"The greatest danger that threatens us is protectionism, and we are still not taking enough steps to ensure genuinely free trade," Merkel told the Financial Times newspaper.
The chancellor, who will meet up with world leaders in South Korea on Thursday, called for a new effort to complete the Doha development round of trade liberalisation measures.
"There is something we can do that does not cost us much, and does not create any new debts, and that is to finish the Doha round," she said.
"We have been talking about it for many years, but there is another chance in 2011 to complete it at last."
The German leader broached the subject of China's manipulated currency, saying that the blossoming superpower needed to be persuaded using "facts and benchmarks" rather than bullied into allowing its currency, the renminbi, to appreciate.
With Sino-US relations strained over one another's monetary policies, Merkel said she would be prepared to act as peacemaker, adding: "I do not think it sensible to have a political argument."
Merkel brushed off US suggestions that nations should adhere to targets for maximum levels of balance of payments surpluses and deficits, describing it as "narrowly conceived."
Germany has come in for criticism over its large trade surplus, which some other countries say causes imbalances and distortions in international commerce.
"I don't think much of quantified balance of payments targets," she said. "It is not just a question of exchange rates but also a question of competitiveness."
AFP/dw
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