Greenspan warns on trade wars

ALAN Greenspan today attacked growing signs of 'emerging protectionism' as China said it would retaliate against US textile import quotas.

In language that seemed to be directed at President George Bush, who is on a state visit to Britain, the US Federal Reserve chairman said: 'It is imperative that creeping protectionism be thwarted and reversed.'

If allowed to run, it would ' significantly erode' the global economy, he told a conference hosted by Washington's Cato Institute.

He said the growing US trade deficit, $138bn (£81.2bn) in the second quarter, had put little stress on national finances.

Bush promised today to make an immediate decision about lifting steel import tariffs that have angered Europe and were declared illegal by the World Trade Organisation. Tony Blair brought up the subject three times in their talks, he added.

Bush said he was reviewing trade with China. 'There are market disruptions involved with certain Chinese textiles,' he said. 'We are addressing those.'

Commerce Secretary Don Evans said US job losses caused by rising exports from State-owned and subsidised firms in China would not be tolerated.