Globalization and the changing world economy

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					Globalization and the changing world

                      Joseph M Portera
                        November 20th 2008

 • Definition of globalization
 • A brief history of globalization
 • Globalization and the United States
 • Will the United States continue to benefit from
 • Obama and McCain’s views on globalization
 • Policy proposal
Definition of globalization:

 • the development of an
   increasingly integrated
   global economy
   marked especially by
   free trade, free flow of
   capital, and the
   tapping of cheaper
   foreign labor markets.
History of globalization:

 • Traits of globalization can
   be traced to as far back as
   the Roman Empire
 • The Silk Road started in
   China, reached portions of
   the Parthian Empire and
   ended in Rome
 • The trade route helped to
   integrate the three
   economies of the Han
   Dynasty, Parthian and
   Roman Empires.
History of globalization (Cont.)

 • The term globalization wasn’t used in an
   economical sense until the 1980’s
 • The integration of economies was seen as a slow
   process until after World War II
 • The Bretton Woods agreement created the ITO,
   IMF, World Bank, and the GATT
 • The ITO failed 1950 and was disbanded
 • The WTO was created and became an official
   trade governing body on January 1st 1995
History of globalization (Cont.)

 • The WTO currently has 153 member nations
 • The member nations represent more than 95% of all
   global trade
 • The WTO helps to lower barriers to trade and progress
 • The WTO uses the GATT as an all encompassing treaty
   to help regulate trade
WTO member nations:
The U.S. and globalization

 • The United States has been a
   beneficiary of globalization
   through integrating its economy
   into the world economy and
   lowering barriers to trade
 • The U.S. has been a firm
   proponent of furthering global
   trade and lowering barriers to
   trade around the world
 • The U.S. continues to pursue
   FTA’s like the FTTA (Free
   Trade Area of the Americas) to
   promote free trade and
The U.S. and Globalization (Cont.)

 • The U.S. is falling into a recession and domestic
   industries and markets are collapsing
 • Partly because of the integration of the U.S.
   economy in the world economy, the world is
   slipping into a global recession
Will the U.S. continue to benefit
from globalization?

 • With the face of the world economy changing,
   current U.S. trade policies are in danger of
   becoming outdated
 • Do multilateral trade agreements such as NAFTA
   need to be re-negotiated?
 • The Doha round of WTO trade negotiations has
 • If things continue on the current path, the U.S.
   will not continue to benefit from globalization
President-Elect Obama’s views on

                       • Obama believes
                         globalization will continue
                         to be beneficial to the U.S.
                         if we pursue multilateral
                         trade agreements
                       • He believes that
                         globalization will continue
                         with or without the U.S.
                         being a main participant
                       • He believes we must
                         “embrace” globalization
President-Elect Obama’s views on
globalization (Cont.)

 • “ There are some who believe that we must try to turn
   back the clock on this new world; that the only chance to
   maintain our living standards is to build a fortress around
   America; to stop trading with other countries, shut down
   immigration, and rely on old industries. I disagree. Not
   only is it impossible to turn back the tide of globalization,
   but efforts to do so can make us worse off. Rather than
   fear the future, we must embrace it. I have no doubt that
   America can compete--and succeed--in the 21st century.
   And I know as well that more than anything else, success
   will depend not on our government, but on the dynamism,
   determination, and innovation of the American people.”
Former Presidential hopeful John
McCain’s view on globalization

 • He and Obama share a
   similar stance on
 • McCain doesn’t feel the
   need to be as careful
   when entering into future
   trade agreements
 • Doesn’t believe that
   NAFTA should be re-
Former Presidential hopeful John
McCain’s view on globalization (Cont.)

 • “We stand much to gain by harmonizing our energy
   policies, just as have gained by cooperating in trade
   through NAFTA. Since NAFTA was concluded, it has
   contributed to strong job growth and flourishing trade.
   Since the agreement was signed, the United States has
   added 25 million jobs and Canada more than 4 million.
   Cross-border trade has more than doubled since NAFTA
   came into force. We have established North America as
   the world's largest economic market and the integration of
   our economies has led to greater competitiveness of
   American and Canadian businesses. Because of our
   common market, our workers are better able to compete,
   and to find opportunities of their own in the global
Policy Proposal

 • 3 part proposal that would further world trade and
   protect domestic jobs and industries
 • Renegotiate NAFTA
 • Monitor domestic industries and insert
   transparent safeguards
 • Progress multilateral trade agreements and help
   to re-start Doha round negotiations
Renegotiate NAFTA

 • Include enforceable labor laws and environmental laws
 • Abolish the Chapter 11 “investor state” clause which gives
   investors the right to sue governments over profits lost
   due to measures taken in public interest
Monitor domestic industries and insert
transparent safeguards

 • The government would monitor all industries
   using certain metrics to make sure they were
   acting fiscally and socially responsible.
 • The government would also incorporate
   transparent safeguards of which trade partners
   were fully aware.
Progress multilateral trade agreements
and help to re-start Doha round

 • Enter into multilateral trade agreements in a responsible
   and judicious manner
 • The first agreement on the agenda needs to a re-pursuit
   of Doha round negotiations
 • Willingness to compromise on some agricultural
   subsidies. Tradeoffs?
 • Continue to pursue FTAA

 • It’s not a matter of will globalization continue, it’s
   what form will it take and who will benefit? This
   three part policy will help the U.S. to remain on
   the cutting edge of global trade and will allow the
   U.S. to help guide globalization so that everyone
   will benefit.

 •   “The benefits of globalization” The Center for Trade Policy Studies 30 July 2008
 •   “Greasing the World Economy without Doha” The Center for Trade Policy Studies 30 July 2008
 •   “Global Issues” Free Trade and Globalization 2 July 2007
 •   “Global Financial Crisis” Global Issues 29 October 2008
 •   “Globalization and Trade Policy” OED 24 July 2008
 •   “Barack Obama on Free trade” On the Issues 15 June 2008
 •   “Trade and Globalization” Council on Foreign Relations 3 November 20, 2008
 •   “NAFTA’s Economic Impact” Council on Foreign Relations 21 March 2008
 •   “Doha Development Agenda” World Trade Organization 12 November 20, 2008
 •   “Principals of the Trading System” World Trade Organization

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