Former Ambassador Discusses Politics, World Trade

Former ambassador Rozanne Ridgway says world trade is essential but filled with social and cultural complications.

In April, President Bush met in Quebec with 33 other leaders from the Western Hemisphere for a summit on free trade. But the news occurred outside, where police in riot gear clashed with some of the 1,000 protestors. Security fences girded the meeting site.

It was hardly the first time a meeting on global trade had been upstaged. In 1999, protesters besieged Seattle, host of a meeting for the World Trade Organization. And last year, protesters targeted a global summit in Prague.

Large corporations, meanwhile, see international sales as a critical part of their strategy to maintain growth and ensure stability when different parts of the world's economy slow. Many executives argue that free trade improves economic conditions and supports democracy.

Rozanne Ridgway sees the issue of globalization both as a former ambassador and corporate board member. A Hamline University graduate who's still active with its alumni association, Ridgway joined the U.S. Foreign Service in 1957 and was Assistant Secretary of State for European and Canadian Affairs from 1985 to 1989. She now serves on boards for 3M Co., Boeing Co., Sara Lee Corp. and Emerson Electric Co.

She spoke with reporter Kevin Maler about politics and global trade.

QUESTION: Many large U.S. companies are looking overseas for long-term growth. What are some of the concerns investors should keep in mind?

ANSWER: Whether, in fact, the research has been done on the existence of a market for the product. What kinds of returns are expected over time? And whether or not the company has the experience or can acquire the experience among its personnel overseas to direct the enterprise.

Q: Is it the responsibility of management to weigh factors like human rights abuses before entering a country?

A: I would say, absolutely. I would say you cannot expect a corporation to be treated by the rule of law if the rule of law doesn't exist for its own people. That doesn't mean you're going to find the perfect world. One of the major challenges in an emerging market territory -- China comes to mind -- is how to balance an opportunity against an unattractive setting.

I think most large companies here, and I'm not speaking for any one company, believe that over time, open economies inevitably lead to open societies. I think companies that have gone ahead with investments -- they know there are risks, they know they are often subject to criticism -- but if they make sure their own workplace is an example of what can and should be done, most believe they are making a contribution.

Q: When should a company pull out of a country?

A: The obvious initial one would be interference with how you run your business, interference with your employees, a consistent lack of transparency in the host country, unpredictability and a dramatic change, say, in the business environment, like tax rates or the ability to repatriate profits until suddenly it is not a good business proposition.

Q: Critics of international trade say American companies that source overseas are simply exploiting lax regulations and poor working conditions. Is that true?

A: I know the arguments. The feeling that you're going overseas to run sweatshops. Chain people to machines, pay slave labor wages, put the work force here out of work while supporting unattractive regimes. I believe the companies that engage in that behavior deserve the spotlight they get.

I think they are the exception, not the rule. The companies are trying to bring into the marketplace, either in the U.S. or outside the U.S., a reasonably priced product. In many instances, that's best done by having overseas manufacturing. In many instances, it's the only way you can compete with products coming into the U.S.

And there are those who would argue, and I think I'm among them, that a broadly based, global economy produces more jobs, more good jobs, than fewer. The problem, and I don't think you can ignore it and you would be a fool to try to, is that there are displacements and adjustments and people are hurt, and I think provisions have to be made for that reality.

Q: Who holds companies accountable?

A: There's a basic body of U.S. law that governs behavior overseas. And there are interest groups. And the topic is accountability.

(Interest groups) are certainly part of the spotlight process. I think all you have to do is go down the list of people who are concerned today -- labor unions, environmentalists, human rights groups -- each comes to the issue from a different standpoint and each may want different outcomes, but they're there, and in many instances the function they perform helps keep us on the right track.