Globalization is not a new story.
When Masthead editor Kay Semion asked me to write a column about free trade, she made an interesting observation: Most editorial boards, whether liberal or conservative, seem to be free-traders by conviction.
Perhaps it's because editorial boards usually stick up for values like individual liberty and freedom from arbitrary government action. Perhaps it's because most newspapers believe in the power of economic growth to raise living standards. Perhaps it's because the arguments in favor of free trade are so convincing.
Still, many readers aren't sold on free trade, for a variety of reasons.
Unions worry about job losses. Protectionist sentiment in some communities remains strong, especially when one-industry towns are threatened by foreign competition. And a new generation of anti-globalization activists is starting to blame the ills of the world on free trade.
We saw them at the baffle of Seattle, and we saw them again in Quebec City in April at the Summit of the Americas (where 34 heads of state met to talk about a free-trade zone that would stretch from Alaska to Argentina). A Free Trade Agreement of the Americas would open up new markets for developing nations and help sustain the economic liberalization already underway in Latin America.
Yet opposition to it was fierce among the 25,000 protesters in Quebec City. Everything from environmental catastrophe to human rights abuse was blamed on trade liberalization.
Demonstrations against globalization have, of course, become today's equivalent of Grateful Dead concerts, with the same groups showing up in city after city. But while many of the protesters are peaceful and well-intentioned, these self-appointed guardians of Third World interests would do well to read some economic history.
Globalization is not a new story. Since the 1950s, and especially in the past decade, countries that have been more open to trade and investment have grown twice as fast as others. This has helped to lift three billion people out of poverty during the post-war period, according to an estimate by the Organization for Economic Cooperation and Development.
Nowhere has this been more dramatic than in Southeast Asia. Today's Asian tigers -- South Korea, Taiwan, Hong Kong, Singapore -- were largely closed economies in the 1950s and '60s. So were rapidly developing nations of today such as Malaysia, Thailand, and Indonesia. As late as 1975, six out of 10 in Asia lived in absolute poverty (defined as less than $1 of income a day). Today, only two out of 10 face that plight.
Now look at what happened to countries that didn't embrace market liberalization. African nations such as Nigeria and Tanzania in the 1960s were at about the same level of development as Malaysia, Thailand, and Indonesia. But most African nations have chosen to rely on protectionism, foreign aid, and an inefficient public sector. Today, the difference between the two continents is striking -- and tragic insofar as Africa is concerned.
In Latin America, economic liberalization has already begun to help. Most nations have begun to abandon the old, discredited economic policies of the post-war years, such as a huge state presence in the economy, import substitution and the protection of domestic industry Tariffs have tumbled and trade has surged.
Even so, critics contend that globalization and free trade are making people poorer. That's simply not the case. While it's true that there is widening income inequality in many countries, that shouldn't be confused with income loss. A World Bank study of 130 countries found that in general the incomes of the bottom 20% have grown as fast as incomes overall. In fact, the poor benefit most from growth because they suffered most from past failures like runaway inflation, lack of investment, and huge foreign debts.
It's true that NAFTA still generates some controversy in North America but it's hard to see why NAFTA has been a remarkable success in Mexico, which has used the trade deal to become a rapidly rising economic star. Mexico is the now the eighth-largest export economy in the world. Trade liberalization and political change have gone hand in hand. The economic opening of Mexico coincided with the election of president Vicente Fox last year and the defeat of the corrupt PRI after 71 years of rule.
As far as the United States is concerned, Ross Perot's giant sucking sound never happened. Since NAFTA was signed, 20 million manufacturing jobs were added in the United States, and two million in Mexico. NAFTA didn't stop the United States from enjoying an unparalleled economic boom in the second half of the 1990s. Even America's trade deficit with Mexico and Canada is overrated.
From a Canadian perspective, free trade with the United States has been a godsend. Canada runs a hefty trade surplus with the United States, and more than 85% of our exports head south of the border. Free trade helped sustain our economy during a brutal recession in the early '90s.
Free trade is not easy for everyone to swallow. It creates both winners and losers; it requires adjustment policies and retraining for those whose jobs are displaced. Still, as a policy prescription for most economies, it's hard to beat.
NCEW member Peter Hadekel is editorial page editor of The Gazette in Montreal, Canada.
From an April 26 editorial in the Dallas Morning News by editorial Writer Timothy O'Leary
Spirit of Quebec
President Bush made a bold promise at the Pan-American summit in Quebec last weekend. He committed himself to obtain from Congress by year's end the enhanced authority to negotiate free-trade agreements called "fast track" or "trade promotion authority." It was the political equivalent of Babe Ruth pointing to the outfield bleachers before attempting to hit his next home run.
Like the legendary baseball slugger, Mr. Bush put his reputation on the line. He did it so that he would be able to sign a Pan-American free-trade agreement by 2005 (and, not incidentally, to launch a new round of global trade-liberalization talks in November in the Middle Eastern country of Qatar). His very public pledge will increase the pressure on him to succeed, and make it easier for other free-trade supporters to cast their lots with him. There's no going back on a commitment like that, not when the following year is an election year, when Congress would be especially loath to consider controversial trade initiatives. If he is serious about opening markets for U.S. goods and investment as far south as Chile, it's this year or never.
Success will require leadership. It will take a systematic, district-by-district fight to convince individual representatives and senators of the rightness of the project. Mr. Bush should not be above cajoling and arm-twisting, bluster and threats....
Fast track is often described as requiring Congress to vote on free-trade agreements in their entirety, without amendments. That isn't the half of it.
The essence of fast track is that Congress becomes a partner in the negotiations. In effect, it establishes a mechanism for countries to negotiate with the president and Congress simultaneously. In that manner, countries are more inclined to make their best offers, knowing that Congress won't intrude later to change the terms of the deal....
Mr. Bush and his advisers are fond of saying that good foreign policy starts in one's own neighborhood. If that's true, Congress has no more important foreign policy objective than to approve fast track so that the dream of a prosperous and entirely democratic Pan-America can be made real. Having pointed to the bleachers, Mr. Bush has no choice but to deliver a home run.
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|Date:||Sep 22, 2001|
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