Title page 1

Contents 2

KEY TAKEAWAYS 1

INTRODUCTION 4

THE DEFENSE OF GLOBALIZATION 1.0 6

WHAT WENT WRONG: WHY DID SO MANY BECOME SO SKEPTICAL OF TRADE? 7

American Techno-Economic Interests Took a Back Seat to U.S. Foreign Policy Interests 7

Globalists Assumed China Would Join the Free-Trade Coalition 9

With the Collapse of the Soviet Union, Globalists Ignored the Critical Nexus Between Multinational Behavior and National Interests 10

Globalists Assumed That a More Efficient Global Division of Labor Would Lead the United States to Specialize in High-Value-Added Goods and Services 11

Globalists Rejected Industrial Policy 12

Globalists Believed That the WTO Would Effectively Police Trade Infractions 13

Globalists Believed That "Behind-the-Border" Barriers Would Be Limited and Declining as New Waves of Trade Opening Proceeded, Such as the Doha Round 14

U.S. Trade Officials Focused More on Market Opening Than on Market Enforcement 15

Failure to Effectively Influence the Global South 16

Policymakers Gave Only Lip Service to Helping Regions and Workers Who Lost Due to Globalization 17

Globalists Dismissed the Negative Impact of Foreign Industrial Strategies on the United States 17

Globalists Refused to Focus on Currency Adjustment as a Natural, Market-Based Adjustment Mechanism 17

Globalists Dismissed the Importance of the Trade Deficit 19

AUTARKY AND PROTECTIONISM CANNOT BE THE ANSWER 20

Argument: Globalization 1.0 Hurts American Workers 20

Argument: The U.S. Market Is So Big It Doesn't Need Global Market Access 21

GLOBALISTS FIGHT A REARGUARD ACTION TO PRESERVE GLOBALIZATION 1.0 23

U.S. TRADE POLICY AND THE GLOBAL BATTLE OVER ADVANCED INDUSTRIES: TIME FOR A STRATEGIC APPROACH 24

12 PRINCIPLES TO GUIDE GLOBALIZATION 2.0 28

Principle 1: China Changes Everything 29

Principle 2: Embrace a National Advanced-Industry Strategy to Bolster U.S. Competitiveness 31

Principle 3: Trade Should Be a Component of That National Advanced-Industry Strategy 31

Principle 4: America First, But Not Alone 32

Principle 5: Engage in Free Trade With Allies, Pragmatic Trade With Others, and Strategic Trade With Our Adversaries 33

Principle 6: Pressure Allies to Clean Up Their Act and Align With the United States Against Chinese Innovation Mercantilism 34

Principle 7: Establish a Process and Institution That Can Effectively Adjudicate Disputes Among Free-Trading Nations 35

Principle 8: Don't Decouple From China 35

Principle 9: Insist on Floatable Currencies, Especially the U.S. Dollar 36

Principle 10: Fight Back Against Advanced Industry Mercantilism 36

Principle 11: Expand Trade Rules to Cover More Behind-the-Border Issues 38

Principle 12: Provide Better Support to Places and Workers Hurt by Trade Disruption 38

A POLICY AGENDA TO ADVANCE GLOBALIZATION 2.0 39

Organizational Strategy 39

Market Opening 39

Trade Enforcement 41

Export Promotion 44

OPPOSITION TO GLOBALIZATION 2.0 AND NEXT STEPS 46

ENDNOTES 48

Boxes 22

Box 1. Semiconductors and Global Scale 22

Box 2. Employing Defensive Measures to Protect Allied Advanced Technology Capabilities; The Case of Electronic Displays 37