Just after 9/11 I reported that 9/11 would be the beginning of the end of "Globalization".
Reports from around the globe confirm that this is happening. Look at some of the specifics:
1. Nations are beginning to raise tariffs, regulations and higher barriers to business. The recent dispute with the WTO and the USA over steel pricing is a perfect example. The U.S. steel industry has been virtually destroyed by foreign competition and cheaper jobs. When the U.S. government stepped in to try to protect the industry, world competitors used the WTO to threaten tariffs on a long list of American agricultural and industrial products. Thus the USA has to decide, to either protect it's steel industry (perhaps 700,000 jobs), or to have to later protect the agricultural industry (5,000,000 jobs). The potential response is that eventually nations will have disputes that will not be easily solved. The walls could then go up all over the world.
2. Higher security and import/export controls. In a recent symposium in India I listened to industrialists there complain of the higher costs and delays in exporting goods from India to the USA because of Homeland Security. At any given time 30 to 70 ships will be waiting in U.S. ports, backlogged, while Homeland Security goes through a cumbersome "inspection" process. Plus, the damage, loss, and even theft of items inspected, as well as the costs of inspection are passed on to the buyer. Some say that because of Homeland Security, that imports to U.S. Consumers are increasing in cost substantially, plus losses to U.S. companies that import are substantial.
3. FAILURE OF WTO AND CANCUN TRADE TALKS. Deloitte Research reported that this was one factor indicating that globalization was running out of steam. The best economists and diplomats from throughout the world could not agree upon a direction, partially because the great nations, including the USA did not have a cohesive direction of leadership. The world is fractured intellectually.
4. Military actions. The U.S. going it's own way in military adventures had created a damper effect on trade and has lowered cooperation with the US in a variety of ways. It has created an environment where regional trading blocs such as the EU v. the US have increased friction. China and Japan are at odds. China and Taiwan are at odds. Conflicts over access to resources such as water (U.S. and Mexico), oil (Canada and U.S.), and worldwide financial instability all have been exacerbated by U.S. unilateralism. These have also given a form of approval to governments throughout the world to be more militaristic in their policies.
5. Deloitte Research suggests that all companies that trade internationally should review their strategies. If the walls are going back up, and it appears that they are, companies would be wise to open offices in each nation they wish to do business in. Boothe and Associates, Inc has recently had an upsurge in inquiries from companies of foreign nations that want to have offices in the U.S.A.. We have also been more active in consulting and helping U.S. companies open offices in other nations. This is a trend that is growing and will continue.
Will globalization gradually become a memory, or will political leaders take the cue from economic leaders and see that a balanced program of "enlightened capitalism" mixing free markets with responsible regulation is the correct direction to lead the world?