Greenspan sees 'great tragedy' if trade protection takes hold

WASHINGTON (AP) -- Federal Reserve Chairman Alan Greenspan, declaring anti-globalization protesters "wrong-headed," said Wednesday the United States must resist calls for erecting protectionist trade barriers.

Greenspan told Congress the steady removal of trade barriers over the past half century has contributed to the strong prosperity in recent decades. That prosperity could be jeopardized by barriers to protect domestic industries threatened by increased imports, he said.

"The United States has been in the forefront of the postwar opening up of international markets, much to our and the rest of the world's benefits," Greenspan said in prepared remarks. "It would be a great tragedy were that process stopped or reversed."

Greenspan was testifying before the Senate Finance Committee as Republicans attempted to build support for an effort by President Bush to win negotiating authority he needs to strike new trade agreements.

Greenspan, who has spoken often of the economic benefits that come from free trade, repeated those views Wednesday. He made no mention of current economic conditions or the big plunge that has occurred in stock values.

Greenspan said he regretted the fact that supporters of free trade often contend that lowering barriers will promote jobs. He said greater trade flows, by spurring domestic companies to become more competitive, increases productivity but not the overall level of employment.

He cited as evidence that trade does not have a link to employment levels the fact that the nation's jobless rate dipped last year to the lowest point in three decades even as the trade deficit surged to a record high.

Greenspan said countries gain from trade simply by lowering barriers, whether or not other nations do so.

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