Global Trade and Investment

Marvin Center Room 307, 800 21st Street, NW, Washington, DC
Friday, November 4, 2005, 2:45 PM

Panelists

Moderator

Media

Panel Presentation
Embracing Globalization: Recasting U.S.-China Trade Relations
Dr. Jiawen Yang

Panel Summary

Countries are becoming ever more economically interdependent as trade volumes and financial flows increase worldwide. Technology is accelerating the flow of goods and capital as well as enabling the mobility of traditionally fixed production factors. These changes are creating viable markets in developing countries and other parts of the world, altering the economic landscape with new areas of growth and prosperity. They are also causing the economic position of industrialized countries to shift, posing national and global challenges of economic adjustment and governance.

The purpose of this panel discussion was to examine the challenges globalization is bringing about in the area of Global Trade and Investment and how well global governance approaches are dealing with them.

James Rosenau

Professor James Rosenau began the discussion by presenting a matrix of "Fragmegrative" processes. Rosenau invented the word "Fragmegration" to describe the complex dynamism of world politics. The word is a combination of "Fragmentation" and "Integration," and signifies a theoretical outlook that attempts to examine the world in two different ways simultaneously. Like combining Newtonian and quantum physics, Rosenau's Fragmegration lens views the world of politics as both macro and micro phenomena. By examining the world at micro and macro levels simultaneously, Rosenau hopes to avoid neglecting the findings of either view and to develop a more comprehensive picture. For example, at the micro level, technologies such as television, internet, and cell phones "enable like-minded individuals to be in touch with one another." While at the macro level, those technologies "render collectivities more open and connected'and empower them to mobilize support." Uniting micro and macro perspectives, the Fragmegration lens illustrates how such technologies "constrain governments by enabling opposition groups to mobilize more effectively" while "accelerating diplomatic processes and facilitating surveillance and intelligence work." Though tangential to the finer points of global trade and investment, Rosenau's discussion of Fragmegration highlighted the conceptual challenge globalization poses and the necessity for new theoretical frameworks able to capture the complex processes of global phenomena.

Bernard Hoekman

Taking a macro perspective, Bernard Hoekman's discussion examined the challenge of governing an $8 trillion boom in world trade. With particular focus on the controversial World Trade Organization (WTO), Hoekman argued that many of the problems in world trade governance stem from the "technology of decision-making" within the WTO. That is, the organization functions as a place to negotiate trade agreements, however this setup does not let it focus on matters of efficiency. Instead, the WTO is tied up in bargains stymied by politics where large states set the rules and have the power to enforce them. As a result, many countries abandon the multilateral process, only to compound difficulties by forging their own regional agreements that are often unfair and inefficient. What is more, settling disputes at the WTO is prohibitively expensive for poor, developing nations that lack any credible threat of economic retaliation against larger states. As a solution, Hoekman suggested expanding the policy instruments available to the WTO negotiators to include elements of compensation and finance. For example, allowing the WTO to compensate rich countries for lowering their trade barriers, or compensating developing countries that are victims of large-state infractions, would help increase the flexibility of the WTO in promoting global economic efficiency and competition. These improvements would increase the legitimacy of the organization and prevent countries from abandoning the multilateral process. The overall effects of such improvements would allow more countries to share in the benefits of world trade and globalization.

Jiawen Yang

Professor Jiawen Yang discussed the challenges increased world trade poses for industrial countries as their economic positions shift in relation to those of developing countries. Professor Yang noted the improving positions of developing countries as they grow with the Foreign Direct Investment of management-skills and technology. This investment is allowing developing countries to break away from the classical trade paradigm as previously immobile factors of production become mobile. Countries can now outsource services, a traditionally fixed factor of production. An example of this phenomenon is in the outsourcing of U.S. computer tech-support services to India. Industrial countries are feeling the pinch of this global economic flux as their comparative advantage in manufacturing is diminishing, wages of regular-skilled workers are stagnating, and political pressure for protective measures are intensifying. Concluding his discussion with brief examination of U.S.-China trade relations and the issue of the U.S. trade deficit, Professor Yang argued that U.S. policy on "dual-use" technologies is undermining efforts to balance trade between the two nations. Comparative advantage in U.S.-China trade relations implies that the U.S. should pursue its advantage in the production of technological goods and trade those goods for China's productive talents of manufactured and textile items. The countries should mutually benefit by exchanging the goods of their respective advantages. However, the U.S. limits the exportation of dual-use technologies to China, citing concerns that such technologies could be used for military purposes. As a result, U.S. industry is forced to compete with China's superior manufacturing and textile industries.

Panelists' Bios

Bernard Hoekman

Bernard Hoekman

Bernard Hoekman is Research Manager of the International Trade group in the Development Research Group of the World Bank. Before taking up his present position he managed the international trade and global integration activities of the World Bank Institute's Economic Policy division.

Dr. Hoekman has worked extensively in countries in the Middle East and North Africa. Between 1988 and 1993 he was on the staff of the GATT Secretariat in Geneva. He is currently a Research Fellow of the London-based Centre for Economic Policy Research. His current research focuses on the functioning of the multilateral trading system (WTO), international transactions in services, the relationship between competition and trade policy, the economics of regional economic integration, and channels of international technology diffusion.

He is a graduate of the Erasmus University Rotterdam and holds a Ph.D. in economics from the University of Michigan.

James Rosenau

James Rosenau

James Rosenau is University Professor of International Affairs at the George Washington University. He is a renowned international political theorist with a record of publication and professional service that is acknowledged worldwide. His scholarship has focused on globalization, the dynamics of change in world politics, and the overlap of domestic and foreign affairs, resulting in more than 40 books and 200 articles. His most recent publications include On the Cutting Edge of Globalization: Dynamics Beyond Globalization (2005); Distant Proximities: Dynamics Beyond Globalization (2003); Information Technologies and Global Politics: The Changing Scope of Power and Governance (2002); Strange Power: Shaping the Parameters of International Relations and International Political Economy (2000); Thinking Theory Thoroughly: Coherent Approaches to an Incoherent World (2000); Along the Domestic-Foreign Frontier: Exploring Governance in a Turbulent World (1997); Global Voices (1993); Government without Governance (1992); and Turbulence in World Politics: A Theory of Change and Continuity (1990).

Dr. Rosenau has held a Guggenheim Foundation Fellowship and is a former president of the International Studies Association. He is currently the Senior Fellow at the Center for the Study of Globalization at the George Washington University.

He holds a B.A. from Bard College, an M.A. from Johns Hopkins University and a Ph.D. from Princeton University.

Jiawen Yang

Jiawen Yang

Jiawen Yang is Professor of International Business and International Affairs at the George Washington University. He joined the George Washington University in 1994, and has been teaching courses in international trade and finance, emerging markets, and China's business environment. He has also taught at New York University, Vanderbilt University, Beijing University, and the University of International Business and Economics in China.

Dr. Yang's current research focuses on exchange rate pass-through, international capital flows and their impact on emerging markets, international business strategies for small and medium-sized firms, and the Chinese economy. His research has appeared in The Review of Economics and Statistics, Review of International Economics, International Review of Economics & Finance, The Quarterly Review of Economics and Finance, The International Trade Journal, and other academic journals. Dr. Yang is also the author of many book chapters and co-author of two books on economic sanctions.

He received his PhD in International Business from New York University and his MA in International Economics from the University of International Business and Economics in Beijing.

Joseph Cordes

Joseph Cordes

Professor Cordes received his Ph.D in Economics from the University of Wisconsin, Madison in 1977. He has been on the faculty of The George Washington University since 1975. He was a Brookings Economic Policy Fellow in the Office of the Assistant Secretary for Tax Policy, US Treasury Department in 1980-81. From 1989-1991 he was Deputy Assistant Director for Tax Analysis at the Congressional Budget Office. Professor Cordes currently directs the University's Ph.D Program in Public Policy, and is an Associate Scholar at the Urban Institute.

Professor Cordes is a member of the National Tax Association, and the American Economic Association. Dr. Cordes is co-editor of the Encyclopedia of Taxation and Tax Policy (Urban Institute Press). He has published articles on tax policy, government regulation, and government spending in numerous journals and has contributed been a contributor to several books, including The Economics of Technological Change on Employment and Growth (Ballinger), State Taxation of Business (Praeger), Labor Market Adjustments in the Pacific Basin (Kluwer-Nijhof), Cooperative Research and Development: The Industry-University-Government Relationship (Kluwer-Nijhof), and Readings in Public Policy (Basil Blackwell).