Globalization Backlash?

Time Asia has a story about signs of a backlash against globalization.

The article acknowledges the growth of world trade, but notes:

Yet a quick look around the planet might lead to the impression that globalization is in crisis. Ahead of Chinese President Hu Jintao's visit to Washington next month, U.S. Commerce Secretary Carlos Gutierrez told China that it must shape up on a host of issues if it is to continue to benefit from its trade with America. Last week, indigenous people in Ecuador protested against a proposed free-trade agreement with the U.S. that they thought would deliver their economy and culture to the colossus of the North. In Seoul, the attempt by U.S. corporate raider Carl Icahn to get a seat on the board of tobacco company KT&G has, says Jang Hasung, dean of Korea University's business school, "reignited anti-foreign-investor sentiment." The sale of a controlling interest in Shin Corp., owner of Thailand's leading telecommunications company, to Temasek Holdings of Singapore has been one of the catalysts for the Bangkok demonstrations against Thai Prime Minister Thaksin Shinawatra, whose family controlled Shin Corp. In France, an effort by the Italian gas company Enel to acquire Groupe Suez appears to have been thwarted by a hastily arranged, government-sponsored marriage between Suez and Gaz de France. The very idea that a state-owned company from Dubai might take over P&O, a British company that controlled six ports in the U.S., gave most members of Congress an attack of the vapors; Dubai Ports World has now said that it will sell P&O's U.S. assets to an American buyer. Even in Britain, where the economy has been "Wimbledonized" for years (London has a great tennis tournament, but no Briton ever wins it) and where, says Robert Wade of the London School of Economics, there is "an unusually deeply held belief in the merits of free trade and free investment," there are limits. When Russian gas behemoth Gazprom started stalking the British supplier Centrica, officials let it be known that "any new ownership would face robust scrutiny." Put all those straws in the wind and you've got a flying haystack. "We're at a point here," says Kenneth Courtis, vice chairman of Goldman Sachs Asia, "where if this is just a little pop it doesn't mean very much. But if it's the beginning of a trend, it's big."

In a Washington Post editorial, Henrik Rasmussen writes

Protectionism is alive and well in the United States. The massive mobilization against the takeover of a number of U.S. port operations by a Dubai-based company has very little to do with port security. It makes no difference whatsoever which companies manage U.S. port operations. The U.S. government will remain in charge of security, and the ports will continue to be manned by U.S. workers. That's the bottom line.
Now that Dubai Ports World has decided to shed its newly acquired American assets, perhaps we can finally start debating the real issue at stake: free trade.

China Radio International reports

U.S. economists and business leaders attending the China Development Forum 2006 have raised concern over the negative impact of rising American protectionism on the Sino-U.S. relations and the global economy.

"The Sino-U.S. relations are perhaps the world's most important bilateral economic relationship in the 21st century. That relationship is now at risk, and if not attended to it could backfire, with significant negative impact on China, the United States, and the broader global economy," Stephen Roach, chief economist of investment bank Morgan Stanley told the forum that closed in Beijing on Monday.

The U.S. government is expected to decide by the end of March if China is guilty of currency manipulation. It has been suggested that a 28 percent punitive tariff will be imposed on Chinese imports if the U.S. finds China at fault.

The threat of higher tariffs on Chinese exports if China doesn't revalue its currency is just a tip of the iceberg of mounting protectionism in the United States, he said.

Some in the US Congress feel China is not playing fair regarding the valuation of their currency, and are considering a vote on sanctions. From a Reuters article:

Two U.S. senators said on Wednesday they were inclined to go ahead with a vote this month on a bill threatening China with sanctions but that they would make a final decision after a trip to Beijing next week.

"We hope, we truly hope that we're given some reason for optimism that China will revalue its currency and play by the rules on our visit," Sen. Charles Schumer, a New York Democrat, told reporters at a joint press conference with Sen. Lindsey Graham, a South Carolina Republican.

"We are meeting with the highest level of people in China and we expect to get ... real knowledge first hand of the Chinese economy, the Chinese world view and the specific views on currency revaluation," Schumer said.

Senate leaders have promised Schumer and Graham a vote by March 31 on their bill threatening China with a 27.5 percent tariff on its exports to the United States unless Beijing agrees to let its currency, the yuan, rise in value.

The two senators, many other lawmakers and manufacturers claim the yuan is so undervalued it gives Chinese products an unfair advantage in U.S. markets, costing millions of lost American jobs and fueling a record bilateral trade gap which hit nearly $202 billion last year.

Policy is often cyclical. It seems the US and the rest of the world are feeling out what the proper limits of globalization ought be - considering factors economic and otherwise. I feel the benefits of globalization are far too great and the risk of protectionism to stop it, at least for very long. Yet, I am also suspicious of those that have an unqualified support of free markets, because of all the other issues involved, including national security. A good discussion of some of the other issues governments ought to consider, along with possible limits on globalization is included in Barry C. Lynn's book: THE END OF THE LINE. I wrote previously about this book. As with most things, balance is the key.