Globalization - the Good and the Bad
November 1, 2007
Globalization — the Good and the Bad
Te live in a world community. If you are not convinced, you need to review 21st century geopolitics, while also noting the international community’s increasing use of foreign labor to deliver manufacturing efficiencies.
U.S. agricultural imports reportedly may soon exceed exports, triggering a U.S. trade deficit for the first time since 1959. Notably, by 1995 America’s accumulated trade deficit totaled about $1.1 trillion based on a period of sustained trade deficits beginning in 1975.
Although America’s exports continue to rise, its imports are increasing at nearly twice the pace with U.S. consumers buying all manner of goods, many of which are not commonly available or else are grown off-season to U.S. production. They also are likely to be produced more cheaply overseas. These products range from fruits to nuts to cheese to beer and coffee. The U.S. meat protein industry is also involved.
As of December 3, 2007, Chile is due to become a U.S. trading partner to export poultry and poultry products to this country. In its announcement, USDA’s Food Safety and Inspection Service (FSIS) indicated that the deal involves about five establishments that are expected to export some 5,000 metric tons of raw young chicken de-boned breast meat this year, to increase to 12,000 metric tons by 2010. Although lower consumer prices are an identified benefit, FSIS also notes that the trade agreement is expected to impact U.S. producers “in the form of greater competition from Chile.” Based on the agency’s final rule assessment, both nations will benefit from an expansion of trade in poultry and poultry products as part of a wide range of commodities.
Another influence in the international relations’ equation relates to “a new giant sucking sound” as described by journalist William Greider, who sees globalization entering a “fateful new state” given such factors as the migration of production outside the United States to such nations as China. American tycoon Ross Perot was in front of this curve with his prediction of the early ’90s that NAFTA would devastate the U.S. economy. He painted a dire picture, mostly about American firms moving to Mexico for cheap labor.
Former Secretary of Agriculture Edward Madigan called the NAFTA agreement a “win-win” for agriculture, predicting a gain of $2 billion in U.S. farm exports to Mexico for fiscal 1993.
NAFTA’s final transitional restrictions concerning U.S.-Mexico and Canada-Mexico agricultural trade will be removed in 2008. This concludes a 14-year project in which the member countries systematically dismantled numerous barriers to regional agricultural trade. That’s a good thing. Moreover, agricultural trade within the free-trade area has grown dramatically, and Canadian and Mexican industries that rely on U.S. agricultural inputs have expanded. U.S. feedstuffs have facilitated a marked increase in Mexican meat production and consumption, and the importance of Canadian and Mexican produce to U.S. fruit and vegetable consumption is growing.
The downside of globalization is the outsourcing of service functions and the employment of foreign labor to deliver services more efficiently and less costly. This has a triggered hot debate between opponents and proponents in America. That debate is sure to heat up as job outsourcing increases.
Consider that General Motors plans to build a research center to develop hybrid technology among other designs in Shanghai in a joint-venture business arrangement. Notably Chinese engineers earn far less than their American counterparts. Other automakers also plan to build similar facilities in China.
A continued debate over the relative merits of globalization seems pointless. The genie is out of the bottle. To compete with vigor on a new playing field defined by globalization, America must rise above debate, especially the petty kind, and kick into gear with new technology, insightful political maneuvers and marketing tactics better than anywhere else in the world.