nearly 7-year-old negotiations.

"We have a potential deal on the table that could be worth more in new trade than any previous multilateral trade round. Yet the final trade-offs that would put a balanced deal within reach are proving elusive," Mandelson said in his speech.

"Negotiating fatigue is setting in. It would be gross irresponsibility if we fail where every previous trade round has succeeded," he said.

Mandelson cited examples of political trends around the world that treated globalization as a threat and called on leaders to react with innovation and adaptation rather than protectionism.

"As one government after another has imposed new export tariffs in response to rising global food prices, they have pushed up prices for everyone else," Mandelson said.

"There are still too few leaders willing to stand up and make the opposite case," he said, naming British Prime Minister Gordon Brown as a notable exception.

Mandelson said developed countries have more to fear from the failure of developing countries, than from their success.

He also argued countries with strong social safety nets are better equipped to deal with globalization and thus more likely to be able to maintain open economies.

(Editing by David Wiessler)