Globalisation is opposed through ignorance: let's keep it factual

The World Economic Forum annual meeting in Davos in February saw a scaled-down version of the demonstrations against globalisation that took place in Seattle last year.

The Swiss authorities, however, showed less sympathy for the ragbag of complaints against globalisation and more resolve in restraining protestors than did the US authorities in Seattle.

One of the striking features of the Seattle demonstrations was the range of accusations levelled against globalisation and the World Trade Organisation (WTO) for its part in it. Yet the complaints from participating non-government organisations (NGOs) showed little or no knowledge of the WTO agreements or how they operate. Worse, serious inconsistencies among the NGOs amounted to contradictions in the anti-globalisation coalition.

Environmental lobbies regard trade and economic development as a threat to nature conservation and fear that their single-issue solutions will be rejected when governments are exposed to the benefits of global arrangements.

Trade unions in manufacturing industries that have come under cost pressure from newly industrialising economies want to preserve old jobs and privileges and, above all, wage relativities. This is their argument for ‘fair’ trade.

Cultural protectionists dislike foreign competition even though it gives people greater choice. This justifies trashing McDonalds, no matter how popular the fast food chains are with low income families.

Development lobbies want more aid (which raises their incomes) rather than more trade (from which they gain no credit). Never mind which is more effective in overcoming poverty.

The Seattle demonstrators shared a hatred of multinational enterprises, free trade and international cooperation, but had many differences. Their many objectives were not consistent, exposing deep divisions in the anti-globalisation coalition.

For example, attempting to enforce universal labour standards by applying trade sanctions could increase poverty in countries where labour productivity is still low. The poorest developing countries would be deprived of the opportunity to compete internationally if the labour unions’ demands for ‘uniform labour standards’ were enforced.

Doubts about the justification for forcing outside standards, with their economic costs, on developing countries were absent. But such costs could be significant and could bring the present global prosperity to an end. Look what happened the last time sanctions and trade wars were practised in the early decades of the 20th century. What began with protectionism ended in the world economic crisis of the 1930s, mass unemployment and world war.

One of the WTO’s difficulties is that some of its member governments and many outside commentators want to enlarge its responsibilities. Yet adding topics with only tenuous links to trade to the WTO’s agenda was one of the main reasons why the Ministerial Council meeting in Seattle last December failed to launch a new Round of trade negotiations.

At a global level, free trade promotes economic growth. It leads to job creation, forces companies to be more competitive and lowers prices for consumers. It also gives poor countries the opportunity to develop, owing to injections of foreign capital and technology, and, by facilitating the spread of prosperity, creates the conditions in which democracy may grow.