Debunking myths

Debunking myths

Think of the oft-repeated promises (lies) by government officials and 'experts:' Free trade is rational and good, and NAFTA, CAFTA, FTAA and other such free-market treaties will create jobs, bring healthy development and create stability. Right!"

I came across those charged comments recently on the Web site of the liberal Global Policy Forum.

Clearly, anti-globalist rhetoric still holds appeal for many. Their minds are made up; they do not need the facts. Just as troubling is the fact that too few supporters of globalization have ready access to the kinds of information that can convince open-minded politicians and other observers who are sitting on the fence when they consider trade issues.

The good news: The International Chamber of Commerce has come to the rescue with a 25-page booklet that summarizes the vast literature about globalization in readable style. "Standing up for the global economy: Key facts, figures and arguments in support of globalization" is available free at www.iccwbo.org/.

The report is a handy reference for speeches, interviews and public discussions. For example, it marshals evidence that multinational companies "are not necessarily attracted to countries with low wages and weak environmental protection." On the contrary, it shows that during the late 1990s, "80 percent of U.S. foreign investment was in rich countries such as Canada, Germany, France and Japan where social and environmental standards are high." Moreover, "nearly all the rest was in advanced developing countries such as Singapore, Mexico and South Korea, which also have high standards." A major reason companies shun countries with poor wages and working conditions is that they generally reflect low levels of productivity.

Likewise, the report shows that globalization is not destroying jobs in industrialized countries. On the contrary, "Technology, not trade, is the chief explanation for the decline in manufacturing employment in industrialized countries. Automation and the information-technology revolution have boosted technology." In France, for instance, "1.5 million manufacturing jobs have disappeared since 1978, but manufacturing was able to keep its share of GDP unchanged - at roughly 20 percent." As Stefan Bertasi, a trade policy expert at the International Chamber of Commerce, told me, "Globalization gets blamed for everything."

The report explains that free trade never promised to work miracles. Truly open trade is only one aspect of a much more complex globalization process. "Open trade policies will never make up for shortcomings in other areas," the report reads. "For a country to attract long-term and productive investment, some key conditions have to be met on the ground." These include a stable political system supported by a professional and accountable public service; a transparent legal framework; sound macro-economic, fiscal and monetary policies; and adequate standards for education, health care and social infrastructure. Many of these key conditions are still missing in the world's poorest countries, despite trade liberalization.

The argument is that globalization, in fact, has not failed the world's least-developed countries. The problem is, the poorest countries have not yet really globalized. As U.N. Secretary-General Kofi Annan told the Millennium Forum in 2000, "the poor are poor not because of too much globalization, but because of too little." Too often, critics assume that developing countries have made all the changes required for effective globalization, when those countries have really done little more than merely remove barriers to trade. Recent growth in India and China reflects progress making these other necessary changes, the report shows.

The report's most troubling conclusion: "Contrary to widely held belief, globalization is not irreversible. It has already been reversed in the past, with dramatic consequences for the world economy." Can this help sway the naysayers? Many anti-globalist ideologues will no doubt discount its text and charts as mere propaganda. However, the report could help convince other minds more open to reason.

Martin Wassel, the chamber's director for policy, said the group plans to distribute the report to its chapters in 90 countries to help them communicate effectively to politicians and policy-makers. "Managers are looking for some reassurance that politicians are less likely to erect barriers" in response to continue pressure from anti-globalists. Wassel added, "Politicians are less likely to do things that are against their long-term interests if there is a balanced public debate on this issue."

Let us hope that he's right.

Alan M. Field is the international trade reporter for The Journal of Commerce. He can be reached at (973) 848-7113, or by e-mail at afield@joc.com.