NEW YORK – The world’s economies are becoming more interdependent than ever, but economic nationalism, protectionism, and beggar-thy-neighbor attitudes are threatening the bonds of trust and cooperation that a truly globalized economy requires.
To prevent another recession or worse, the leaders of the 20 wealthiest nations must take aggressive action at the semi-annual G-20 summit in Seoul to develop a broad agenda for more balanced, equitable, and sustainable global growth – and to oversee its strict implementation.
Five principles should guide their thinking. First, although differences on trade and economic policy must be addressed, short-sighted self-interest must be countered actively. Excessive surpluses in some countries and excessive debt in others, fueled by undervalued currencies and runaway government spending, respectively, must be curbed. Countries must commit not to withhold exports of key natural resources for political reasons, and to doing all they can to maintain and promote open markets based on principles of reciprocity and long-term sustainability.
To make this happen, all major players must remain committed to free trade within the context of a fair and equitable global system, and they must communicate this commitment respectfully, forcefully, and repeatedly to their own publics. As the two most significant global trading powers, the United States and China, especially, must fight tendencies in their own countries to raise hidden barriers or take inappropriate retaliatory action designed to placate domestic public opinion. All economies must address the domestic dislocations that can accompany the freeing up of markets.