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Why George W. Bush Has Corporate America Nervous

By Jock O'Connell


This article appeared in the Sunday Forum section of the Sacramento Bee on December 15, 2002.


Having contributed mightily to the Republican Party's seizure of the political high ground in Washington during last month's general election, business lobbyists now have every reason to regard Capitol Hill as their own Big Rock Candy Mountain set to dispense sweet favors ranging from tax cuts and regulatory relief to a federal judiciary less apt to find compelling the pleas of consumers, organized labor and environmental groups.

But before anyone assumes that corporate America is uniformly jubilant about seeing George W. Bush and the GOP's congressional leadership strutting about in the full summer of their powers, there is one vital aspect of national policymaking - the administration's anxious view of the world beyond our shores - that is of concern to the executives of many of America's largest and most successful companies.

At issue is not merely the doubts business leaders harbor about the White House's ability to promote a vigorous economic recovery so long as the president himself remains preoccupied to the point of obsession with foreign demons. (While the departure of Treasury Secretary Paul O'Neill helps still some of those doubts, it is unclear how the appointment of a onetime deficit hawk like John W. Snow as O'Neill's successor will resolve the sharp economic policy divisions within the president's camp.)

Rather, what perhaps most deeply separates corporate America from an otherwise friendly White House is the clash between the administration's unapologetically unilateralist foreign policy and the decidedly more cosmopolitan, multinational, multicultural outlooks of corporate executives maneuvering through today's global economy.

How this fundamental conflict of cultures plays out could have a bearing not just on the ability of American companies to expand their overseas markets but, more importantly, on the historic process of global economic integration.

Some eight decades ago, Calvin Coolidge proclaimed that the business of America is business. Today, a substantial share of that business involves foreign companies as competitors, certainly, but also as customers, suppliers, investors and partners in developing, producing and marketing an unprecedented array of goods and services worldwide.

Unfortunately, the full extent to which the U.S. economy has become inextricably enmeshed in a global economy is not well understood by most Americans or, evidently, by many of the country's leaders.

Decades of advancements in transportation and communications technologies have so diminished the relevance of distance as to permit the emergence of elaborate production and distribution systems known as global supply chains. A logical extension of the division-of-labor concept that has guided mass-manufacturing practices for over a century, these creatures of globalization enable the processes for producing virtually any product to be divided into separate tasks to be completed wherever the work can be done most efficiently and economically.

As a result, a fast-growing share of global trade now involves not the stereotypical shipment of finished goods destined for consumer markets but rather the movement back and forth of raw materials, parts, components and semi-finished goods between the disparate elements of these far-flung supply chains. More and more of the products we eat, wear, drive or otherwise use are likely to have pedigrees as complicated as, well, the ancestral roots of most Americans. That's why the closure of 29 Pacific Coast seaports this fall caused such disruption to manufacturers and retailers all across the country and why the president was ultimately prompted to re-open the ports by invoking Taft-Hartley.

Of course, the fact that so many U.S. companies have deeply woven themselves into the global economy also leaves the nation's economic life more vulnerable to interdiction or attack at points too numerous to defend.

The weeks immediately following Sept. 11 brought numerous predictions that U.S. multinationals would relocate many of their overseas operations to the presumably safer confines of the North American Free Trade Area. Those forecasts proved wrong, however. Far from retrenching, U.S. multinationals have generally let their global business strategies be guided more by exigent economic and political conditions here and abroad than by fears of terrorist assaults on American targets. And remarkably, it's not just manufacturing jobs that continue to be assigned to overseas locations.

Consider the case of Boeing, the one company that more than others helped foster globalization. In September, the aerospace firm with a substantial presence in California revealed its intention to shift a greater share of its aircraft design, engineering and production work offshore, to locations that will include Russia and China.

Intel, one of the Sacramento region's major employers, has likewise announced plans to expand its high-end 32-bit microprocessor design and development operations in India, a country that this past summer went to the brink of a nuclear exchange with neighboring Pakistan. A number of other prominent California technology firms like Oracle, Avanex and PeopleSoft are following suit. These companies are not being cavalier about fanatics swaddled in gelignite or rampaging mobs of anti-American demonstrators. As with other American corporations with ample experience doing business abroad, they have acquired a keen appreciation of the specific dangers they face and have devised methods for managing risk - not fleeing from it. The benefits of earnest interaction with the world beyond our borders are simply too great to permit retreat or retrenchment.

But questions about how long they can safely and profitably remain in business abroad inevitably lead to the broader question of whether America's greater interests in an age of globalization are well served by the administration's unalloyed brand of in-your-face unilateralism.

Since taking office in January 2001 (and with the exception of a brief interlude following the attacks on the World Trade Center and the Pentagon), the Bush administration has shown a contemptuous disdain for engaging the rest of the world on anything but its own terms. Whether the issue is exempting American citizens from an international court of justice or ignoring the Kyoto Protocols on global warming or unilaterally abridging arms control treaties or approving a farm bill whose lavish subsidies and targeted protections represent the antithesis of free trade, the administration has almost gone out of its way to disregard foreign opinion.

The president's frequently jingoistic message may play well in the polls, but it unfortunately also gives succor to those domestic groups who would raise the drawbridges, erect new barriers to immigration, indulge in protectionism and otherwise keep the foreigners at bay. If nothing else, the administration's rhetoric vastly complicates the already daunting challenge of building a domestic political constituency in support of free trade.

Even more troubling - especially to America's international business community - is that the administration's disdain for constructive engagement with the rest of the world invites predictably neuralgic responses from abroad and so does little to advance the interests of American corporations in the global economy.

With the exception of Secretary of State Colin Powell, the one administration official who may feel most conflicted about the dismissive attitude toward foreign opinion exhibited by President Bush and Vice President Dick Cheney is Robert B. Zoellick, the U.S. trade representative.

Zoellick has the unenviable task of negotiating trade agreements with nations in Europe, Latin America and Asia whose relations with the United States have almost uniformly soured since the Bush administration took office. As recent electoral outcomes in Germany and Brazil suggest, running against U.S. policies can be politically rewarding.

During the past year, Zoellick has shifted the focus of U.S. trade negotiations away from an emphasis on pursuing the broad range of multilateral trade talks launched last November in Doha, Qatar under the auspices of the World Trade Organization. Instead, Zoellick is now absorbed with bilateral and regional trade agreements with Chile, Singapore and other smaller economies in which U.S. leverage can be more decisive.

Zoellick's revised approach is somewhat understandable. As a body that operates by consensus, the WTO system poses a considerable challenge to the patience and resourcefulness of any trade negotiator. But in the current atmosphere of world opinion, America's ability to dictate outcomes at the WTO has been sharply circumscribed as scores of nations have taken to venting their frustrations and anger with Washington heavy-handedness.

As a result, new concerns are emerging that the Doha Round will fall short of its objectives and fail to meet its 2005 deadline for new agreements. According to a New York Times report last weekend, the Doha Round "has bogged down, and trade diplomats are beginning to despair of making enough progress to justify holding an important interim conference scheduled for Cancun, Mexico, next year."

It would be wrong to attribute all of this to the Bush administration's contempt for foreign opinion. Still, what is apparent is that over the past 15 months the president's instinctive antipathy toward foreign relations has been sharpened by his conviction that the U.S. faces evil perils that it alone can define and against which it will struggle using whatever means it chooses. It is this worrisome posture that has troubled civil libertarians at home and government officials abroad that should also give pause to corporate executives doing business in a global economy.

Shortly after 9/11, some literary pundit writing in the New York Review of Books pronounced the death of irony. Clearly, he got it wrong. What could be more ironic than the plight of American businesses confidently reaching out to a world that it has made less and less foreign over the years while America's government sees only "a world in which terrors and evils stalk the horizon of dread" (to appropriate an appropriate phrase from the Irish poet Seamus Heaney).


For information about the author, click on Jock O'Connell
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