Second thoughts on world trade Globalization: New voices are joining the chorus of those questioning whether unfettered trade among nations is always a goal worth pursuing.

Sun Journal

April 08, 1997|By Mark Matthews | Mark Matthews,SUN NATIONAL STAFF

WASHINGTON -- In 1994, the United States and 124 other nations formed an organization to police world trade. In the process, they seemed to agree that globalization -- the technology- and communication-driven integration of world economies -- was an unstoppable force.

Except now there are second thoughts.

Free trade and the global marketplace are again the subject of debate and threaten to be a major topic in American presidential politics. Divisions within the Democratic Party on trade issues have already chilled the Clinton administration's eagerness to expand the North American Free Trade Agreement. In addition, efforts toward new worldwide trade talks are stalled.

That seemed an improbable outcome when officials signed the pact that slashed tariffs and created the World Trade Organization, a Geneva-based agency that decides trade disputes. The agreement was eight years in negotiation and marked the culmination of five decades of trade liberalization that followed World War II. It signaled a broad consensus that the world was moving inexorably toward one market, enhancing global peace and prosperity.

To a large extent, the agreement has delivered on its promises.

"My general assessment is positive," says I. M. Destler, director of the Center for International and Security Studies at the University of Maryland's School of Public Affairs. "It has established itself as an important place for the settlement of disputes. It is employed by a wide variety of countries, including the United States. And the general pattern is for countries either to settle cases out of court or to accept the findings" reached by WTO panels.

The United States in particular has enjoyed a trade-driven period of economic growth and has made greater use of the WTO's trade dispute system than any other country. But critics haven't been silenced -- and new voices are joining the chorus of those questioning whether unfettered trade among nations is always a goal worth pursuing.

Two recent additions are financier-philanthropist George Soros and author William Greider.

Soros became a billionaire from the very essence of world commerce: currency trading. But in a widely cited article in the February issue of Atlantic Monthly, he bites the hand that bestowed his wealth, saying it undermines his new, cherished goal of a "civil society."

"Too much competition and too little cooperation can cause intolerable inequities and instability," Soros writes. Nations, guided by the principal of survival of the fittest, "are unwilling to make any sacrifices for the common good."

He argues that the global system needs to be tempered by "the recognition of a common interest that ought to take precedence over particular interests."

Greider, a Rolling Stone editor who revealed the candid musings of Ronald Reagan's first budget director, David A. Stockman, is more alarmist. He writes that the global economy has reached a "pathological" stage, threatening to create far more goods than there are consumers and to produce large-scale unemployment and financial crisis.

"Certainly, enormous conflicts lie ahead for the peoples of the world, political and economic collisions, possibly including the violence of wars between rival economies," Greider writes in his well-received book "One World, Ready or Not: The Manic Logic of Global Capitalism."

His prescription: National controls over capital, worker-controlled businesses, increased taxes on wealth, compulsory trade balancing and debt forgiveness for the poorest countries.

Even nations that led the way in creating the new trading regime are contributing to the strains.

The European Union has formally challenged a U.S. law, co-sponsored by Sen. Jesse Helms, Republican of North Carolina, and Rep. Dan Burton, Republican of Indiana, that penalizes foreign companies that invest in and trade with Cuba.

Cuba matters little to Europe economically. But Europeans fear that if the United States gets away with Helms-Burton, it would be tempted to impose penalties for trading with other countries that Congress doesn't like.

One threat is a new law, named for New York Republican Sen. Alphonse M. D'Amato, that penalizes firms investing in Iranian and Libyan oil development.

"We want to stop D'Amato and all possible follow-ons," says Hugo Paemen, the EU ambassador in Washington. "The problem is that once you accept that it is allowed in international TTC economic relations that you apply your domestic law in an extra-territorial way -- today it's the United States with Cuba -- who is going to do it tomorrow?"

After firing their opening salvos, the United States and Europe have been worried by the danger that the dispute poses to the world trading system and are scrambling to reach a settlement.

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