EU's Von der Leyen says need to work together to avoid global race to the bottom

By Leela de Kretser

DAVOS, Switzerland (Reuters) - European Commission President Ursula von der Leyen warned on Tuesday of the risk of a 'global race to the bottom' using economic tools such as sanctions, export controls and tariffs.

Speaking at the World Economic Forum's annual meeting a day after the inauguration of U.S. President Donald Trump, Von der Leyen spoke of a new era of harsh geostrategic competition.

"As this competition intensifies, we will likely continue to see frequent use of economic tools, such as sanctions, export controls, and tariffs, that are intended to safeguard economic and national security," she said.

But she said innovation must not be stifled.

"In this spirit, we will need to work together to avoid a global race to the bottom," she added.

"Because it is in no one's interest, to break the bonds in the global economy. Rather we need to modernize the rules to sustain our ability to produce mutual gain for our citizens."

Trump said on Monday that he wanted to reverse the U.S. trade deficit with the European Union, either with tariffs or more energy exports.

(Reporting by Bart Meijer, Charlotte Van Campenhout; Editing by Alison Williams and Alexander Smith)