Petty nationalism risks turning the clock back a century, warns Johnson

Trade & Industry Secretary's stern message to 'little Europeans' about dangers of protectionism

The rise of "petty nationalism" in Europe risks a return to the protectionism that ended free trade in the 19th century and paved the way for the outbreak of the First World War, Alan Johnson said yesterday.

In his second hard-hitting speech attacking protectionism in the US and Europe, the Secretary of State for Trade and Industry said the world was "heading down a dangerous route", singling out what he called "little Europeans".

He also launched a thinly veiled attack on the French President Jacques Chirac for vowing to protect the independence of Danone, the yoghurt giant, against a takeover by PepsiCo of the US.

In a wide-ranging address to the British Chambers of Commerce' annual conference, he said globalisation was causing "increased anxiety" about its effects across the Channel and the Atlantic. He said opponents of globalisation were using talk of a "clash of civilisations" to advocate protecting national champions as a guise for nationalistic protectionism.

Last week Mr Johnson attacked US politicians for blocking the acquisition of five US ports as part of the takeover of P&O by Dubai Ports World because of concerns an Arabian country would have access to security information.

Mr Johnson said yesterday: "Of course, mergers and acquisitions should be of concern when there is a genuine issue of national security at risk but, in some cases, security is being used as a veil. For instance, it is hard to see how a rich country's economic security can hinge on yoghurt, as one is claiming."

There has been a slew of interventions by European governments to protect domestic companies. Several opposed the takeover by Mittal Steel, controlled by the Indian-born Lakshmi Mittal, of the Luxembourg-based rival Arcelor.

Critics say the merger of the French utilities Gaz de France and Suez was rushed out to head off a bid for Suez or some of its assets by Italy's Enel. The European Commission has also criticised apparent moves by Poland and Spain to block foreign takeovers.

"I don't want to be alarmist - world trade is growing," Mr Johnson said. "But we are at a crossroads and if we take a wrong turn it could take generations to recover."

He pointed out that Lord Keynes, the celebrated economist, wrote in 1914 that free trade was a state of affairs that could only improve further. "But of course what followed was the First World War, and then a prolonged period of protectionism and isolation. It was no coincidence that much of the world experienced depression, hyperinflation and mass unemployment."

Mr Johnson's comments came before a meeting of all 25 EU finance ministers to discuss the divisive issue of globalisation in Vienna this weekend.