Panel, Conference Presentation
Globalization: Path to Prosperity or Race to the Bottom?
Milken InstituteStaci Warden, Victoria Espinel, Tony Fratto, Francisco González Díaz, Clark Roberts, Stefan Selig
- One major U.S. political party may nominate a candidate explicitly opposed to globalization and free trade, with the Democratic Party predicted to invert its trade worldview rapidly.
- Communication strategies regarding trade are expected to shift from viewing it as asymmetric to recognizing "win-win" dynamics based on Ricardian models, acknowledging dispersed benefits and acute disruptions to foster more intense pro-trade voter sentiment.
- Mexico is projected to increase manufacturing competitiveness and depth, capitalizing on the 89% of exports that are manufacturing, while consumer purchasing power is evidenced by a 19% increase in new car sales in 2015.
- U.S. population sentiment may move toward a consensus rejecting the "race to the bottom" narrative, driven by millennials, with 67% of that demographic favoring free trade.
- Economies integrated into the Pacific alliance are expected to outperform those relying on commodity super cycles or protectionism, such as Brazil, Ecuador, and Venezuela.
- By 2030, TPP markets are forecast to encompass 3.2 billion consumers representing 40% of global GDP, offering opportunities to eliminate 18,000 separate tariffs.
- U.S. companies face a necessity to access international markets due to demographic shifts, targeting the 95% of consumers located outside U.S. borders.
- Global debt levels are projected to reach 98% of GDP by 2035, diminishing the effectiveness of monetary policy and making trade essential for driving demand and productivity.
- Trade agreements like the TPP are expected to establish a "race to the top" for international market access through an open architecture, ensuring data moves across borders to support tech breakthroughs in health, education, and AI.
- The software and tech industries will rely on unrestricted cross-border data movement, contributing to an exponential growth in global trade driven by information rather than traditional goods.
- Future trade negotiations will likely prioritize smaller bilateral and regional agreements over large multilateral rounds like Doha, which have failed to complete.
- Canada and specific provinces like British Columbia are expected to diversify trade connections away from the U.S., with British Columbia's U.S. trade share potentially dropping from 80% to 50%.
- The Trans-Pacific Partnership is characterized as an agreement that allows other countries to join if they meet high standards, countering claims that it harms worker rights or boosts profits at their expense.
- The U.S. Trade Adjustment Assistance (TAA) is expected to be reauthorized for another six years to provide income support, health care, tax credits, and training for dislocated workers.
- Structural reforms in energy, telecom, and education are prioritized to prepare talent for manufacturing and services, addressing the disruptive nature of trade and an aging global population requiring automation.
- To attract investment and promote exports, the U.S. government may maintain a balanced budget with a low tax base while encouraging students to think globally.
- Global interconnections are intended to be utilized to combat challenges such as climate change and Ebola, while spreading human rights and democracy.
- Open economies are predicted to be the winners in the global environment, driven by the movement of capital, people, and goods to elevate living standards.