The Trilemma of Globalisation: Free Trade, Fair Trade or Fear Trade
Ken Costa
Chairman: Europe, Middle East and Africa UBS Investment Banking Department 2 Finsbury Avenue London EC2M 2PP
Cass Business School
2 March 2006 EMBARGO UNTIL 19:30pm 2 March 2006
The Trilemma of Globalisation: Free Trade, Fair Trade or Fear Trade In discussing the challenges presented by today’s diverse global environment few topics can be as important as the issue of globalisation. It is at the heart of the structural change that has taken place in our generation as borders have shrunk, technology changed and communications enhanced.
Economists believe – almost universally, which says something(!) that globalisation is a net benefit. But, if recent examples are to go by, there seems to be a growing doubt gnawing at its foundation. Globalisation faces a trilemma. Which is to be master? Free Trade, Fair Trade or Fear Trade. Free Trade
For globalisation to succeed there needs to be a common acceptance of the frictionless flow of capital across borders and the determination to eliminate
2
impediments to the free movement of resources and products. Free trade is the pillar on which the argument for globalisation is founded. For the last decade we have lived with the prevailing sense that the globalised environment is here to stay. There has of course been a vigorous debate about how the benefits should be shared, the implications of the growing technology divide and the sustainability of regional development. But by and large the foundations have been in place. What has become disquieting recently has been the realisation that some of the most basic premises of globalisation are far from secure. The case for globalisation still has to be made. Globalisation still needs to be nurtured as a beneficial system and shown to be demonstrably favourable to all participants in the global market place. This is an argument that needs to be advanced and argued for and can not merely be assumed. Fear Trade
But free trade seems to have been
Chairman: Europe, Middle East and Africa UBS Investment Banking Department 2 Finsbury Avenue London EC2M 2PP
Cass Business School
2 March 2006 EMBARGO UNTIL 19:30pm 2 March 2006
The Trilemma of Globalisation: Free Trade, Fair Trade or Fear Trade In discussing the challenges presented by today’s diverse global environment few topics can be as important as the issue of globalisation. It is at the heart of the structural change that has taken place in our generation as borders have shrunk, technology changed and communications enhanced.
Economists believe – almost universally, which says something(!) that globalisation is a net benefit. But, if recent examples are to go by, there seems to be a growing doubt gnawing at its foundation. Globalisation faces a trilemma. Which is to be master? Free Trade, Fair Trade or Fear Trade. Free Trade
For globalisation to succeed there needs to be a common acceptance of the frictionless flow of capital across borders and the determination to eliminate
2
impediments to the free movement of resources and products. Free trade is the pillar on which the argument for globalisation is founded. For the last decade we have lived with the prevailing sense that the globalised environment is here to stay. There has of course been a vigorous debate about how the benefits should be shared, the implications of the growing technology divide and the sustainability of regional development. But by and large the foundations have been in place. What has become disquieting recently has been the realisation that some of the most basic premises of globalisation are far from secure. The case for globalisation still has to be made. Globalisation still needs to be nurtured as a beneficial system and shown to be demonstrably favourable to all participants in the global market place. This is an argument that needs to be advanced and argued for and can not merely be assumed. Fear Trade
But free trade seems to have been