Ambassador Frank Wisner, former American envoy to India, expressed concern the US may fall back on protectionist measures if the economic crisis continues for much longer.
Although he said he is against protectionism Wisner said he believes 'the game will be much more complicated' for the US if the economic downturn continues.
Wisner was speaking at the India Business Conference 2009 at the Columbia Business School in New York on Friday.
"I am troubled by the appearance of protectionism," he said, adding that protectionism does not exist only in advanced economies in the US and Europe, but can be found increasingly around the world as sovereign governments rise to shield their markets from economic turmoil.
"Yet, I believe that we all have been to the same school and recognize that going by the experience of the 1930s it would be a serious disaster if we move towards serious legislative protectionism," Wisner added.
The former envoy, who keynoted the conference, said both India and the US need to be pay attention to issues of protectionism and free trade.
Wisner said that despite his conviction that protectionism is harmful, individuals, some people in Congress and special interest groups could move to close off some avenues of Indo-US trade.
He said the US Congress's new focus on H-1B visas and outsourcing is the real threat to the bilateral relationship that US and India have built. It would only give American industries a short-term advantage, he said.
Wisner said he was similarly troubled by New Delhi's decision to ban imports from China, even if it only involved toys. "This is another example of what we should not have done. We need to think about eventually putting in place a free trade agreement between our two countries and expand opportunities for growth," he said.
Wisner, however, said, he does not believe the intellectual or the political climate in the US favours protectionism on a grand scale. "For the moment the side of reason is backed by the administration, by the Congressional leadership, and by the intellectual community," he said.
Wisner said he is struck by the determination of the Obama administration, despite the election rhetoric, to resist protectionism and that he hoped CNN anchor Lou Dobbs and the protectionists did not win the argument.
"Vigilance and careful attention are necessary," he said.
Wisner also stressed the need for Indo-US cooperation both at the government level and at the level of public-private partnership, funded by both sides and by both private and public funding that will tackle grave issues.
"That cooperation can open new horizon in the US-India relations that has changed so much in the past years. We have new opportunities," Wisner said.