Adam Smith...... Paulson?

BILLINGS, MT - Treasury Secretary Henry Paulson warned on Tuesday that it was a mistake for U.S. lawmakers to blame U.S. job losses on global competition and to use it as an excuse for passing protectionist trade laws.

"This increase in protectionism is a worrying trend," Paulson said in prepared remarks for delivery at a community jobs forum in Billings where he appeared with Senate Finance Committee Chairman Max Baucus, who represents Montana.

He said it was not unusual in a rapidly changing economy for job losses and dislocations to occur but that can in turn open the way for more job creation in other sectors. "But making trade a scapegoat and enacting protectionist legislation would make us worse off," Paulson said.

The U.S. Treasury chief said he was doing all he could to ensure that America's trade partners keep their markets open and play fair.

Paulson said he had pressed Chinese leaders last week during a visit to Beijing "to move more quickly to adopt market-oriented reforms which would reduce their trade imbalance with the United States."

He urged U.S. lawmakers to approve four free trade agreements -- with Peru, Colombia, Panama and South Korea -- that have been awaiting action for weeks.

Paulson said the U.S. economy was "healthy and we have low unemployment," but stressed that it was important not to discourage foreign investors.

"To keep America competitive in a global economy, we must also welcome foreign investment," he said.

Paulson also suggested the U.S. taxation system was working against the country's best interest because corporate taxes were "above average" when compared with other countries. He said that was hurting job creation and damaging the U.S.'s ability to compete globally.