CBI Chief Chides Bush over US Protectionism ; BUSINESS ANALYSIS Digby Jones Urges Public Sector Pension Reform

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THE LEADER of British industry yesterday launched an attack on the newly re-elected President George Bush, calling on him to drop his protectionist rhetoric and adopt a more friendly approach towards the environment.

Digby Jones, the director general of the CBI, said the new US administration urgently needed to tackle trade distortions and sign up to the Kyoto agreement aimed at curbing greenhouse gas emissions.

In a wide-ranging interview ahead of the CBI's annual conference next week, Mr Jones also called for a reform of public sector pensions and said that Britain had a golden opportunity to take the lead in the modernisation of Europe.

Noting that in his first term of office President Bush had introduced the steel tariffs which were ruled illegal by the World Trade Organisation, the CBI leader said: "He seems to be making a virtue out of protectionism. I find that very disappointing. They are the most powerful nation on earth, they have the most powerful economy on earth and yet Bush and Kerry spent the election indulging in who could be more protectionist than the other."

Mr Jones acknowledged that the Common Agricultural Policy was an "absolute disgrace" which Europe had to address. But he added: "We have every right to say to the Americans, right, what are you going to do about trade distortions?"

On the environment, Mr Jones said the President should start his new term with some "statesmanlike behaviour" by signing up to Kyoto. "If Bush is going to say Kyoto doesn't work, he has to give us an alternative rather than just say he is not playing. We haven't a hope of getting China and India to the table and becoming more sensitive to the environment unless the biggest economy and biggest polluter in the world does the same."

Mr Jones also turned his fire on the public sector, saying there was a real need to tackle the huge unfunded liabilities which had built up in Civil Service pension schemes. In the past, the generous final salary pension schemes enjoyed by public sector workers had been justified on the grounds that their pay was inferior, but this was no longer the case.

"There will be a huge polit-ical problem when council tax demands drop through the letterbox next March and people find their tax has gone up for one reason - to fund the deficit in the council's pension fund," Mr Jones said. "Council tax payers will say, why should I use my money to fund another person's pension fund when they are not using theirs to fund mine? Public sector pensions are in real need of reform and it is going to be seriously unpopular with public sector unions and employees but they can't use the old argument that they have this pension advantage because the pay is not very good. …