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Opinion Globalization shouldn’t be a dirty word

Shipping containers stand on the dockside at Thessaloniki Port in Thessaloniki, Greece. (Oliver Bunic/Bloomberg)

+ What should be the next president’s model in approaching international trade?

Douglas Holtz-Eakin is president of the American Action Forum.

“Globalization” — broadly defined as market-driven, cross-national flows of goods, services and investments — has become a dirty word. It is derided by U.S. presidential candidates, feared and rejected by the public, and evidently headed to the dustbin of policy ideals. This, despite its contributions in the past two decades to dramatically reducing poverty in developing countries and improving productivity and standards of living in the developed world. What can get globalization back on track?

First, tell the truth about the successes and failures of globalization. The North American Free Trade Agreement was a success, both economically and strategically. In purely economic terms, it benefited Canada, Mexico and (modestly) the United States. It also solidified a democratic neighbor on the southern border. It was a success and should not be mischaracterized for cheap political gain.

Free our trade deals from corporate interests

The entry of China and India into the world trading system was also an enormously successful global anti-poverty program. But it is also true that its effect on global wage scales was far greater than anticipated, and Western policy responses were inadequate to deal with the fallout. Globalization is neither a resounding success nor an unmitigated disaster; the truth lies in between.

Second, stop further deterioration. The toughest moment for globalization — the entrance of China and India — is in the rear-view mirror and won’t be repeated. The greatest danger of this moment is not that additional steps on the path to globalization — the TPP or the Transatlantic Trade and Investment Partnership — will not go forward. Rather, the greatest danger is self-inflicted wounds — actively protectionist tariffs; retaliation and trade wars; and resulting global economic downdrafts. Preventing these will the biggest test of near-term political leadership.

Third, improve the macro environment in which any future globalization discussion takes place. Everyday Americans recognize the post-World War II gains that accrued from aggregate growth north of 3 percent. They will similarly be acutely aware of the slow pace of economic advance that comes with our current 2 percent economic growth. Any notion that this “new normal” is somehow acceptable should be immediately discarded. Structural reforms to entitlements, the tax code, the regulatory state and education systems are necessary complements to trade agreements and globalization. Trade economics is not a zero-sum game, but the faster the economic growth, the more the general public will believe this.

Fourth, we must address the aftereffects. Shifts in the patterns of trade are accompanied by shifts in the pattern of employment, which may require more robust transition assistance in the form of income support or training. But this is just as true of shifts in domestic trade as it is international trade. Broadly supporting workers through job transitions will ease the fears of globalization.

Finally, we must broaden the discussion. Any discussion of future trade agreements should openly feature their strategic importance. Just as the General Agreement on Tariffs and Trade knitted together the Western alliance and NAFTA strengthened North American democracy, agreements such as the TPP are just as important in terms of the U.S.-China strategic rivalry as they are for dollars and cents.

Read more:

Carla A. Hills: Don’t give up on trade just yet

Lori Wallach: Free our trade deals from corporate interests

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