Tom Palley uses an interesting analogy to get us to think about improving globalization:
The global economy has built a narrow gauge railroad and now needs to find a way to build a broad gauge replacement. That points to several directions, relevant for both the US and Europe. First, countries should stop building more narrow gauge track, which means no more trade agreements without high quality labor and environmental standards. Additionally, agreements must have exchange rate provisions guarding against currency manipulation and unfair competition based on undervalued exchange rates.
Second, the US and Europe should start cherry-picking the existing “narrow gauge” trade system and promote “broad gauge” trade agreements. For instance, they could negotiate a US - Europe Trans-Atlantic free trade agreement (TAFTA) that includes proper labor and environmental standards and exchange rate provisions. Similar agreements could be negotiated with Canada, Japan and South Korea. All of these countries would have little difficulty complying with standards, and together they comprise over eighty percent of the global economy. Such a trading bloc would quickly become a “broad gauge” magnet for other countries.
Third, country shareholdings in the IMF and World Bank may in future be adjusted to reflect the greater contribution of developing countries to the global economy. If this happens, it should be part of a quid pro quo whereby the IMF and World Bank commit to promote labor and environmental standards.
The bottom line is that it is still possible to escape globalization lock-in. The key is replacing corporate sponsored downward competitive liberalization with progressive upward competitive harmonization.
And there is the rub. For one thing, where does harmonization start and stop? If it is OK to harmonize on labor, does that also make it OK to harmonize patent laws, and vice versa? And what exactly in labor do we harmonize? And for another, what if other countries do not want to harmonize their policy regimes with the U.S., because they feel this would hurt their own development prospects?
It seems to me that a robust international economic regime has got to leave enough room for different countries doing their own things. The push for economic globalization is narrowing that space--both from the left (labor harmonization) and the right (patents). So maybe the solution is to reconfigure the balance between international obligations and domestic policy space--and not to build more railroad tracks until we do so.