ASIA TODAY INTERNATIONAL AUGUST/SEPTEMBER 2014 | 7

to worry about Indonesia or Turkey. The rest of the world hadn’t quite evolved.“

It was really in the ‘90s that the global market started to change, he says. “Asia Pacif-ic no longer just meant Japan. All of a sudden, Hong Kong and Singapore took over from Tokyo (as financial centres). I saw changes in our own business — there was more influence coming from outside the US.”

Like others, McGraw realised that the world no longer revolved around the developed coun-tries. The combined GDP of the US, Europe and Japan has now fallen to 50 per cent of the glob-al total, and by 2030, it will be down to 30 per cent.

“It tells you that you have to start looking for friends and partners around the world or you

are not going to be com-petitive,” he says. “Transformation of glob-al trade has begun to bring far-reaching change to economies and companies.

“If the world is going in this direction, and if we continue to do things in a certain way, we are misaligned and we are going to miss out.

“From my standpoint, my interest began when

(globalisation) started to influence our busi-nesses. I knew nothing about India. Today, we have 7,700 employees in India. I knew nothing about China, or Brazil or Indonesia.”

One option was to go out and buy compa-nies, but everything would still emanate from headquarters in New York, he says. “We would not be competitive. People were doing busi-ness in Singapore, Sydney, Hungary or Croatia. They had people on the ground.

“We needed to build a global organisational structure, such that people there on the ground were capable of making decisions, growing the business, being accountable. It was inefficient to go back to New York.”

Driven by competition, US business did not wait for someone to give them permission to go into new markets. Some of the largest Ameri-can conglomerates, among them GE, Cargill, Honeywell, and International Paper, went global — and have benefitted for the move.

“But the average man and woman does not

WHY GLOBALISATION IS IRREVERSIBLECOVER REPORT: B20

The Politics and theRewards of Global Trade

Of markets and minds

g CONTINUED PAGE 8

Florence ChongEditor ATI Magazine

a spell (2005-09) as Chair of the US Business Roundtable, an association of CEOs of Ameri-can companies.

Today, however, he speaks with more than the voice of an American business leader. As chair of the Paris-based International Chamber of Commerce (ICC), McGraw speaks for global business. His other forum is the B-20 Grouping, a companion event to the premier global leaders G-20 Summit.

“I am excited about the B20 process. I am thrilled with the difference that we have made in just the last three years. It has been extraordi-nary,” McGraw told ATI.

“You have everybody talking similar things. We need growth. We need more jobs. We need to prosper. Nothing stays the same forever. Things change and either you find ways to change with them or you are going to be left behind.”

In an interview with ATI in Sydney, McGraw‘s passion and conviction came through loud and clear. He was highly animat-ed when asked if he believes globalisation might have run its course and is now in reversal in an increasingly fragmented world.

Globalisation is irreversible, McGraw argues. “If you go back two decades, the United States, Europe and Japan controlled the global economy and trade. At that time, the developed world represented 80 per cent of world GDP. So if you were in business, like I was, I didn’t have

THE NAME Harold “Terry” McGraw III is synonymous with three things – publishing, financial services and a distinguished family lineage. To that list, one should now add trade.

McGraw has become something of a free trade evangelist, with trade liberalisation now a subject of consuming interest.

He travels widely to spread the message that trade promotes growth — and is constantly urging governments not to let their commit-ments lapse.

Terry McGraw is best known as heir to the McGraw family interests, associated with McGraw-Hill, a leading global business infor-mation company born out of a business journal, which his great-grandfather bought in 1888.

McGraw expanded into financial services when he acquired the international rating house, Standard & Poor’s, and the Group has since been renamed McGraw-Hill Financial. He ran the company as its Chairman and Chief Executive from 1998 until his retirement last November, and continues to sit on the Board as Non-Executive Chairman.

Running a sprawling empire that crosses many borders gave McGraw an intimate insight into global trade issues — the politics and the rewards. He has become a key advo-cate for opening up trade in his own country. And for more than two decades, he sat – and continues to sit – on scores of US Government and private sector trade committees, including

}Transformation of global trade has begun

to bring far-reaching change to economies and

companies. If we are misaligned, we are going

to miss out~

THERE has been a failure by business to properly explain the benefits of globalisation, says Terry McGraw, Chairman of the Paris-based Inter-national Chamber of Commerce (ICC). “There is a separation between the common men and woman – and their understanding – and that of business. We haven’t done enough to change that gap,” he says . . . ICC’s Terry McGraw – ‘Doha is not dead!’

AUGUST/SEPTEMBER 2014 ASIA TODAY INTERNATIONAL8 |

ment was helping to open both markets and minds.

McGraw accepts that multilateral trade agreements are perhaps ahead of their time, given the diversity of the global economy. “Mul-tilateral deals can’t work. You still have enor-mous disparity between regions. So when I am talking about agriculture, manufactured goods, or tariff rates, what is good for me might not be good for you. You need to do things to get into a position where there is benefit to everyone.”

Even so, he cannot countenance the thought that the multilateral forum for trade liberalisa-

tion, under the auspices of the Geneva-based World Trade Organisa-tion, has been irrepara-bly wounded by failure to reach agreements in the past 13 years (see report page 10). Many have pronounced the Doha Development Agenda, the multilater-

al trade round which started in 2001, dead fol-lowing failure of WTO members to cut an agree-ment.

McGraw remains adamant. He tells ATI: “Doha is not dead!

“Doha is very important for the survival of the WTO (and) it is crucial to get the Bali agree-ment on trade facilitation completed.” (Since this interview, the WTO has failed to move ahead with the Bali agreement because of implacable opposition from India).

“The environment today is different. Today’s trade agenda is different. When Doha did not go forward, it led to a plethora of free trade agree-ments. We have the TPP (Trans Pacific Partner-ship) and the Transatlantic (Free Trade and Investment Partnership). There is emphasis on services in these regional negotiations.”

Services, McGraw says, are a bigger sector than manufactured goods, let alone agriculture. But in multilateral deals, he admits, agriculture takes all the oxygen in the room.

McGraw is encouraged by the progress in TPP and liberalisation in the services sector — and possibly an agreement on information technology. “The agenda today is the strongest trade agenda that we have ever had,” he says. “That is why we need to have hope — and that is why we need to be optimistic, to be very positive.”

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COVER REPORT: B20WHY GLOBALISATION IS IRREVERSIBLE

understand that. They have never been to Indonesia or to anywhere outside their own country, he says. Even in a sophisticated coun-try like the United States, the majority of Amer-icans — even its Congressmen and women — have never been out of the United States.”

McGraw says business leaders need to start to educate employees on the process of globali-sation and the positive impact it can have on their businesses. These are no transient influ-ences, he adds. They are changes that will eventually have a profound impact on business-es and, indeed, countries, including the US.

“There is separation between the common men and women — and their understanding — and that of business. We haven’t done enough to change that gap,” says McGraw.

“If people can see that there are benefits from trade — that they can get better employment, better jobs — then they know that it is not in their best interests to be against (globalisation). But we haven’t done enough as the voice of business to help the general public understand why globalisation is so important for them.

“This is one of the reasons I joined the Inter-national Chamber of Commerce. It has 6.5 mil-lion member companies in 120 countries, and their voice is getting louder.”

These days, McGraw laments that many pol-iticians have taken on a populist view. “If I start talking about globalisation and trade, people don’t like that. People want to know what they will get in return.” He says the message has to be that trade generates growth, and that growth will lead to better infrastructure. “If a country is growing, there will be more jobs, more prosperity and a rapidly-growing middle–class. These are the benefits.

“Singapore, Indonesia, the Philippines, Viet-nam and Malaysia are all growing at four to eight per cent. And in a short timeframe, their citizens have seen the benefits of what growth brings. They know they can’t do it on their own, and that there has got to be a more global and open market.

Then, there is the dramatic transformation of China, thanks to its engagement with the world through trade, he says.

One reason for the public backlash against globalisation is uneven growth around the world. Even within countries, concerns of ine-quality are rising, McGraw says. Financial cri-ses or recession can bring fear and uncertainty to an individual and the general population.

He sees no option but to press ahead to keep globalisation alive. “If the developed world’s share of global GDP is dropping to 30 per cent of world GDP, and 70 per cent is coming from somewhere, we have got to work together.”

McGraw became involved with global trade in part out of necessity. “I wanted to know how we could find out more — more quickly — about who is doing what outside the US. The best way of doing that was through trade.

“Even though it was then still embryonic, I got involved early on with the North American Free Trade Agreement (NAFTA). Canada and Mexico wanted in on this one. We tried desper-ately to get Brazil. I regret to this day that we were not successful in getting Brazil into NAFTA. “

McGraw says trade became a bigger issue in the second term of the Clinton Administration and in the Bush Admin-istration. When George Bush became US Presi-dent in the early 2000s, McGraw became more active himself on trade issues.

“I developed a terrific relationship with Bob Zoellick (who served as the US Administra-tion’s USTR until 2005). He is a globalist and very smart,“ says McGraw, who worked with Zoellick on trade agreements with Colombia and Peru.

“It was very clear that we couldn’t enter free trade agreements with Colombia or Peru because they didn’t have anything to offer. So Bob came up with the Trade Preference Act. We are able to open up a portion of our market just for Columbia, to give them benefits. For Columbia, Zoellick came up with roses.”

Columbian farmers who were growing cocoa — their main cash crop —started growing ros-es and were able to use preferential treatment to get access into the US market. The US did a similar deal with Peru with asparagus.

“I was fascinated with what was taking place,” says McGraw. “There was President Uribe (Alvaro Uribe was President of Columbia from 2002 to 2010). He said: ‘If we can do this (with roses) then we have got to do more with others to open up the market.’ McGraw says Uribe has left an indelible mark on him because Uribe was highly emotional when talking about the benefits of trade to Columbians.

After Zoellick moved on to head the World Bank, his successors, Susan Schwab and Rob Portman, continued to press to open up trade, says McGraw, gratified that his own involve-

}Multilateral deals don’t work (because) you still have enormous disparity

between regions~

}The message has to be that trade generates growth. If a country is growing, there will be

more jobs, more prosperity and a rapidly-growing middle-class~

Why the US needslower tax ratesTERRY MCGRAW is critical of the US Government for not keeping up with global trends on corporate tax rates.

“Why does the US have a 35 per cent stat-utory tax rate? When you add State and local taxes, it is almost 40 per cent. Who in the world is going to invest and build plants in this country? They are not.

“You have inconsistent policies. Again, the business community has to do the job of communicating with Government officials about why it is in the Government’s best interests to have a lower tax rate. Then you can grow faster.”