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BAYLIS. Globalization of World Politics_-12 CHA...doc
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'Domestic' and 'International'

We have already briefly discussed the blurring of the boundaries between the 'domestic' and 'inter­national' realms that is brought about by the processes of interdependence, but a number of recent developments take this process even further. Over the past fifty years international trade has increasingly expanded and the framework for this trade has been the subject of intense international negotiation, with the result that more trade is now nominally 'free' of tariff and quota restraint. But more trade, with the changes in production we have discussed, has led to greater openness of the trading economies. This means that 'domestic' pol­icy is increasingly the subject of trade dispute: when is an environmental health regulation con­cerning automobile exhaust emissions a barrier to trade? When is a labour regulation an improper constraint on trade, or 'unfair'? It seems that almost every aspect of national economic activity is now subject to international supervision (see Case Study 6, Box 11.8). John Ruggie (1995) calls this the issue of 'contested domestic domains' and argues that this is a consequence of other far-reaching changes in political economy, and that it is a major problem of defining politically where 'external' ends and 'domestic' begins, but that there are no simple solu­tions. The 'global' is increasingly part of the 'local' and this often produces direct links that by-pass central government, adding to the sense that gov­ernments are either impotent or increasingly irrele­vant (Horsman and Marshall 1995).

The problem is made more difficult by the growth in trade in services (one of the key areas to be considered in the last major round of trade nego­tiations—The Uruguay Round). Services include: transport, insurance, tourism, information ser­vices, construction, intellectual property rights, and many others, and their value is now around a quarter of total world trade, perhaps more, as we have the familiar problem of 'how we measure' things like the value-added element of design (e.g. in cars and clothes) (Ruggie 1995: 513-16). The Uruguay Round did produce a 'General Agreement on Trade in Services' (GATS), but this promises to produce many more political problems before a clear framework emerges. However, what is clear is that GATS means that more hitherto 'domestic' activities than ever before will be brought under international surveillance and attempted influence and control, particularly in the area of intellectual property (copyright, patents, licensing, etc.).

Box 11.8. Case Study 6: Financial Times, 3 April 1996: 'Labour standards "must be included in growth strategy" '

The Group of Seven leading industrialised nations yes­terday agreed that the enhancement of core labour stan­dards was necessary in any global strategy for economic growth.

The G7 comprises the US, Japan, Germany, France, Italy, the UK and Canada.

The agreed communique ending the G7 economy and labour ministers' two-day conference in Lille in northern France was only reached after many hours of intense behind-the-scenes discussion and was seen as a setback for the views of several participants, notably Japan, Germany, the UK and Canada.

They had expressed opposition to any reference to labour standards in the document emerging from the conference.

But the UK government said last night the outcome could have been much worse from its point of view. Initially France and the US had wanted the communique to say G7 should insist the labour standards issue should be on the agenda at the December meeting in Singapore of the World Trade Organization. But this proposal was removed over yesterday's lunch after the UK and others had expressed strong opposition to it.

France, which had called the conference, put the labour standards issue at the forefront of the meeting and, along with the US, insisted on a clear commitment.

Mr Robert Reich, US labour secretary, made clear yes­terday that the US intends to press hard on the issue in the WTO. He said it was 'a proper forum for a discussion' of labour standards that cover trade union freedoms, prevent the employment of children and ban forced labour.

The communique said: 'We note the importance of enhancing core labour standards around the world and examining the links between these standards and inter­national trade in appropriate fora.'

Ministers awaited 'with interest the completion of studies currently under way at the Organization for Economic Co-operation and Development and the International Labour Organization on the social dimen­sions of international trade'.

However, there was also a strong commitment, backed unanimously by all the governments at the con­ference, to fiscal discipline in the running of their eco­nomic policies.

'The G7 countries must endeavour to control public spending more effectively in order to reduce their deficits,' said the communique. 'Reducing deficits will help to create a more favourable climate for private investment and income growth against a background of moderate interest rates.'

Other proposals which won general agreement included:

• A 'modernisation' of the 'regulatory framework' in goods and services.

• The active encouragement of small- and medium-sized enterprises with venture capital to help in new technologies.

• The need to promote policies to ensure 'the security of employability over individuals' working lives'.

• Changes in the tax and benefits system 'to make work pay particularly for the least well-off'; in addition, cuts in non-wage labour costs 'where appropriate'.

• Policies targeted on helping the long-term unem­ployed and to integrate young job-seekers into regu­lar jobs.

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