WASHINGTON – While some American executives have been hesitant to criticize U.S. President Donald Trump or his policies, General Electric Co. Chief Executive Jeff Immelt on Thursday provided a warning for the president: globalization needs an overhaul, but the U.S. should avoid the temptation to throw up barriers to free trade.
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"The principles for trade need to be rethought in the modern age," Mr. Immelt said in a speech at Georgetown University. "The systems of free trade haven't worked for enough people. But protectionism is not the answer. It makes us look weak, and not strong."
While big business has enthusiastically embraced much of Mr. Trump's economic agenda -- especially tax cuts and deregulation -- his promise to adopt a harder-edged "American First" trade policy has made CEOs of big multinational corporations nervous. But few have been willing to speak out.
"There's not a lot of political upside these days to being a defender of an open and globalized trading system," Joshua Bolten, president of the Business Roundtable trade group of large U.S. companies, said in an interview. "Individual companies who stick their heads above the parapet on it are at risk of being ostracized."
Mr. Immelt has been one of the few CEOs who has seemed to have walked a careful line over the past year, defending the global trade on which his conglomerate depends, while navigating outside the firing line of the president, who has reaped huge political gains from criticizing globalization and its corporate adherents.
While Mr. Trump has lashed out at some of GE's industrial competitors for shipping jobs outside the U.S. -- most notably the Carrier Corp. division of United Technologies Corp. -- GE has managed to avoid trial by presidential tweet.
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And Mr. Immelt, while publicly voicing concern with Mr. Trump's rejection of the science behind climate change and the president's attempt to ban travel from some Muslim-majority countries into the U.S., has also been quick to praise the president.
On Thursday, Mr. Immelt continued his praise, saying that "President Trump is right" that government should take action to ensure a "level playing field" between American companies and foreign entities that import goods into the U.S.
Echoing a speech he gave last May to New York University's Stern School of Business, Mr. Immelt acknowledged that companies and governments that benefited from globalization failed to keep their attention on American workers who suffered.
"Economic nationalism is replacing free trade as the dominant idea of the era," Mr. Immelt said Thursday.
One cause of that is China, Mr. Immelt said -- the Chinese government "made state capitalism work" by providing support for its own companies while putting local content restrictions on foreign companies, like GE, that sought to operate in their market.
And the retreats of corporate elites "in places like Davos" isolated leaders from workers and voters, the GE chief executive said. "We made globalization its own political party," he said. "The party saw globalization as a theory, rather than understanding the impact on normal people, or the critical investments needed to build competitiveness. We rationalized outsourcing as merely good business. Long ago, GE was a part of this as well."
But Mr. Immelt also warned that efforts to undo the forces of globalization could unleash a backlash of its own, not unlike the one that has singed GE and free-trade advocates.
"We are not going back to a pure free-trade world," Mr. Immelt said, but added, "If leaders think people in this room or around the country want to live without the many benefits economic integration has enabled, they're in for a rude awakening."
Write to Ted Mann at email@example.com
(END) Dow Jones Newswires
May 04, 2017 18:57 ET (22:57 GMT)