Prime Minister Harper compares economic crisis to 1929

LIMA, Peru - Prime Minister Stephen Harper said the current economic crisis could be as dangerous as the financial collapse that began in 1929 and the world must avoid repeating history by recognizing the Great Depression was caused by bad government policies.

Harper's remarks came as leaders at the Asia-Pacific Economic Co-operation summit in Peru pledged Saturday to invoke a 12-month moratorium on new trade barriers in an effort to stabilize the present tumultuous global economy.

"The financial crisis has become an economic crisis, and the world is entering an economic period unlike, and potentially as dangerous, as anything we have faced since 1929," Harper said in an address.

The prime minister said policymakers back then erred in allowing their banking sector to contract. They let deflation take hold, attempted to balance government budgets when fiscal stimulus was needed, and closed doors to trade in an effort to protect jobs within their own boundaries, he said.

"Notwithstanding our current difficulties, the prosperity generated around the world in the last part of 20th century, and the beginning of the 21st century, has been unprecedented in history," Harper said.

"Removing protectionist barriers and easing trade restrictions was a big factor in ushering in this extraordinary era. ... We cannot allow ourselves to turn back."

"We reiterate our firm belief that free market principles, and open trade and investment regimes, will continue to drive global growth, employment and poverty reduction," the statement says.

"There is a risk that slower world growth could lead to calls for protectionist measures which would only exacerbate the current economic situation."

Meantime, in a conference call with reporters, International Trade Minister Stockwell Day said Canada's handling of the economic crisis is getting a lot of attention from other countries.

"I can tell you the PM is getting a lot of attention around here because it's in time of troubles that people say: 'What can we do? What is working?' and Canada has some things that are working," he said.