The Highlander

Last week Regis University welcomed Dr. Pietra Rivoli for an insightful look into the complex issues surrounding globalization. Dr. Rivoli, associate professor at the McDonough School of Business at Georgetown University, specializes in corporate and international finance, as well as ethical and social issues related to finance. Her 2005 book The Travels of a T-Shirt in the Global Economy: An Economist Examines the Markets, Power, and Politics of World Trade was a finalist for the inaugural Financial Times and Goldman Sachs Business Book of the Year Award. Her visit was part of the Regis University Diversity Day. Dr. Rivoli's exploration into the life of the T-shirt displayed the interconnected world we live in and the rich diversity it possesses.

One of the ways Regis is addressing these changing realities is through the John J. Sullivan Endowed Chair for Free Enterprise. According to the program's website, the recently reinvigorated program strives to be: "in the classroom and the community, the Sullivan program will ensure the discussion of free enterprise explores value-based solutions, advocates socially conscious business practices and represents the points of view of under served communities."

Janet Evans-the Sullivan Professor for the John J. Sullivan Endowed Chair for Free Enterprise- has been a Regis University affiliate faculty member since 1996, teaching accounting, ethics and communication courses. Sullivan Program Manager Beth Parish is currently SPS Business Lead Faculty for Marketing and Management. The efforts of the Sullivan Chair brought Dr. Rivoli to Regis and the Denver business community.

Dr. Rivoli addressed multiple classes from a range of departments while on campus. She has a wonderful opening exercise where she has students check their neighbors T-shirt to see where it was made. This exercise captured the attention of many students as locations ranged from Thailand to the Mariana Islands. The shirt that inspired her journey that produced the book was made in China and it turns out Dr. Rivoli had just returned from the world's fastest growing economy.

I was interested in her thoughts on ASEAN, the Association of Southeast Asian Nation as the U.S.-ASEAN Business Council had just held their Regional Board Meeting. ASEAN consists of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. She said to this point ASEAN had not done anything substantive, but spoke positively of the labor and environmental protections that are a part of the U.S.-Cambodia Bilateral Textile Agreement.

Although she was frustrated with the trend towards bilateral agreements, she continues to hold onto optimism. Her use of a bicycle metaphor captured the essence of the Doha Round of trade talks within the World Trade Organization. Dr. Rivoli said that trade talks are like a bicycle; they have fallen down many times, but they continue. The most recent talks in Hong Kong have left that bicycle wobbly. This instance reverts back to her effort to study the T-shirt; the primary barrier to further progress on trade talks is the controversy over agricultural subsidies in industrialized nations. In the book she describes an elderly couple in West Texas that grows cotton. In the evening lecture in the Mountain View Room she explained how the U.S. Government subsidizes the difference between the market price and the U.S. price to farmers in the States.

The cotton subsidy brings us back to the Asian juggernaut that Dr. Rivoli is quite familiar with. Minister of Commerce Bo Xilai said China's textile exports growth benefits developed countries, including the US and EU, because they save money on China's low-cost products according to Forces. Speaking at a textile forum held in Beijing last month, the minister said that the US saves nearly $100 billion in expenditure every year by buying imported textile products from China. The Chinese are continuing to secure textile imports to leverage the economy of scale their labor market well into the future. Failing to recognize the growing power of nations such China could have serious consequences. Dr. Rivoli spoke about the Chinese attempt to acquire UNOCAL this past summer and how the U.S. requires so much foreign investment to fund its consumption; the sustainability of such a path is a great concern.

This is a difficult aspect of globalization that we must face; the world is changing and we must adapt. Clyde Prestowitz, founder and President of the Economic Strategy Institute, served in the Commerce Department in the Regan Administration and was a key trade negotiator. In May 2005 he wrote Three Billion New Capitalists: The Great Shift of Wealth and Power to the East, in which he begins by describing this changing dynamic. "Over the past two decades however, China, India and the former Soviet Union all decided to leave their respective socialist workers' paradise and drive their 3 billion citizens along the once despised capitalist road. Although these people are mostly poor, the number having an advanced education and sophisticated skills is larger that the populations of many first world countries." Dr. Rivoli described the town of Florence, Alabama. She said it was once the T-shirt capital of the U.S. and now those mills are closed along with the jobs they previously provided.

One response to the reality of China comes from Senator Lindsay Graham (R-SC) and Senator Chuck Schumer (D-NY). The Chinese invited these two staunch critics to visit and convinced them to delay their Senate Bill that would levy a 27.5% tariff on Chinese goods entering the U.S. Dr. Rivoli pointed out the folly of such actions labeling them as posturing comparable to U.S. criticism of the Chinese currency. Irwin Seltzer writes in the Sunday Times of London about the upcoming visit of Chinese President Hu Jintao on April 20. "The date is significant because some time this month the Treasury must issue its bi-annual list of currency manipulators. It is doubtful that the 3% rise in value of the yuan against the dollar, allowed by the Chinese since they relaxed the yuan-dollar peg, will satisfy congressional critics who want China included on the list."

The case of China displays the complexity of the task U.S. Trade Representative Rob Portman faces. Seltzer writes, "Although he still hopes to salvage the Doha round, Portman knows that his best hope is to concentrate on bilateral rather than multinational agreements." Dr. Rivoli said the Bush Administration has no chance of renewing the fast track trade promotion authority (TPA) that is set to expire in July 2007. According to the Financial Times this enables the President to put trade deals for an up-or-down vote without amendments in the Congress. She says the Administrations unprincipled approach to trade has led to significant mistrust of its handling of these matters and she cited the Dubai Ports World fiasco.

Rivoli did not make the case for or against globalization. I took from her lecture that there is a reality to be managed. Dr. Rivoli spoke about how those who simply wail away at globalization do little good, but expressed how activists have contributed to improved labor standards. Despite the calls for protectionism the process of globalization will continue to drive forward. Imagine the reaction of American consumers if Congress approved a 27.5% tariff on Chinese imports, which would amount to a 27.5% tax on Chinese goods? Do we really think this would bolster U.S. industry? There are troubling concerns to attend to. In three words made famous by Irving Kristol: at some point you get "mugged by reality."

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