CHAPTER EIGHT: Pax Britannica, Pax Americana, and Globalization Today

Using the Perspectives

Four years after the Doha Round of multilateral trade talks was launched, C. Fred Bergsten published an article in Foreign Affairs analyzing its progress. If the Doha Round—which has thus far placed a heavy emphasis on agricultural trade liberalization—fails, it will be the first major multilateral trade talk to do so in about seventy years. According to Bergsten, Doha's prognosis is not good, in large part because it has neglected two key issues.

"The round has never even attempted to seriously address the two largest problems facing today's global trading system: security concerns since the attacks of September 11, 2001, especially the risk that world trade would seize up in the wake of another major terrorist attack, and the absence of effective control over the increasing number of preferential pacts involving many of the world's largest trading nations."

1.  Which perspective would emphasize each of these concerns? Why?
     

Bergsten also attributes Doha's poor prognosis to increasingly protectionist measures taken by countries in regard to the value of their currency. Because the Chinese renminbi is significantly undervalued, allowing Chinese goods to be more competitive in the global marketplace, many other states have considered using protectionist measures to control the value of their currencies.

"The undervaluation of the renminbi, and that of other Asian currencies kept artificially undervalued (including the yen and the Indian rupee) because governments were afraid to let their competitive positions deteriorate against China, pertain almost as much to Europe as to the United States. Protectionist attitudes are rising rapidly in Italy, France, and even traditionally liberal Germany."

2.  What action have countries taken or at least considered in response to the undervalued renminbi, and why? What perspective      might recommend this response?
     

Bergsten issues a warning that the consequences of Doha's failure could be disastrous for the world economy. But the silver lining, he points out, is that countries recognize this and will subsequently make this trade round work.

"There is widespread recognition that failure to keep the trading system moving toward further liberalization could trigger a sharp reversal into protectionism and bilateralism and perhaps erode the WTO itself, causing substantial problems for the economies and foreign policies of all countries involved."

3.  Which perspective is Bergsten using? How can you tell?
     

4.  Do you believe, as Bergsten implies, that protectionism is always or nearly always bad? Explain.
     

C. Fred Bergsten, "Rescuing the Doha Round," Foreign Affairs.