A WORLD OF OPPORTUNITY

13-10-2006

Cadbury's has admitted making Dairy Milk in France; Corus which has a major centre in Wednesbury is in merger talks with the Indian steel company Tata; and the call centre for your bank or insurance company is probably based abroad. Welcome to globalisation. But whose interests does it serve asks Colin Hines?

Trade union leaders are echoing the agenda of big business by calling for acceptance of the job destroying policies of the free movement of goods, capital and labour. Companies such as Aviva (formerly Norwich Union) appear to be taking them at their word as they sacked 4000 UK workers, a quarter of them due to relocation of call centres to India.

The three main political parties also call for open markets and the inevitability of bowing the knee to international competitiveness. Accompanying this counsel of despair there will almost certainly be more corporate press releases heralding more job losses that will damage social and community fabric and harm the environment by increasing the transportation of goods.

A more hopeful message for the protection of jobs, the social fabric, community cohesion and the environment would be one of localisation, the protecting and rebuilding of local economies rather than gearing economies to out-compete each other internationally. Everything that can sensibly be produced within a nation or a region should be. Long-distance trade is then reduced to supplying what could not come from within one country or geographical grouping of countries, the historic role of such trade.

Localisation is not about restricting the flow of information, technology, trade and investment, management and legal structures, but about a different end goal for such activities.

Globalisation has a clear end goal: maximum trade and money flows for maximum profit. From localisation's end goal comes a clear set of policies and trade rules which would ensure a more just, secure, environmentally sustainable future through localisation.

There would not be a return to overpowering state control, merely the provision of government policy providing an economic framework which allows people, community groups and businesses to rediversify their own local economies.

The route to localization consists of seven interrelated and self-reinforcing policy areas. The basic steps are:

• reintroduction of protective safeguards such as tariffs and quotas for domestic economies;
• a site-here-to-sell-here policy for manufacturing and services domestically or regionally;
• localising money such that the majority stays within its place of origin;
• local competition policy to eliminate monopolies from the more protected economies;
• introduction of resource taxes to increase environmental improvements and help fund the transition to localisation;
• increased democratic involvement both politically and economically to ensure the effectiveness and equity of the movement to more diverse local economies;
• reorientation of the end goals of aid and trade rules such that they contribute to the rebuilding of local economies and local control.

Under these circumstances, beggar-your-neighbour globalization gives way to better-your-neighbour localization.

Such an approach will also help developing countries who, like us, are told that the only way forward is to downgrade efforts to improve their local conditions and instead contort their economies to compete with the likes of China and India. The impossibility of such a strategy is already obvious in areas like textiles and shoes, soon this will widen to an ever-increasing range of low and high tech goods and services.

The leaders of rich countries see their future in dominating the global high tech sector. This ignores the fact that China and India are fast developing their own highly skilled but low cost expertise in these high value added areas. Almost 20% of China's exports are already classified as high-tech, and with two million graduates a year there's every reason to believe that this percentage will grow.

Politicians who assert that Europe can win such an economic race, and in the process secure the future funding of Europe's social model, should be challenged to spell out exactly what it is that Europe will still be able to export, rather than import from China, and other cheap labour, hi-tech competitors. Also, given the rising tide of Chinese imports, and resulting European job losses and declining tax revenue, what are the implications for public sector finances.

Trade could make a valuable contribution to achieving job and food security and poverty alleviation globally, but to achieve this, international competitiveness and reductions in trade barriers have to be replaced by a combination of internationalism together with new rules to allow elected governments to protect their domestic agriculture, industry and services. The gradual reintroduction of import controls, allied to domestic policies and redirected aid and trade rules that prioritise the rediversification of local economies world-wide, is the only way to protect livelihoods and reduce poverty.

This involves replacing the present emphasis on gearing economies globally to out-compete each other with a new goal of maximising self reliance and ensuring that trade rules are governed by a pro poor approach.

For example: to give effective help to Africa's poor producers of cash crops it is vital to make sure that the exporting nations and their producers have as secure a level of earnings as is feasible. To achieve this will require measures to ensure that guaranteed quantities of - say - coffee from specified exporting countries are purchased by specified buying countries. The transactions must also take place within a guaranteed range of prices. This would provide economic security for all, not only for the rich north. Poor countries could also then prioritise the meeting of their basic needs rather than the provision of ever-cheaper exports.

In response to their restive and increasingly insecure populations, governments are likely to return to protective barriers. But this features nowhere at present in the thinking of leading politicians in this country, though some American politicians and unionists are pressing for protection. The present Government's supportive acquiescence to evermore open markets will really sink any chance of a fairer and more secure future for Britain. UK manufacturing is disappearing to Asia and Eastern Europe, followed by call centres and other services and yet the idea persists that our future lies in out-competing Asia in hi-tech exports - truly the final colonial delusion.

Globalisation's increasingly adverse effects will eventually result in massive public support for a party that offers protection and security from this process.

(Colin Hines is the author of the Earthscan book ‘Localization - a global manifesto' and member of Localise West Midlands.)