The leading powers in the globalisation

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5. Is it impossible to create fair prices worldwide? Or are the institutions just not willing to change the status quo? If so, is the European Parliament willing and ready to engage? Do you have examples from your work in the EU parliament?

10. Who do you think decides role allocation in this process of globalisation? Do you think some societies hold the main power in their hands or do you think every society has the power to take its place in the process of globalisaton? What possibilities do the countries without strong financial, energy resources have to become competitive?

Answer by Jana Hybášková:

The leading powers are the most competitive. Countries able to dominate markets, dominate globalization. The key factor is price. A country able to compete in price dominates the market. China dominates the goods market offering the most competitive price. Countries able to offer the biggest quantity of oil for a competitive price dominate the market. The USA offers competitive price for its currency, Brazil dominates sugar and beef markets. The EU dominates most of the agricultural markets, since the final price is the result of costs and subsidies.

Labor costs, environmental costs, energy costs, transportation costs, financial costs as well as direct and indirect expenditures, real costs and external cost, taxation, and subsidies play a role.

The global free market can only exist if we are able to set up equal world prices. If in Europe we harm our production by the inclusion of environmental costs, we can never be competitive in paper production, in the production of steel, iron, glass. If environmental damage caused by the destruction of tropical forests is not part of the price of Brazilian sugar, we can not be competitive. Inasmuch as the US opened its market by the low price of the dollar, we can not compete with the Euro. Inasmuch as Kuwait and Saudi Arabia are able to produce crude oil for less than 20 USD per barrel, no one can compete. Iceland became important manufacturer of aluminum, since energy costs almost nothing, the very same holds true for Qatar.

Some production needs high technology. Without the value added by high technology the production does not exist. Europe’s competitiveness presently relates to its intellectual property.

To influence world trade to make it more just and equal we can only push for some clearer rules: external costs should be part of price. The price of environment and environmental damage should be accounted for. The price of energy should be part of the final price. Social and health costs should be part of labor costs. Resource exploitation – water, soil, coal, minerals, raw materials, should form a part of the cost. Subsidizing should be part of the cost…

The CAP is a clear example of bad management of EU resources. Instead of subsidizing technological development, research and science, the source of intellectual property, we subsidize wine, apples, and olives. Chinese market goods do not take into account import taxes, intellectual property, ILO labor standards, and causes damage to EU production. African exploitation of its raw material, inasmuch as Brazilian and Javans damage their rain forests, is not part of the price of exported sugar.

World trade management should go in the direction of global accountability and transparency. Protection of the environment, intellectual property protection, energy responsibility, respect for labor rights are world rules which can guarantee a better future through globalization.

EP is for instance responsible for African Caribbean Pacific – EU relations. The whole process of ACP trade agreements entered a new stage with the EPA – European Partnership Agreements. EPA negotiations lasted for years and took a lot of criticism. Europe should stand as a partner, not as a protector of its own market. It is not what usually happens.

The European Parliament should protect EU consumer health. The ability to limit unhealthy imports from China is not very high. European powers need access to the Chinese market. They are not willing to allow for the limitation of Chinese imports to EU because they will be harmed in their access to Chinese market.

EU agricultural policy goes against all good intentions in the world food market. There is not enough political will among EU leaders to limit their popularity vis á vis their rural constituency.

The EU should itself first stick to clear and transparent rules in environmental protection, labor force rights, intellectual property protection, state subsidies, competition policy. In so doing, we would be able to counter negative globalization pressure.

Ilknur Yilmaz

First of all I want to thank Jana Hybášková for taking time and answering our questions. Smile.

Now I want to come to the answer to the question.

“The leading powers are the most competitive. Countries able to dominate markets, dominate globalization.”

Does this mean that countries and societies that are not able to take leading roles in the global market will not have a chance to become an equal competitor or equal partner in the process of globalisation? Most countries can maybe build up any industry or make any improvement necessary to take place in global trade, but it is doubtful that these countries can make such fast progress to be able to compete with these leading countries that dominate the world markets, despite the dependence on natural resources that might be necessary. Is this to say that these less advanced countries will always be kind of puppets of the advanced leading countries?

Moreover, we always talk about world prices, but what about the different incomes and different standards of living? How can a less advanced country with meager incomes and under-paid labour be able to take its place in a process of progress and improvement and become an equal part of globalization?

Monday, 7 December 2009

Jana Hybášková

Allow me to use a couple of examples from recent years, countries which definitely were not the strongest industrial tigers, nor banking strongholds. A very fine example is Finland, a country which 20 years ago appeared from under the shadow of the iron curtain. A country with no specific raw material and energy reserves, not the most educated population and famous universities. And yet, with good management of human resources, good governance, a decision to follow the most modern industrial trends, Finland became a clear example of a win-win solution. And it is not about good luck and Nokia; it is about one of the lowest levels of corruption achieved worldwide, an increase in elementary and secondary education, very high language knowledge, etc. A comparable example of a small, very poor country, with high growth, good governance, and which was simply able to use its strategic geographic position, is Ireland. In South America, let us look at Chile, a country deeply wounded by a military regime, and is now a stable, sustainable growing democracy, achieving admirable GDP growth even in years of crisis. And again, no proximity to financial markets, no substantial natural resources, nor accumulated cultural capital.

Another, more complicated example of course is India, now a real winner in globalization. Again - it was not a financial stronghold, nor a resource-rich country, or a scientific and technological backyard.

The preconditions for win-win in globalization: good governance, substantial reduction in corruption, stable democracy, good economic management, perfect management of human resources, visible improvement of public education. Good governance and the fight against corruption are key issues.

The win-win solution for globalization is not that much about economics as about politics. It might be difficult for young people to grasp the fact that professionalism and criticism are not enough. Only by participation in ways which allow a reduction in corruption, and which allows for transparent and good governance are the surest ways to subscribe to win-win global solutions.

Monday, 7 December 2009