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Web-only Exclusives
November 30, 2000

From Our Correspondent: Hirohito and the War
A conversation with biographer Herbert Bix

From Our Correspondent: A Rough Road Ahead
Bad news for the Philippines - and some others

From Our Correspondent: Making Enemies
Indonesia needs friends. So why is it picking fights?

AsiaweekTimeAsia NowAsiaweek story

FEBRUARY 18, 2000 VOL. 26 NO. 6

As The World Gets Tight
Globalization does not happen "out there." It happens at home, and Asia must learn to deal with it
By JONATHAN SPRAGUE

History is clear on this point, said President Ernesto Zedillo of Mexico. "In every case where a poor nation has significantly overcome its poverty, this has been achieved while engaging in production for export markets and opening itself to the influx of foreign goods, investment and technology - that is, by participating in globalization," he told the World Economic Forum in Davos, Switzerland, late last month. That proved true for Philippine entrepreneur Angel Carpio, who had established a thriving ceramics factory and export business. Or it did, until cheap Chinese ceramics began flooding the market in recent years. "Export-wise, the industry is dying," she laments. (click here for more on Carpio and other winners and losers of globalization.)

Globalization. The word used to have a universally hopeful ring to it. It spoke of a world coming closer together, of distances and differences overcome, of everybody sharing in the promise of the future. Now, to some, the word represents financial markets ravaging economies, foreign competitors crushing local enterprises, and distant bureaucrats making decisions that turn societies inside out. The turning point was the World Trade Organization (WTO) conference in Seattle last November. An unlikely conglomeration of tree-huggers, blue-collar workers and anarchists besieged the government officials from around the world who had met to hammer out the shape of international commerce, serving notice that business as usual was no longer an option. In Davos, an invitation-only gathering of government leaders and heavyweight businessmen, speaker after speaker raised the need to absorb the lessons of Seattle, listen to the concerns of "globophobes," while pushing full steam ahead with globalization. Outside, demonstrators trashed a McDonald's restaurant.

    ALSO IN ASIAWEEK
Globalization
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Interview: Supachai Panitchpakdi
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Winners and Losers
Riders of the Global Tidal Wave

Asia's Worldly Past
Everything old is new again

China's Rarest Man
The mainland's first entrepreneur to list his company outside China may be a harbinger of things to come

The Revenge of Cronyism
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  RELATED STORIES
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Free Trade Takes a Tumble
Riots were only part of the problem in Seattle (12/17/99)

Viewpoint: Beyond Seattle
Keeping developing countries on the open-trade track (12/17/99)

TIME
The Battle in Seattle
Never mind the riots. The real threat to the WTO's free-trade agenda lies in discord among member nations (12/13/99)

This week, a meeting of the United Nations Conference on Trade and Development in Bangkok sums up the globalization disjunction. "We are confident that in our conference, there will be what we could call a healing process after Seattle," says UNCTAD secretary-general Rubens Ricupero, promising a "parliament on globalization." Non-governmental organizations (NGOs) ranging from labor unions to tribal-rights activists have gathered in Bangkok, taking Ricupero at his word. "We want decision-makers at all levels to review the goals of free trade," says Dej Poomkacha of the Thai NGO Coordinating Committee on Development. "We are very much in doubt about the benefits." But the industrialized nations are sending only low-level functionaries to what they see as a meeting of a body concerned with aiding poor countries. "[Major trade issues] won't be discussed in UNCTAD as a forum," says Michel Caillouet, head of the European Union delegation in Bangkok. "That's more the job of the WTO."

What is globalization, and why is it so contentious? Usually, the topic comes up in relation to international trade, but it goes far beyond that. Globalization really means changing the way things are done at home. The import of foreign goods not only affects domestic manufacturers, it changes consumer expectations about quality, price and even lifestyles. The entry of foreign businesses forces local companies to adopt new practices ranging from improving corporate governance to cutting staff. Even exports change the exporting nation - factories replace rice padis, farmers turn into production-line workers and become familiar with the exotic goods they manufacture, money courses through the community, and the entire rhythm of life is altered. Make no mistake - change can be good. Asia's development over the past half-century is a prime example. "The Asian [economic] miracle . . . is largely a result of globalization," says Singapore Trade and Industry Minister George Yeo.

The changes go beyond the economy. As goods and services flow across borders, ideas and values are also changing. The customers of Kim Eui Sik, an electronics retailer in Seoul, are enjoying more choices and lower prices since South Korea lifted its ban on Japanese imports. Also, more foreigners are coming into his store, and he likes it. "In Korea, we have a mentality that leads us to be xenophobic, but that is definitely changing," he says. "I have hired a foreign sales assistant who speaks both Chinese and English. A few years ago, I would not have dared to hire such a person." The spread of media and information is raising expectations and norms in both private and public life. Liang Congjie, a Beijing environmentalist, recalls the great sparrow hunt of three decades ago. People all across China banged pots and pans and let off fireworks to force the birds, which Mao Zedong called pests, to stay aloft until they died of exhaustion. (The cull resulted in a plague of insects.) "The few foreigners who were in town did not know what was happening, so they thought everybody had gone crazy, which was actually correct," Liang laughs. "Things like that can never happen again, thanks to globalization."

So what's the worry? Asian concerns about globalization come on three levels. Western economies are no longer willing to absorb Asian exports without getting equal access to Asian markets. Through the WTO, they are demanding a level playing field. It sounds fair, but many Asians are calling foul. "It is not a matter of a level playing field but of the size of the players," says Stephen Leong of the Institute of Strategic and International Studies in Kuala Lumpur. Huge countries with huge conglomerates have all the advantages, he says, whereas smaller countries simply do not have the wherewithal to compete. Others argue that succoring the uncompetitive is a waste of time and resources. "A weak company that can't stand on its own in a global sense without the protection of government shouldn't be in business," says Dean Park, president of Far East Investment, a top investment bank in Seoul. A closely associated concern is Western moves to link trade with the improvement of labor conditions and environmental protection, which could undermine Asia's competitiveness. The WTO talks in Seattle collapsed not because of the protestors outside but because the negotiators inside could not agree on how to distribute the pain and pleasure of further liberalization.

Those are the concerns of officials and businessmen. Social activists point to a different set of problems. Trade liberalization has boosted only a privileged few, they say. "You can't say the whole world has benefited," says Martin Khor, director of the Penang-based Third World Network, pointing to U.N. statistics that show the top fifth of the world's population in the richest countries enjoy 82% of expanding export trade. Labor activists say workers are suffering as competition intensifies and factories skip across borders. (Some Asian unionists decry their governments' opposition to linking trade and labor conditions, fearing jobs will flee to even cheaper locations.) "Officials see globalization merely as a way to open up markets and attract investment," says G. Rajasekaran of the Malaysian Trades Union Congress. "They have forgotten the human factor." Environmentalists lament that rich countries' hunger for commodities and manufactured goods is stripping and polluting Asia, with the help of development-obsessed governments and businesses in the region.

Finally, there is the murky area of values and culture. Most of that debate is focused on Hollywood movies or McDonald's restaurants. But the greatest impact may be more subtle. It can be seen most clearly on the edges of society. Seewigaa Kittiyoungku, a project director for an NGO working with hilltribes in Thailand, says even remote ethnic minorities are affected. "Some parents don't want to teach their children their own dialect because they want them to have a future, to have jobs, to be accepted, and that depends heavily on their ability to blend into Thai society," Seewigaa says. Even development that on the surface supports their traditions, like tourism, can in fact erode them. "Things that were being done for merit are now being done for money," he says. "There is a loss of values." Two related forces are at work here. To climb on board the development bandwagon, some people are voluntarily jettisoning their "excess" baggage. And ethnic/local traditions are being judged using the global value system - money.

Yet for all its problems, globalization cannot be rejected. For one thing, it is providing Asia and the entire world a huge amount of good. "Look at what modern technology and information offer in terms of improving Thai standards of living," says Santi Sathippong of the Institute of Social and Economic Policy in Bangkok. "Look at the advances, the chance for more home-grown R&D, the chance for our own entrepreneurs to benefit." Even activists opposed to multinational business and the WTO are embracing globalization of their own. The Seattle demonstrators put on such a show of force because they coordinated their efforts through the Internet. Moreover, human activity and its impacts are spilling over borders and demanding multilateral solutions. Most of all, growing trade links, the increasing cross-border flow of students, migrants and business people, and the ever-expanding information technology web make further globalization irreversible. Once a consumer knows a foreign-made car is of better quality, once a new graduate knows the opportunities are better in Silicon Valley, once a reader knows that the Internet carries opinions unavailable in local newspapers, there is no going back. Hiding behind national barriers only ensures internal rot - even as the barriers erode.

But if globalization is inevitable, its shape is still malleable, and the right to mold it is up for grabs. "I'm not against globalization," says Malaysia's famously nationalistic Prime Minister Mahathir Mohamad, "but I'm against the [Western] interpretation of globalization." Developed nations, led by Washington, envision a free hand for their corporations plus universal (read Western) standards of democracy and human rights. Asian nations tend to agree in principle but insist that over-hasty liberalization will mean business subservience and social chaos. Activists say that governments are overly focused on economic development, and tend to want a radical reform of the entire debate. Throw in a generous helping of parochial interests, and the result is an overcooked and unappetizing stew.

Making that stew tasty will take some doing. Much of the criticism of globalization currently is that bureaucrats and business elites make decisions that affect billions with little democratic oversight. The decisions often take years to reach and are hopelessly compromised by the end of the process. "When issues cut across national boundaries, we don't have a framework to reconcile these political pressures," says Singapore's Yeo. "We have to [have such a framework] eventually - for the financial markets, for trade, for human rights, the environment, for all kinds of things - ways by which there can be an exercise of democracy without the world being paralyzed by the threat of destruction by anarchic elements."

At the same time, each nation and community needs to reinforce its own resources to survive. "We need to strengthen our education and technological abilities, organize good governance in the public and private sectors, and raise our business practices to an international level," says Santi Sathippong. "But we should not ignore the benefits to be gained from 'local wisdom,' from some of our own practices." The competitive, whether enterprises or countries, will gain business and talent. The uncompetitive will lose them. One of the benefits of globalization is consciousness of competition, says Xue Mouhong, director of the Institute of International Studies at Tsinghua University in Beijing. In the brave new world, we will all have to stay on our toes.

- With reporting by Julian Gearing/Bangkok, David Hsieh/Beijing, Anne Meijdam/Beijing, Allen T. Cheng/Hong Kong, Arjuna Ranawana/Kuala Lumpur and Laxmi Nakarmi/Seoul

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