Economists slam Bush steel decision

FORTALEZA, BRAZIL - The U.S. decision to protect its steel industry by barring imports could encourage Latin American nations to turn their back on free trade and spark a new wave of protectionism across the region, economists said Saturday at a regional bank meeting here. <br> <br> Economists addressing the 43rd annual meeting of the Inter-American Development Bank roundly criticized President Bush&#39;s decision to impose punitive tariffs on steel imports. <br> <br> They said it played into the hands of populist politicians who oppose free trade and can capitalize on Latin Americans&#39; weariness with free-market reforms that have largely failed to spread prosperity over the past decade. <br> <br> ``It&#39;s a phenomenal step backward of extreme importance that should worry us greatly,&#39;&#39; said Sebastian Edwards, professor of economics at UCLA. ``I only hope it is an isolated case.&#39;&#39; <br> <br> He said a broader turn toward protectionism in the rich Northern Hemisphere could have disastrous effects on Latin American economies at a time when some already look back with nostalgia to the years when Latin America&#39;s economies were largely closed to imports. <br> <br> That kept people in jobs, but it also meant inferior quality products and services and in many cases spiraling inflation fueled by profligate public spending and the printing of bank notes. <br> <br> A study by the banks&#39; economists showed that Latin Americans - and especially the middle classes - are disillusioned with reforms, associating them with corruption that has tainted the sell-off of state sector companies in some countries. <br> <br> The recent collapse of Argentina, once a poster-child for free-market reforms, has further added to Latin Americans&#39; doubts. Many say free-market policies are really policies designed to guarantee domination by U.S. companies and their products. <br> <br> Goods produced in the region - raw materials and farming goods - bring meager prices or are kept out of rich markets altogether, they complain. <br> <br> There is growing skepticism of a Bush-backed project to build a Free Trade Area of the Americas - a single market stretching from Alaska to Argentina - by 2005. <br> <br> Edwards and others said they did not believe the region&#39;s populists - Argentina&#39;s President Eduardo Duhalde and Venezuela&#39;s Hugo Chavez - would resort to all-out economic populism. <br> <br> But they said several other countries could succumb to anti-free-trade rhetoric, especially now that Bush has been seen to abandon his overtly free-trade stance. <br> <br> ``I believe that macroeconomic populism, even in countries like Venezuela, is dead,&#39;&#39; said Edwards. But he said it was vital for emerging economies to have access to rich, industrialized markets as a logical reward for implementing market-friendly economics at home. <br> <br> ``The danger is that a more insidious form of populism is making a comeback,&#39;&#39; said Eliana Cardoso, visiting economics professor at Georgetown University in Washington. ``This form of populism is industrial protectionism and it comes at a moment when the United States is setting us the worst possible example.&#39;&#39;