[PHOTO AT LEFT COURTESY OF  YAHOO! NEWS - AP – President George W. Bush wears a traditional Peruvian poncho as he arrives for the official group photo …]

LIMA, PERU, NOVEMBER 24, 2008 (STAR) Leaders from 21 nations that account for half of the world’s economy pledged Saturday to resist protectionist measures – no matter how punishing the global downturn gets.

At the Asia-Pacific Economic Cooperation forum in Peru, the leaders met behind closed doors, seeking to build on last weekend’s Group of 20 summit in Washington, which proposed no new trade barriers over the next 12 months.

South Korean President Lee Myung-bak told business executives that protectionism would bring devastating consequences.

“Companies will go bankrupt and countless jobs will be lost, and poor nations and poor people will suffer the most damage,” he said.

US President George W. Bush said nations must “resist the temptation to overcorrect” for the crisis by “imposing regulations that would stifle innovation and choke off growth.”

“One of the enduring lessons of the Great Depression is that global protectionism is a path to global economic ruin,” he said.

Bush, bidding farewell to the international stage, offered a sweeping defense of free markets.

The joint statement denouncing any drift to protectionism in the economic crisis came after Bush staunchly defended his controversial eight-year presidency, summing up his philosophy as “free markets, free trade and free people.”

“I believe there is an Almighty and I believe a gift of that Almighty to every man, woman and child on the face of the Earth is freedom,” Bush said.

A smiling Bush, peppering his remarks with Spanish, conceded that recent events showed that governments must sometimes intervene in markets.

The Bush administration led a 700 billion-dollar bailout of Wall Street in hopes the US economy would rebound from its worst crisis since the Great Depression.

Bush vowed to press hard in his final two months in office to break a deadlock in World Trade Organization negotiations, a pledge made by 20 world leaders last week in Washington for a summit on the financial turmoil.

“We refuse to accept protectionism in the 21st century,” Bush said emphatically.

Obama, despite his wild popularity around much of the world, has sparked concerns among some Asian leaders that he would take the United States in a protectionist direction.

“Nations must not regress toward protectionism by citing the current financial crisis,” said President Lee Myung-Bak of South Korea, whose currency has been hammered in recent weeks.

“Protectionism begets more protectionism and results in a further slowdown of the global economy,” Lee said.

Success stories

The leaders argued their case with free-trade success stories.

Lee, former head of the Hyundai group, said open markets were central to boosting his nation’s per-capital annual income from $100 in the 1960s to $20,000 today.

Canadian Prime Minister Stephen Harper gently chided other major economies that have intervened to prop up businesses and markets.

“As necessary as such actions may be in some countries, there should be a plan to unwind this kind of direct participation by governments in the banking business over the long term,” Harper said.

Harper said the North American Free Trade Agreement has tripled trade and created 40 million jobs.

The leaders were expected to commit to wrapping up the broad outlines of a free-trade agreement by the end of December.

Nick Reilly, president of General Motors Corp. Asia-Pacific, said they had better hurry since they will face intense pressure at home to protect their must vulnerable markets.

“The economies haven’t yet seen the full impact of unemployment hit. So domestically, the leaders are going to be facing that,” Reilly told The Associated Press.

But delegates said the leaders were unlikely to make important decisions until US President-elect Barack Obama takes office in January. He did not send representatives to Lima.

“In terms of leadership, the next US administration must assume leadership in a very firm manner - not just for Americans but for the whole world,” said Mexico’s president, Felipe Calderon.

Frosty reception

Bush also focused on security, holding a three-way summit with Japanese Prime Minister Taro Aso and South Korea’s Lee at which they demanded North Korea move forward in a slow-moving denuclearization pact.

Bush, who once branded North Korea as part of an “axis of evil,” last year agreed to a six-nation deal under which the communist state would end its nuclear program in exchange for badly needed aid and security guarantees.

Bush has held out hope of a last-minute diplomatic triumph on North Korea. But Aso later told reporters that Bush said he was ready to hand over the issue to Obama.

Aso hailed Bush’s eight-year presidency, saying he brought the Pacific allies closer together.

But Bush had a more frosty reception from Russian President Dmitry Medvedev. Russia has been angered by US plans to install a missile defense shield in the former Soviet bloc.

The White House described the meeting as a “cordial, but honest and direct exchange,” language typically used by diplomats to describe a tense encounter.

“Both presidents noticed that differences remain in our relations but there was a unanimous wish, and President Bush said this, not to get hung up on such problems that always exist between big powers,” Russian Foreign Minister Sergei Lavrov told reporters.

Lavrov said that Bush’s presidency had shown the holes in the so-called “Pax Americana” after the Soviet Union’s collapse.

“Now it’s quite clear that even such a powerful country as the United States can’t deal with global challenges alone,” he said.

Bush was also dogged on his last trip by protesters. Some 300 leftist students marched to the US ambassador’s residence in Lima, chanting that Bush was a “fascist” and demanding he be put on trial for alleged war crimes. – AP

Chief News Editor: Sol Jose Vanzi

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