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Speak Up for Globalization - IHT, 14 June 2000


By David de Pury and Jean-Pierre Lehmann International Herald Tribune

GENEVA - Historians of the future will marvel at the threshold on which the world economy stood at this turn of the century. The end of the Cold War had abolished geopolitical and ideological divisions between a capitalist West and a communist East. Throughout the 1990s, economic reforms in developing countries - including erstwhile economic nationalist stalwarts like India, China, Brazil, Argentina, Mexico, Egypt - led to the abandonment of protectionist policies in favor of open markets. Divisions of economic ideology and the spirit of mutual hostility that had prevailed between South and North were significantly reduced.

The international political economy had never known such unity and such promise. Furthermore, enormous developments in information and communications technologies intensified the world's integration and led to an exponential increase in new business opportunities. This extraordinary era witnessed considerable achievements in wealth creation on a global scale and the emergence of many new corporations driven by technological innovation and entrepreneurial flair.

Of course Utopia has not arrived. Wealth has been created, but unevenly, as the pace of technological change has caused income gaps to widen both between countries and within them. Widespread poverty, disease and ignorance remain. These problems continuously and vigorously need to be addressed.

Most important, however, the world economy must not be allowed to deviate from the direction it embarked on after communism collapsed. The victory of liberalism must not be jeopardized, let alone reversed. But there is cause for concern. The demonstrations in Seattle last year and in Washington in April and the proliferation and stridency of groups opposing an open and liberal global economy are more the symbol than the substance of the perils that confront the world. The real cause for concern is the absence of political leadership, including the conspicuous absence of a spirited promotion of the virtues of the open liberal economy and of the need to continue making it more open and more liberal.

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Leading up to, during and since Seattle, Washington has been at best highly ambivalent in its attitudes and policies. In the throes of a presidential election and in the absence of fast-track authority, nothing constructive on the world trade agenda can be expected for the foreseeable future.

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While the EU and the United States should be actively engaged to strengthen the international multilateral system, their incessant squabbles and the petty petulant nature of the relationship in fact risk tearing it apart.

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Brussels's uncompromising position on agriculture continues to create an insuperable barrier to genuine global liberalization as the Prodi Commission also seems headed toward internal wrangling and irrelevance.

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Japan, the world's second largest economy, has been so mired in the last decade in its economic and political paralysis that its voice on international economic matters has been even more muted than usual.

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As the world's leading economic powers have shown absence of leadership and direction, the World Trade Organization, created in 1995 to bring coherence and conviction to the global economic system, has failed to generate any momentum, to gain any credibility, to obtain support, to provide even a shadow of inspiration and intellectual input. Geneva is at a navel-gazing standstill.

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There is a real and growing danger that the recent committed adherence to the international liberal system by the developing economies may be eroded, possibly lost, as they feel alienated by the proposed imposition by the industrialized countries of new rules (on labor standards and environment), discriminated against by the continued, indeed increased, use of anti-dumping measures and frustrated by failing to gain market access in products where they have comparative advantage (agriculture, textiles, steel) and insufficiently integrated in the policy process in writing the world economic agenda.

Thus, in contrast to the extraordinary opportunities in this new global economic age, much more striking of late has been the sense of drift, of policy paralysis, of intellectual incoherence. The unity of the international political economy, rather than being reinforced by centripetal forces, is witnessing an intensification of centrifugal forces.

Though future historians will marvel at the this moment in the world economy, it is not yet known sequence of events that followed, the fact that the liberal economic system became dismantled, that globalization was followed by deglobalization, that centrifugal forces caused greater tensions and divisions, culminating in a failure to create the great global wealth that had appeared so promising.

Or will they be able to note that after some confusion and political ineffectiveness, the dangerous drift to greater turbulence was reversed?

Though the unraveling of the international liberal economic system has not occurred yet, there is cause neither for complacency nor for passivity. Nor is there reason to expect that existing national political forces or the WTO will show leadership or provide motivation. Supporters of the liberal international political economy must stand up, be counted and persuasively champion the cause.

The world's corporate leaders in particular must do more. Many multinational corporations have exhibited innovativeness, dynamism and strategic vision by acting as agents of profound change in accelerating and intensifying the process of globalization. Yet, with few exceptions, they have proved embarrassingly reticent, inarticulate and unconvincing in expressing their convictions and explaining their actions and the benefits that can result.

This is a time that urgently calls for global corporate statesmanship.

Mr. de Pury is chairman of de Pury, Pictet, Turrettini & Co. and chairman of the Evian Group, a forum of officials, executives and academics promoting the global liberal economy. Mr. Lehmann is professor of international political economy at the International Institute for Management Development and director of the Evian Group. They contributed this comment to the International Herald Tribune.