NEW DELHI (Reuters) - A trend toward greater protectionism was pushing the world toward a prolonged recession, Canadian Prime Minister Stephen Harper said on Wednesday, although he added an economic catastrophe could be averted.
Speaking at a World Economic Forum meeting in New Delhi, Harper said a recovery in the global economy was held back by investor worries of another “catastrophic event” similar to the financial crisis in 2008.
He said Canada was focusing on bilateral and regional free trade deals because of the logjam in the Doha round of World Trade Organisation negotiations. He said consensus on trade was slipping at the G20 group of nations, which has been key in coordinating international policy during the financial crisis.
“At the G20 there is increasing slippage,” Harper said. “There’s starting to be greater protectionism going forward. It’s not an avalanche yet, it’s not something to panic about, but this is the one thing that could throw us into a prolonged recession for a long period of time,” he said.
“We can be disappointed that certain countries haven’t acted aggressively enough or are raising little bits of protectionism here and there but the reality is that most leaders get it on the big picture. I’m still optimistic we’ll avoid catastrophe.”
However, recent moves by Harper’s government have raised questions about its appetite for foreign investment in Canada’s energy resources.
Canada is currently reviewing a proposed $15 billion bid by China’s CNOOC Ltd for Canadian energy producer Nexen Inc and last month temporarily blocked Malaysian state oil firm Petronas’ C$5.17 billion bid for gas producer Progress Energy Resources.
Harper is on a week long trip to Asia and has been pressing for greater open-ness from partners in the region to trade and investment from Canada. He called for a serious push to complete a foreign investment protection deal and a free trade agreement with India.
“On our side, we have been deepening trade and investment ties with the largest, most dynamic markets in the world, the United States, the European Union, Japan, China. We want India firmly in that list. But time and tide wait for no one,” he said.
India is also eyeing Canada’s energy resources. In September, a trio of state-controlled Indian oil companies said they had bid $5 billion for stakes in Canadian oil sands assets owned by ConocoPhillips.
Canada’s two-way trade with India, at C$5.2 billion ($5.3 billion) last year, is far below what they could achieve, Harper said, adding: “The untapped economic potential between us is massive and undeniable. But, massive and undeniable as that potential is, it will not develop itself.”
Reporting by Randall Palmer; Writing by Frank Jack Daniel; Editing by Raju Gopalakrishnan