46
GLOBAL FINANCE
``[The state] is the great fictitious entity by which everyone seeks
to live at the expense of everyone else.''
Frī
edī
eric Bastiat, nineteenth century French economist
THE ANTI-GLOBALIZATION BACKLASH: SEATTLE
AND BEYOND
In late 1999 a ministerial meeting of the World Trade Organization
gathered in Seattle to outline the agenda for a new round of global
trade talks (see Chapter 3 for an outline of the GATT agreements since
WWII). It rapidly degenerated into a shambles as serious disagreements
emerged, with the US, the EU, and developing countries crystallizing
into warring camps. Outside, there were violent clashes between police
and protesters, some of the 50,000 people, mainly trade unionists and
environmentalists, who had converged on the city to demonstrate
against trade-related issues. Eventually, the meeting collapsed.
During 2000 and 2001, an estimated one million people have taken
part in demonstrations at meetings in Washington, Melbourne, Prague,
Seoul, Nice, Barcelona, Washington DC, Quebec City, Gothenburg,
and Genoa. At the time of writing, the WTO intends to make a second
attempt to launch a new trade round in Doha, Qatar. For the first time in
many years, the trend towards increased free trade and ``globalization''
looks under threat, with a world recession looming and well-organized
political activism gaining strength.
Anne Krueger, deputy managing director of the IMF, said in 2001
that ``the big risk is a slackening or slowdown in the rate of economic
growth could lead to a sufficient downturn in economic activity to
trigger a backlash among those who are now silent, but not neces-
sarily supportive, of globalization.'' Anti-globalization is a form of
protectionism that could reverse liberalization and ``the long period of
successful economic growth that the world has enjoyed.'' (See Fig. 6.1.)
The debate between protectionism and free trade has been raging
for at least two centuries (see Chapter 8 for a discussion of the basic
arguments) and although most economists are broadly in favor of
free trade, many others including many politicians are not. The
controversy is not merely a matter for theorists: a worldwide switch
towards protectionism would have profound effects on industries and
individual firms around the world.
