LOS ANGELES — Not many prominent Americans saw the huge cloud forming over globalization as early as did then-President Bill Clinton. After an address on the subject at last year’s World Economic Forum in Davos — in which he virtually pleaded with well-heeled corporate execs to put themselves in the position of those less heeled — Clinton told me privately that if America failed to tamp down the insecurities created by trade liberalization, the price might be increasing protectionism and recession.
Surely, the turning point was the Battle of Seattle in December 1999, just a month or so before. Seattle was billed as a standoff between the protesters and the establishment. But this Vietnam-era-like clash uncovered an astonishing chasm in American opinion about globalization, despite its having been so highly touted by the U.S. establishment and most notably by the Clinton administration.
A lot has happened since then — or hasn’t happened. Forward movement for the World Trade Organization — the Vatican of globalization — is on hold. But as the politics of world economics abhors a vacuum, various restless nations, in Asia and Europe especially, are putting together bilateral trade liberalization and tariff-lowering deals right and left.
Some are even moving to create regional organizations that could be good for everybody — or just for some.
Thus, one growing fear is that regional and bilateral efforts will undermine the desired goal of universal global liberalization, which (at its well-articulated, theoretical best) would presumably unleash all the pent-up forces of the world economy and produce unprecedented new wealth for all.
One prominent worrier about regionalism is C. Fred Bergsten, director of the Washington-based Institute for International Economics and a former Treasury official. He is, additionally, a charter member of the school of thought that says if something is not moving forward, it’s probably moving backward. Writing in the current issue of Foreign Affairs, the heady journal of the Council on Foreign Relations in New York, this prominent globalization guru flatly foresees nothing less than a blistering economic war among Asia, America and Europe.
“Like a bicycle on a hill,” he writes, “the global trading system tends to slip backward in the absence of continual progress forward. Now, with no serious multilateral trade negotiations taking place anywhere in the world, the backsliding has come in the form of intensified regionalism (which is inherently discriminatory).”
Regional trade groupings have the potential to grind the world economy down if they sour into fortress-Asia/fortress-Europe rejections of globalization. Should globalization’s lead agent, the WTO, remain stymied, watch for a torrid race between the Europeans and the Asians — and for abrasive, counter-productive power plays between regional economic blocs that could constantly roil the waters of world politics.
What’s more, souring U.S. public opinion could turn America into something of a fortress itself. That’s why history is likely to aver that, for all Clinton’s predictive powers, Mr. I-Feel-Your-Pain and his go-go globalization administration didn’t do enough to tame the anti-globalism backlash with a persistent campaign of education, persuasion and reassurance. While the Clinton administration slept — or was preoccupied with raking in campaign funds — the armies of anti-globality, in the States and abroad, were mobilizing.
And they are still well-mobilized. So, as long as America remains a house divided about trade liberalization and globalization, it’s hard to envision America being able to counter trends toward regionalism and bilateralism.
In the U.S., too many groups feel threatened by the harsh mechanics of global competition: Workers whose jobs are blown away by globalization expect the government to catch them when they fall over, while outside of the U.S. other nations want to know why we keep making grand speeches about open trade but shield sectors such as steel and agriculture from foreign competition. Similarly, environmental concerns, even the sincerest ones, are often read across the Atlantic and Pacific oceans as scarcely disguised protectionism.
The Bush administration’s trade inheritance is accordingly brutal: The issue could well prove to be the toughest one facing it. Clinton may have been sagacious enough to see the revolt coming, but, sadly, he did little but step out of the way. Don’t be surprised if his successor is hit with it smack in the face.
Wouldn’t it be incredibly ironic if America, the original cheerleader for globalization, were to become its Achilles’ heel?
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