TCS Daily

The Tyranny of Regionalization

By Tomasz Teluk - October 3, 2003 12:00 AM

As everyone knows by now, the World Trade Organization gathering in Cancun was a fiasco. No compromise was achieved on international competition, investments, free trade of products and services, or agricultural subsidies. The main goal of the meeting of the richest world powers and developing countries -- the liberalization of the economy -- was not achieved. It seems we are stuck with regionalization, not globalization.


Every observer of the Cancun ministerial is now wondering whether economic globalization exists. Every state introduces its own regulation of foreign trade. Instead of spontaneous international free markets there is a stiff network of trading connections. Contracts are based on governmental decisions, supported by local lobbies. Every government has its own economic intervention policy, subsidizing certain products or protecting specific economic sectors which could possibly suffer from international competition.


Richest Against Poorest


Debate on trade liberalization is being brought into the bargain. Rich countries, the European Union, United States, Switzerland, Japan or South Korea, try not to admit the developing countries into their markets. Fast developing nations produce goods of high quality for lower prices. This is the danger to the local producers, but nobody asks consumers, interested in buying cheaper products. The poorest countries count on the liberalization of the global agricultural market: the end of subsidies for farmers. But world superpowers are not able to accept the risk of opening their markets. They prefer to support financial aid to Third World governments. Other means of control are tariffs on products and services. Barriers can also be non-financial, such as onerous environmental regulations or unattainable quality standards.


Regionalization not Globalization


The world is suffering not from globalization, but from a lack of it. The free flow of capital, commodities, people and sometimes information is blocked by global regulations. The international economy is controlled in the same way as local economies. Economists say that the global free-market means profits to its participants. The globalization of capitalism can promote only the expansion of well-being. Inflow of new products will stimulate European Union markets, which are in a long-term stagnation. Entrepreneurship seems to be cure for the economic problems of the underdeveloped countries. Free trade constitutes the wealth of nations. Free flow of workers and articles reduces social inequalities and prevent conflicts. The globalization of prosperity could also prevent humanitarian disasters. Experts from the Center for the New Europe estimate that a mere one percent of GDP growth in Africa will help prevent 128 million people from starving.


The Hypocrisy of Antiglobalism


Antiglobalist riots, which have led to suicidal acts, are the result of a misunderstanding of economic processes. The free market is not responsible for the problems of farmers from developing countries. The lack of a free-market coupled with government support of agriculture (the EU subsidizes each farmer to the tune of $14,000 per year) does not allow the export of agrarian products abroad. The antiglobalists, left wing anarchists and others protesting against governments and corporations are hypocrites. In fact, they protest against the results of cooperation between governments and corporations involved in protectionism, while at the same time, they are indirectly financed by them and demanding... more protectionism for the markets, entrepreneurs or products. If activists are enthusiastic about disrupting the next round of negotiations, it means they are happy that developing countries are losing the chance to make international trade more just. The closing of borders and markets only prolongs stagnation and regression.


The Regionalization of Well-Being


The international policy of the U.S. government and European Union bureaucracy is the main point of resistance on the way to liberalization of the global trade. The Cancun summit has underlined the division on the economic map of the world. Beneficiaries of regionalization are NAFTA, EFTA, EU and others. The losers are shut out by the rich world. There is no possibility of reducing tariffs, fees and subsidies at the moment. The failure of the WTO is the inability of international bureaucracy to reach a compromise. It seems that such organizations as WTO, the International Monetary Fund and the World Bank are no longer able to support international policies.


Long-term financing of non-effective economic systems has resulted in disproportionate development and the defrauding of billions of dollars of financial aid. The international community has become more and more closed off. Countries that have made the most of opening themselves to the world are the winners. Malaysia, Singapore and Thailand were poor countries in the 1950s but now their GDP per capita is around $20,000. Thanks to the present closing of the regional markets, Africans have no chance to equal this success. Thanks to the Cancun failure, many of them must continue to live on less than a dollar a day.


TCS Daily Archives