The International Chamber of Commerce has urged governments to avoid protectionist policies because they will eliminate rather than save jobs, its chairman Victor Fung Kwok-king said yesterday.

"I'm afraid protectionism is prevalent now. It's almost a knee-jerk reaction when unemployment goes up and because it is easily pursued by local politicians," Fung said in an interview with The Standard.

He said that despite no country admitting to protectionism, it is on the rise in the form of anti-dumping duty.

Fung was speaking in response to recent talk of a resurgence in protectionism, most notably concerning US President Barack Obama's rescue plan hinting at a "buy American" policy.

He said that it was not only the United States that posed a protectionist threat, as the World Trade Organization recently added India and Indonesia to its list of anti-dumping countries.

"People are not raising tariffs yet, which we feared they would, but non- tariff barriers [to trade] are more of an issue and could be as damaging," Fung said.

Fung warned that protectionist policies would not only be bad for the economy in the long term but would also have a negative impact on jobs and employment in the short term.

"The world is much more interconnected now.

"If you protect one sector, you could save a few jobs but lose a lot of jobs due to retaliation," Fung said.

He cited a survey from American think-tank the Institute for International Economics, which said "if there were protectionist measures in the US steel industry it will save about 1,000 jobs but at the same time the US economy will lose 65,000 jobs immediately from all the surrounding SMEs."

Fung said multilateral trade financing was key to economic recovery. "Fixing the global financial system is only the first step but it will not necessarily restart growth," he said.

"Getting global trade flowing again is the best means to restart growth and help us out of the recession."

Fung also said that all economies, including Hong Kong, and companies needed to think more deeply about upgrading skills.

"Trade is estimated to decline this year and only start to grow again in 2012, so we need to be prepared to upgrade and emerge stronger than we came into the tsunami," he said.