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Through
a Glass, Darkly
By Michael Alan Hamlin
October 13, 2003
It's as motley an alliance as one can envision. Liberal
academics, activist civil society, and conservative business groups
banded together for the first time since the ouster of former president
Joseph Estrada to bewail the evils of globalization prior to the
recent World Trade Organization (WTO) talks in Cancún. And
they warned government negotiators in starkly dark terms to pull
in the reins on liberalization or face their collective wrath.
If arguments couldn't be won in measured, logical debate,
then any means - including thinly veiled threats of political repercussions
- would do, the alliance seems to have concluded. To be fair, the
locals weren't alone. Other big developing countries - such as Brazil,
India, and Nigeria - gleefully lead the developing world in its
successful effort to crush the latest round of ill-fated WTO talks.
Those talks were originally intended to forge a far-reaching global
consensus for further liberalization of international trade.
The irony, if not delicious, is certainly seductive.
The World Bank estimates that a successful agreement to lower tariffs
would have raised global GDP by US$500 billion by 2015. Most of
that increase was expected to go to poor countries. And if you don't
trust The World Bank's projections, consider that New York Times
columnist and liberal Princeton economist Paul Krugman even in his
most radical moments admits that "this past century, every
case of a poor nation that worked its way up to a more or less decent,
or at least dramatically better, standard of living has taken place
via globalization."
Commentator Fareed Zakaria recently observed that,
"in the last global trade talks, signed in Uruguay in 1994,
rich countries cut their tariffs by 20 percent. This time around,
they were likely to cut 'bound tariffs' by about 50 percent,"
providing increased access by developing economies to these lucrative
markets. While anti-globalization states and their supporters have
celebrated their sabotage of the Cacún talks, they've quite
understandably and publicly ignored the high costs most of their
constituents will continue to pay for their contrived frivolousness.
But it's not all their fault. Despite the populist
appeal of the anti-globalization block, they had plenty of help
bringing the talks to their abrupt and unhappy ending. And as we
all know, that help came from what should have been the least likely
source of comfort for the anti-globalization coalition: developed
countries themselves, the alleged champions of free trade. For instance,
the U.S. under the free trade administration of George W. Bush has
raised tariffs on both agricultural products and steel while at
the very same time pressuring much of Asia to reduce its own agricultural
tariffs. Now, U.S. politicians are complaining about e-Services
jobs being exported to the Philippines and India.
And as Zakaria noted, "The European Union proved
even more determined to maintain its farm-welfare programs. Given
Europe's rhetoric of compassion for the Third World, this was particularly
galling to many poor-country representatives" at the talks.
Zakaria rightly attributes the failure of the Cancún talks
in large measure, as a result, to a leadership vacuum on the part
of the developing countries.
In fact, the reason for resisting liberalization among
developing countries is the same one that accounts for the self-centered
leadership demonstrated on the part of developing world negotiators.
Politicians on both sides of the divide are buckling under the pressure
of politically powerful interest groups, such as our local alliance
of civil society, academics, and traditional business. Civil society
and academics couch their arguments in a misplaced cloak of moral
ascendancy. Business - by which I refer primarily to agro-industrial
and old-line manufacturing interests - decries the exploitation
of local markets by foreigners.
That last is an especially odd - and offensive - argument
for at least a couple of reasons. First, the obvious or the idea
of exploitation. Competition isn't a device for exploiting consumers.
Rather, competition provides choice and forces competitors to lower
prices while providing high-quality goods and services. The net
effect is an empowered consumer. On the other hand, protected markets
are very much exploitive of consumers, leaving them at the mercy
of companies that can't stand up to world-class competition and
for the most part haven't tried to improve themselves. So tell me,
who's the bad guy here?
Next, the offensive argument, which is the idea of
the motley alliance in the first place. The notion that protected
but politically powerful industrialists - from sugar millers to
resin manufacturers - are the least bit concerned with poor farmers,
fishermen and minimum wage factory workers is simply not supported
by the facts. And the facts are glaring. Depending on who's doing
the measuring, somewhere between 40 and 60 percent of Filipinos
live in poverty. Per capita income has been virtually stagnant for
three decades. And the chasm between rich and poor is growing faster
than ever.
And to me, that's not much to celebrate.
(Michael Alan Hamlin is the managing
director of consultancy TeamAsia and the author of three books on
Asian economies and companies. His latest book is Marketing Asian
Places, of which he is a co-author (Wiley, 2001), and he is currently
at work on High Visibility: The Making and Marketing of Asian
Professionals into Celebrities. Write him at mahamlin@teamasia.com.).
Copyright © 2003 Michael Alan
Hamlin. All Rights Reserved.
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