Le Blog d'Olivier Da Lage

A reversal of Globalisation?

Posted in Divers, Inde by odalage on 13 février 2017

By Olivier Da Lage

Commenting on both Trump’s victory and the vote in favour of Brexit in the UK, the ILO director general Guy Ryder said: “It is the people who feel they haven’t benefited from globalisation and from the EU, from the way things are organised. This is the revolt of the dispossessed in that regard”[1].

Worldwide, free-trade agreements (FTA) are threatened. Donald Trump has steadily promised to scrap both NAFTA, the free trade agreement concluded between Mexico, Canada and the USA more than 20 years ago as well as the Transpacific agreement signed just one year ago. Public opinion (and therefore, politicians alike) in the US and Europe have an increasingly negative view of the TTIP, the free trade agreement being negotiated between The United States and the European union, while the Canada-UE FTA was on the brink of failure when a Belgian provincial parliament refused to ratify it unless it received reassurances on some key issues (such as private arbitration courts) which eventually were given, thereby enabling its signature[2].

Even in countries where free-marketeers used to call the shots, such as the UK, the Netherlands and – to a much lesser extent – the USA, “globalisation” has become a spectre for voters across the political spectrum, sounding more like “loss of jobs” than “booster of growth”. True, the “alter-globalisation” movement is losing momentum. However, the fear of globalisation is no longer confined to it: during the last US presidential election, all the main candidates, Trump, Clinton and Sanders campaigned against globalisation. In the Brexit referendum vote, the resentment towards European immigrants was more of a factor than a rejection of the EU as such.

Next in line now is France, where free market was never a popular theme. Even though, as the fifth world economic power, France has vastly benefited from globalisation, most candidates in the run-up to the April 2017 presidential election, including “pro-business” ones insist on their duty to protect citizens against the fallout of globalisation. Such trends can indeed be seen all across Europe.

The reason why the anti-globalisation trend is picking up in the West is that very different forces are merging in a de facto coalition.

On the one hand, one finds old opponents of globalisation who always considered it a bad thing: blue collar workers and the political parties representing them who fear it is all about transferring jobs from their countries to emerging countries where salaries and labour laws are less protective and therefore perceived as unfair competition. They include many workers’ unions, communist parties and other left and far left parties in Europe as well as a good deal of the popular vote in the US among the Democratic electorate and the trade union movement. But increasingly, the popular vote goes to far right or popular parties who blame the loss of jobs not only on foreigners abroad but also on foreign immigrants “stealing” the job of local citizens: UKIP in the UK, Front National in France, “True Finns” in Finland, Party of Freedom in the Netherlands, etc.

Other long-standing opponents include many left-leaning intellectuals, especially in France, who consider globalisation as a threat to cultural diversity, i.e. the “americanisation” of other cultures.

But what really changed the paradigm is that these opponents have now been joined by mainstream figures and parties as was obvious in the Brexit vote, the US presidential election and the ongoing French presidential election campaign. These newcomers have added their voices to the anti-globalisation choir for opportunistic reasons because they have sensed which the wind is blowing and are desperately trying to retain their voters. But there is more to it than this: the feeling is that the Reagan-Thatcher drive towards deregulation has gone too far, has been damaging the social fabric and created widening poverty pockets. In the past 30 years, the difference of salaries between the bottom and the top of the ladder has increased from 1:10 to 1:400 or more and the social acceptance of this widening gap at a time when the economy is barely recovering from the 2008 crisis is just not there.

By contrast, in India, where globalisation has for two decades been synonymous with outsourcing from Western companies and massive inflow of FDI (foreign direct investments), the word does not carry a negative connotation, far from it. But appearances can be deceptive. In 1998, the financial crisis which severely hit the global financial markets hardly affected the Indian economy. Ten years later, India had to face a sudden massive outflow of capital in the wake of the subprime financial crisis. Back in 1998, India was still largely insulated from the world financial markets by the many rules on foreign exchange which were subsequently relaxed. This was no longer the case in 2008. As a result, huge amounts of FDI were hastily repatriated from India to the US or to Europe, not because of the economic situation in India but because these investors desperately needed the cash back home.

The narrative in India is generally that this country supports globalisation and criticises the protectionist practices of Western governments but on the issue of globalisation, India now sits on both sides of the fence. On the one hand, as an “emerging” country, India still offers more for less in many areas and needs globalisation. On the other hand, as an already “emerged” country, India requires regulations to protect its intellectual property. For decades, it was not a priority but as a major exporter of cultural goods and services, India now has an increasing stake in ensuring its artistic works are not stolen.

In the field of agriculture, all Indian governments have always taken a protectionist stance for fear of the brutal consequences of free trade in a sector still employing 60 percent of the active population with generally low productivity and many farmers poverty-stricken.

Globalisation does not divide the West and the rest of the world. The actual oppositions lie within each country and every government has to grapple with the contradictions between the benefits and the negative consequences of the very same phenomenon. As going back on globalisation is not an option even for those hostile to it, the challenge for governments and international institutions is to find how to reign in its excesses, manage it politically, and make it acceptable to their public[3].

—–

[1] “Economic frustration has spawned Trump and Brexit, warns UN labour chief”, The Guardian, 14 November 2016.

[2] “La contestation contre le libre-échange gagne du terrain”, Le Monde, 25 October 2016.

[3] Lawrence H. Summers, “It’s time for a reset”, The New York Times, 5 December 2016.

Publicités
%d blogueurs aiment cette page :