The outpouring of anti-globalist sentiments from both right and left in many western democracies is teaching those of us who support a global economic architecture many valuable lessons on how we should look toward reforming our international institutions of trade and finance. The rise of nationalism and populism in western democracies is a reaction to the perceived loss of sovereignty and economic exclusion that many ordinary citizens have felt as a result of the growth of transnational institutions, be they the European Union, the World Trade Organization, or more focused initiatives such as the Trans-Pacific Partnership.
In reaction, citizens have been reclaiming their desire for sovereign power through exercising their democratic franchise at national polls, especially in the Euro-Atlantic family. Whether a backlash to Brussel’s Euro-bureaucracy through Brexit and the rise of populism in Central Europe or the increasing influence of anti-globalization politics within both U.S. political parties, we need to recognize that these assertions of political will are legitimate forms of grievance. While we may be disheartened by the message at times, we must at least take heart that these grievances play themselves out in a democratic process (albeit one that seems increasingly under fire). In essence, citizens are using their local ballot boxes to push back at international institutions that they otherwise feel powerless to influence.
Sadly, despite its benefits in terms of global prosperity, globalization has become viewed as the provenance of the elite, the well connected, and the wealthy. While multinationals advertise a world of global brands, good times, and freedom, these images don’t reflect the lives of many. The opportunities to better one’s life through a good job or entrepreneurship promised in our global economy aren’t always available, and when the promise of globalization doesn’t deliver, people turn to those institutions that promise them more control over their lives. In the best case, they turn to those things that define their identity and interests, in the worst case some turn to violent extremism.
What then can we learn from the trends we are observing today, I would suggest two points: Firstly, the institutions of trade, commerce, and governance, both regional and global, must be seen to deliver the goods to a wider community of people and be more democratic in their actions, and they must apply the principles of good governance – fairness, accountability, trust, and responsibility – when designing their functionality. For example, the rise of nationalist politics in Central Europe is not a wholesale rejection of European values, most citizens of the region appreciate the democracy, rule of law, and prosperity that the EU has provided. Rather, they feel disheartened by a system that discounts citizen participation in the setting of norms and regulations in a distant capital. Institutions that govern global trade are similarly seen by have-nots around the world as out of touch with local conditions. The EU needs to figure out how to be more democratic and responsive in its policy setting, and the way in which the world negotiates trade deals needs to be more transparent, accountable, and inclusive.
Secondly, globalization itself must also democratize in a way that enables more to access its benefits. Micro, small, and medium business are learning to trade across borders via e-commerce, we need to fast-track our rule setting to ensure that this sector can grow and compete. Governments must put in place the physical infrastructure to speed its adoption, but also the legal infrastructure to guarantee a level playing field, protect data, and ensure a reliable and free internet. Through the WTO Trade Facilitation Agreement, governments must also live up to their commitments to ease the non-tariff barriers to trade that exist at many of our borders and that stand in the way of small businesses trading across frontiers. It’s a very exciting opportunity, but one which requires attention from our leaders to make sure we do it right.
What is troubling to many is that our inward looking instincts are coming at a time when we need to be paying greater attention to how we reform all of these institutions. Do we build the framework for global trade based on our Euro-Atlantic values of openness, free enterprise, and fairness, or do we allow non-democratic nations that rely on closed door deals, crony ties, and authoritarianism to set the rules?
Next week, my organization CIPE will be gathering in Brussels with many of our partners from across Central Europe to sign a declaration reaffirming our own Euro-Atlantic commitment to democracy and private enterprise. The purpose of this admittedly modest action is to make a broader statement about our desire to forge a renewed commitment to regional and global economic systems based on the principles of democratic dialogue, free markets, and rule of law that guarantees a level playing field. We and our partners are convinced that a balance must be found between the desires for greater local control of citizen destiny based on democratic values, and the prosperity brought about by freer trade and common standards.
By extension, the need for continued leadership by the world’s democracies in the design and governance of our trading alliances is crucial if we want to do business in a world based on the principles of economic freedom, rule of law, and fair competition. In that way, we can assure that the promise of prosperity given to us by global growth can be made more accessible to all. Failure to do so puts the future of our liberal democratic order in jeopardy.
Andrew Wilson is the Managing Director of the Center for International Private Enterprise.