My colleagues at our London Liberal Think Tank, Centre Forum, have published a series of essays by prominent politicians and thinkers, and I have borrowed heavily from their thoughts and those expressed in Liberal International meetings for this paper.

Liberals believe that Liberalism, with its easy accommodation of both the market economics that drive globalisation and the internationalist politics needed to regulate it, is a creed tailormade for these fast-moving and exciting times. We believe that the phenomenon of globalisation is at root a force for progress: increased trade, development, migration and green capitalism all have the potential to make the World richer – financially, ecologically and culturally.

Despite this, many parts of the World are turning their backs on globalisation. Protectionism is firmly back in fashion. President Sarkozy of France was a believer in “national champions”, companies which would be protected by the State with a strong domestic market share or even monopoly, in order to penetrate other markets. Protectionist rhetoric is heard in the US, especially in this election year, and Russia is increasingly nationalistic and repressive. Throughout Europe, including the liberal Scandinavians and Netherlands and Belgium, parties are obtaining large shares of the votes with an anti-globalisation and immigration platform. The recession years have enhanced fears about jobs going to foreigners.

In my country, the United Kingdom, we have fortunately resisted this tendency, and the relative success of our economy has been described as being due to Polish plumbers and Chinese jeans. This does not mean that the majority of the country thinks that immigration is not a major problem.

We have also not gone down the road of demanding reciprocity, unlike some liberal governments in the West. We have a more comfortable acceptance of globalisation and have an open economy. Only the more extreme “Greens”, who would prefer us only to consume that which we can produce in our own industries and farms, and the xenophobic far right parties, disagree with this national consensus.

In Europe, most rational people recall that economic nationalism did enormous damage and paved the way to war. Afterwards, in stages, Europe united in a trade bloc which has become the European Union, now a political entity to which 27, soon to be 28, countries have given up a considerable amount of national sovereignty to make – conflict between them unthinkable.

Protectionism is punished – the Hungarian Government has just been told to reverse several of is more objectionable nationalist policies – and the EU negotiates on behalf of all of its members on Trade and Environmental matters. There is a common immigration policy, although this is evolving. Most EU Countries, although sadly not mine, belong to the borderless Schengen Club – one can drive from one State to another without border controls or needing to slow down if one is driving!

There are moves for much closer co-operation between police forces through Europol – vital to combat terrorism, drugs and people trafficking, which are by definition cross-border issues.

The EU also makes and enforces rules for environmental protection, setting common standards which are regularly tightened.

I cannot say that ASEAN countries should imitate the European Union in all respects, but I am sure that regional economic development would be enhanced.

One area where liberals stand out is in our insistence on the rule of law. In a globalised world, this is essential as countries where the legal systems are defective will always be unreliable partners for trade or investment.

The new quasi-democracies of the ex-Soviet Union and Eastern Europe are a case in point. Even today, those who are not members of the European Union see joint venture nationals cheating foreign investors whose expertise is vital to their economic development.

I note Dr Sanjaasuren Oyun’s criticism of the Mongolian Government’s plans to increase its holding in the Oyo Tolgoi mining project. It will indeed make investors nervous.
Argentina’s nationalisation of the national oil company, sold earlier to the Spanish REPSOL, has made outsiders avoid involvement in that Country.

We must, as liberals, accept that if something is worth doing it is worth doing unilaterally. The EU Trade Commissioner in the failed Doha Round – still not ratified to the huge disadvantage of the world economy and both developing and developed countries – said that the EU cannot cut its expensive and wasteful agricultural tariffs and quota protection unless the United States also makes concessions (their agricultural subsidies are mad but political dynamite), or India cuts its manufacturing tariffs. This “tough” or “common sense” approach conceals a logic of remarkable stupidity, as the Liberal Democrat Business Minister Vince Cable has written. “We insist on continuing to harm ourselves unless you agree to stop harming yourself.”

As I said before, those familiar with global trade negotiations will know that this game – reciprocity – has gone on for decades and has apparently not done any great damage – yet -to the developed world at least. Agreement to cut tariffs and trade barriers is usually reached in the end, after politicians have returned to tell their populations how tough they have been in the national
interest.

In the absence of the Doha Agreement, there is a tendency to go for bilateral negotiations. The recent EU-South Korea pact is a case in point. We can see from the US, with its popular obsession with China’s manufacturing exports and “under-valued” exchange rate, where bilateralism may lead.

The Chinese, who are touchily nationalistic, and only recent recruits to the disciplines of multilateral trade and finance, probably don’t need much provocation to retaliate. If the Chinese were to offload large amounts of dollar securities so as to revalue against the dollar, they, despite its current troubles, would buy Euros instead. This would push up the value of the Euro, making Eurozone exports more expensive and affecting European economies and jobs. This would have the effect of increasing dormant protectionism in the EU.

Liberals must understand that trade liberalisation is in all our interests. We should open up our markets no matter what foreigners do.

Trickier times are ahead in the areas of foreign investment and services. My Country has benefited greatly from Japanese investment in our car industry. We have not insisted that bits of their car industry be sold to foreign firms. Last year, for the first time in 30 years, the UK sold more cars abroad than it imported. Many of these cars were Japanese models manufactured in the UK.

There is still no agreement in the aviation industry, however, on open skies between America and the EU, although this would benefit consumers greatly.

One concern when permitting foreign investments in national utilities and other key industries – so-called strategic assets – is the possibility of foreign government–owned companies or sovereign wealth funds using their shareholdings against the interests of the host country. Clearly, such investment has to be carefully vetted, but nationalist arguments such as those employed by the Americans when they refused to let Arab companies own their port facilities, or a Chinese investor to own an oil company, are damaging.

So far we have found that the major Singaporean and Arab sovereign funds have behaved as responsible investors, and they will be of great help investing in the infrastructure projects needed to fuel growth in all continents. As long as proper regulatory standards are maintained, we should all welcome these funds and not demand “reciprocity”.

The main battleground over globalisation is in fact in the developing world. There has been a general increase in resource nationalism – in Russia, Latin America and in OPEC. There are powerful ideological and interest groups in China, India and elsewhere resisting any movement from the comfort zone of “selfreliance” despite the benefits which market opening has brought. There is little that the West can do to win that argument – and attempts to impose liberalisation through aid or IMF conditionality are utterly counterproductive. We must just ensure that our markets remain open.

Even the most economically and politically liberals do, however, draw the line at the free movement of people. There are (except in the EU) no agreements to lift immigration controls. Even countries such as the USA and Australia, which are built on immigration, are pulling up the drawbridges. A world is evolving in which most goods and services, capital, and the very rich or clever people can move about freely. But most people, and particularly poor people, cannot move abroad to settle or look for work legally. Philippe Legrain of the London School of Economics calls this “global apartheid…morally wrong,
economically stupid, and politically unsustainable”.

He may have a point, but in reality it is not going to be possible for the most liberal of us to allow the free migration of unskilled workers. There are the popular fallacies: immigrants steal jobs, drive down wages, drive up house prices, undermine the welfare state, import terrorism and create a permanent underclass.

As liberals, we believe that it should be much easier for migrants to work in our countries, but not necessarily settle permanently. However, the experience of “guest workers” in Germany and Switzerland, and the approaches to migrant workers from ASEAN and South Asian countries in Singapore, Malaysia and the Gulf Countries, does not give any cause for optimism.

Liberalisation should work through a more market-based employment permit system. There should be a route to earned citizenship for long-term residents – without automatically legitimising illegal immigration – and a less draconian approach to visa charges and permissions for short-stay visitors.

There is a strong case for arguing that the market processes which have driven globalisation: rapid communications; the freer movement of goods and services, capital and some people – have run ahead of global governance. There is however an embryonic rule of law, which is why the World Trade Organisation is so important in providing a framework of dispute settlement
covering trade, intellectual property and, increasingly, investment.

In the political sphere, the International Criminal Court is established and now tries individuals – including former heads of State, such as Slobodan Milosevic and Charles Taylor – for war crimes, genocide and the like.

There is a burgeoning corpus of international law on human rights, arms control and multilateral environmental treaties.

Last October, at the meeting of the Liberal International Executive in London, we concentrated on the United Nations Doctrine of the “Responsibility to Protect”, and our Human Rights Officer and Committee are monitoring the progress of this concept, hated by countries such as China and Russia who believe they can trample on the human rights of their citizens without foreign interference.

There is also a growing mass of voluntary cross-border standard setting, relating to banking reserves, telecommunications , accounting standards, the workings of the and sports governing bodies. To these one could add the standards set by bodies such as Amnesty International and Transparency International. But in many areas the rule of law is tenuous, non-existent or ignored ( people trafficking, drugs, arms exports and money-laundering, for example). And the conduct of governments rests on international agreements that are often disregarded.

The problem of international terrorism has led to an erosion of legality in cases such as Guantanamo Bay, rendition and the use of torture, and the use of drone aircraft and other devices to kill suspected terrorists, and those physically close to them, in the name of the so-called “War on Terror”. The Iraq War, without United Nations sanction, marked a step backwards, making it difficult to negotiate such issues as nuclear proliferation.

I should here turn to specific problems in the global arena.

First, corruption. Major international corporations feel that they should be allowed to play by the national rules, especially in nondemocratic countries, paying commission or kick-backs for major military or construction contracts. This attitude is increasingly being challenged by new legislation. The Americans, as usual, have an extra-territorial reach and will seek to extradite foreigners alleged to have engaged in such practices – although I have not noticed too many Saudi princes in US courtrooms!

In my Country, we have at last brought in a very tough Bribery Act, after Liberal Democrat and other protests at blatant commission-giving by British Aerospace in Saudi Arabia. Companies which do not have a strong anti-bribery procedure are heavily fined, even if no corruption has actually taken place.

As an aside, I was very impressed when I visited Georgia 2 weeks ago at the head of a Liberal International fact-finding trip to note the measures taken to successfully eliminate police and bureaucratic corruption since the 2004 Rose Revolution. So successful has the Government been that the World Bank now classifies Georgia as the 14th most attractive investment destination. ALL other post-communist countries, and a plethora of others, have lessons to learn from the Georgian model.

The fight for the world’s scarce mineral and also agricultural resources is a major concern too. We note that the Chinese Government is investing heavily in Africa as well as in South East Asia, buying forests, agricultural mega-holdings and mines to feed its people and its industries. Infrastructure projects are offered, but only Chinese workers are usually employed on them.

International terrorism is made easier, of course, by freer movement of individuals, and of cash to finance their activities. Sadly, Islamic terrorism and Salafist activities, most notoriously Al Quaeda and its spin-offs in the Pacific, the Arabian Peninsula, North Africa, Iraq and Syria are the current most ruthless examples. If globalisation makes their task easier, global intelligence sharing is the weapon to contain and frustrate them.

My last concern regarding globalisation is the environment. As a lover of forests, I am keenly aware that illegal logging is the single greatest cause of global warming, greater even than increased carbon use. The destruction of the rain forests in Latin America and the Pacific area must be reversed. There are increasing numbers of accords to stop this, and initiatives such as the sale by the Government of Guyana of its rain forests to a Scandinavian Government so that there can be an economic gain to local people to replace payments by loggers.

Environmental degradation and consequent water shortages are described by US Generals as a security threat far greater in the medium term than that posed by terrorism. The consequences will be mass movements of peoples unable to sustain themselves in desertified lands, with those in more agreeable circumstances having to use force to keep them out.

We must, as liberals, pressure our Governments at the Rio 20 meeting in Brazil in June, to deliver on the vitally necessary accords to save our Planet for our children and grandchildren. Swedish climate minister, Lena Ek, is convening meetings of liberal ministers in Rio, including my Party Leader and Deputy Prime Minister, Nick Clegg, to ensure a common front.

To conclude, the vital liberal principle we must uphold, at home and abroad, is the rule of law. Without the rule of law, in all areas, globalisation will be anarchic and unsustainable.