As G-8 meets, free trade under fire

Recent economic woes are raising new doubts about the benefits of globalization.

By Mark Trumbull | Staff writer of The Christian Science Monitor

from the July 7, 2008 edition

The long trend toward open trade and global markets is under new stress as problems from food shortages to climate change test its staying power.

The march toward economic globalization is not shifting into reverse gear, but it shows signs of deceleration as leaders of the developed world meet in Japan this week for their annual summit.

They'll be focusing on issues of immediate concern – from how to tame the alarming inflation levels to non economic concerns such as delicate nuclear diplomacy with North Korea. But their agenda also includes a more general problem: how to maintain expansion of global commerce, which has helped many countries reach new levels of prosperity but has costs as well as benefits for workers.

This problem isn't new, but it has greater urgency this year because of a slowing economy that has dampened consumer confidence worldwide. The rising clout of emerging economies adds another challenge – balancing the interests of rich countries against those of developing nations.

Finding the right path forward is tricky.

"There's real risk here, and the stakes are pretty high" says Michael Spence, an economist who recently chaired a commission on global development. "The main thing that's enabled the high growth where it's occurred ... is really access to the global economy."

The trials of 2008 – soaring food and energy prices and a downturn in the vital US economy – are just the sort of environment in which doubts about free trade often increase. But this environment may also represent an opportunity, a nudge for world leaders to make sure that the benefits of economic policies are shared as widely as possible.

"Part of the problem here is that we've had too little attention ... to the distributional issues," says Mr. Spence, a senior fellow at the Hoover Institution in Stanford, Calif.

That concern came through loudly in an international poll released early this year.

The majority of the public in 27 out of 34 countries surveyed said the benefits and burdens of economic change are not being shared fairly.

Still, most people around the world don't wish to backtrack entirely on globalization. It's more that they want to see the process better managed, according to the BBC poll, which was conducted by Globescan and the University of Maryland's Program on International Policy Attitudes. Half of those surveyed said trade and global investment are growing too quickly, while 35 percent said "too slowly."

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