12/18/2006

Jobless in a flat world

Public support for economic globalisation is rising on both sides of the Atlantic but US and French voters are worried that freer trade costs jobs, according to a survey released last week.

The survey, by the German Marshall Fund of the US, a transatlantic think-tank, shows that public opinion across a range of European countries and the US has become more confident over the past year about economic growth and the positive effects of existing international trade.

But there is much less support for further liberalisation of trade, with 59 per cent of Americans and 58 per cent of French thinking that freer trade will cost them more jobs than it creates.

The caution over further cuts in tariffs and other trade protection underlines the difficulties faced by both US and European politicians in pushing ahead with the so-called Doha round of global trade talks, which were suspended over the summer amid transatlantic finger-pointing over who was blocking progress.

Despite the apparent free-market consensus in US politics, worries about stagnant real earnings across most of the workforce have raised fears that trade, particularly with China is holding down pay and eliminating jobs.

The cost of losing a job is far higher in the US than in the European Union because of a less generous public welfare system and the paucity of publicly provided healthcare.

Drop

The Organisation for Economic Co-operation and Development, the Paris-based intergovernmental policy institute, calculates that the income of a single-earner household in the US drops to 41 per cent of its former level if the breadwinner's job is lost, compared with 68 per cent in Germany, 70 per cent in France and 73 per cent in the UK.

Jack Thurston, transatlantic fellow of the GMF, said: "In both France and the US there is a strain of economic nationalism where any particular proposition is judged on whether it is good for the country or a vocal minority within it, rather than supported on principle."

Max Baucus, the Democratic senator from Montana who will take over as chairman of the Senate finance committee in January, has called for a big expansion in a little-used US government assistance programme for workers who lose their jobs as a result of trade.

But Baucus may face an uphill struggle persuading voters.

The GMF survey showed that just a quarter of US respondents thought the government should be primarily responsible for helping workers affected by trade, with 38 per cent saying the company making the layoffs should take the lead and 17 per cent putting the onus on the workers themselves. The survey also covered the UK, Germany, Italy, Slovakia and Poland.

As the only country where a majority of respondents thought that China represented more of an opportunity than a threat, the UK emerged as one of the countries most in favour of globalisation.

Slovakia and Poland also showed relatively strong support for further cuts in trade barriers from present levels. Eastern European countries have often traditionally been regarded as more free-market in economics and Atlanticist in politics than the so-called old Europe nations such as France, Germany and Italy.

In practice, though, because of its large numbers of farmers, Poland has frequently opposed radical agricultural liberalisation in the Doha round.

Source:By Alan Beattie, Financial Times, gulfnews.com



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