S.Africa's Manuel says US bailout could distort trade

CAPE TOWN (Reuters) - South Africa's finance minister Trevor Manuel on Thursday criticised a massive U.S. bailout package, saying it was protectionist and could distort global trade.

U.S. President Barack Obama signed a $787 billion economic stimulus bill into law on Tuesday, which he called part of a broad plan to solve America's economic ills, part of a global crisis that has left major countries in recession.

But Manuel told South Africa's parliament "There are features (of the package) that are exceedingly worrying because they are highly protectionist, highly nationalist and take that country back as though it is not part of this global entity."

The global economic crisis has choked international trade as countries try to stem job losses and factory closures by protecting their industries, raising barriers to imports or promoting exports at the expense of competitors.

World leaders have vowed not to raise trade barriers, although a number of measures suggest the emergence of protectionism, including the "Buy American" provisions in the U.S. package and the resumption of export subsidies for European Union dairy produce.

A World Trade Organisation report last month found "limited evidence" of trade measures such as tariff increases, although it warned against the danger of industrial aid packages in wealthy nations.

"When countries take these highly nationalistic decisions, what doesn't disappear is the extent of global imbalances and unless we put heads together... all that you have in an endeavour to deal with the crisis are palliatives," said Manuel.

Manuel said he did not expect the global economic crisis to be resolved within the next year or two and that people should brace themselves for a "pretty long haul."

Manuel is the world's longest serving finance minister and has been at the forefront of efforts to reform international lending institutions such as the World Bank.