Corporate Communicators Can Help Make the Case for Globalization
At the Arthur W. Page Society’s Annual Conference in London recently, Financial Times columnist Martin Wolf declared that he thinks the “Western-dominated globalization process is coming to an end.” He added that he wasn’t sure if it was globalization that was ending, or just the Western leadership of it, but he attributes the change to the collapse of political support for the policies that have permitted globalization and trade to flourish.
The British vote for Brexit and the rise of Trump in America, Le Pen in France, Hofer in Austria and others who play on populist and nationalist fears, all suggest that many developed country voters no longer believe that globalization is in their interest. Even free-trade supporters in America, including Hillary Clinton and a number of formerly pro-trade Republican senators who are seeking re-election, have walked away from their previous support for President Obama’s landmark Trans-Pacific Partnership (TPP) free trade agreement.
The Doha Round of global trade talks lies in ruins and the outlook for the Transatlantic Trade and Investment Partnership (TTIP), a proposed trade agreement between the European Union and the United States aimed at promoting trade and multilateral economic growth, is grim.
This represents a major threat to the well-being of consumers and workers in developing and developed companies alike. There is much at stake. But I believe there is a case to be made for trade and globalization and see a tremendous opportunity for corporate chief communication officers (CCOs) to help their companies make it.
The Economist recently observed that as exports rose from 8% of world GDP to 20% between 1950 and 2000, “Export-led growth and foreign investment have dragged hundreds of millions out of poverty in China, and transformed economies from Ireland to South Korea.”
Trade has benefitted the U.S., too. Former U.S. Trade Representative Bob Zoellick reports in a recent Wall Street Journal op-ed that half of America’s exports go to the 20 countries with which the country has free-trade agreements, even though they account for just 10% of the global economy.
“In the first five years after the U.S. has concluded free-trade agreements,” Zoellick wrote, “U.S. exports have increased three times as rapidly as overall export growth. Over the past five years the U.S. has, with its free-trade partners, run a trade surplus for manufactured goods of about $230 billion, according to the Commerce Department.”
Importantly, The Economist notes, “Exporting firms are more productive and pay higher wages than those that serve only the domestic market.”
In short, free trade helps consumers and workers in developed and developing countries alike. At the same time, some uncompetitive workers in developed countries come out losers, and this can’t be ignored. For workers displaced by trade, education and training can help them qualify for new, higher-value-add jobs.
Protectionist trade barriers can reduce trade flows, but those who think uncompetitive jobs can be preserved by making trade more difficult are wrong. Listen to GE’s Jeff Immelt, who, seeing the political tide turning against globalization, recently announced that in response to rising protectionism, his company will build more plants abroad. “At GE, we will always be a strong American manufacturer,” Immelt said. “We will produce for the U.S. in the U.S, but our exports may decline.”
Visiting Malaysia and India recently, my optimistic view that growth and progress are inexorable and beneficial was reinforced. In Kuala Lumpur, construction cranes are everywhere and growth has topped seven percent for a quarter-century. India now has outpaced China as Asia’s fastest growing economy. This represents a major opportunity for American exporters, but only if the U.S. continues to work to open those markets.
If the U.S. fails to ratify TPP, it won’t halt economic growth in Asia, but it may mean, as Wolf suggested, the end of Western leadership of globalization. China would be able to increase its role as an economic leader in Asia, meaning less wealth and less security for Americans, as Zoellick argued in another WSJ op-ed.
Making the case for trade liberalization in the face of protectionist fears isn’t easy. When I was assistant U.S. trade representative for public affairs in the Reagan Administration, there was a rising tide of protectionist sentiment as manufacturing jobs were being lost to imports from Japan and Germany. The Administration responded with tough retaliation against unfair trade practices, combined with brilliant negotiating by Ambassador Clayton Yeutter that opened up markets for U.S. exports of manufactured and agricultural products, as well as services.
We worked hard to convince the American public that trade, on balance, helps everyone, and it has. Over the past generation, abject poverty has been halved and a truly global middle class is rapidly emerging. This means growing market opportunity for business and better lives for billions of people.
CCOs of global companies must help our enterprises promote the benefits of free trade and globalization. We also should support education and training for those whose jobs have been affected by trade or technology. By creating opportunities both for jobs and for rising living standards, business can be a force for progress for workers and consumers in developed and developing countries alike.