Rather than worry about a relative decline in their economic weight, or retreat from international engagement, the US and Europe should focus on renewing the global institutions needed to hold this complex new mix of states together through difficult debates on climate change, energy security and trade.

We have to adapt these institutions – the UN, the WTO, the IMF – to give the emerging economies a chance not just to exercise their rights, but to assume their responsibilities.

The problem is that at the moment when we most need the tools of economic internationalism, our own politics has begun pushing in the other direction. Economic nationalism is the symptom of a deeper problem.

We cannot shape globalization without tackling the root causes of protectionism. That means tackling economic insecurity and inequality in our own societies.

Protectionism starts in your pocket. Americans and Europeans might welcome the fact that globalization is narrowing inequality between countries, but they are more worried by the risk that it is widening the gap within their own.

If we want to preserve our open economies, we need to build a social contract that guards against economic insecurity and inequality in our own societies.

It's a deeply entrenched political myth – especially in the US – that globalization and active welfare states are incompatible. Look at OECD data for the last 20 years and it is clear that where they have encouraged labor market flexibility, high levels of education and retraining and helped women and older people stay in the workforce, strong welfare states have equipped countries for globalization much better than weak ones.

The most competitive OECD states also have high levels of spending on public goods and help individuals deal with the biggest economic risks in life – especially unemployment and health care – without fear.

Scandinavia and the US have drawn similar benefits from globalization in terms of wealth and competitiveness, but they have distributed those benefits very differently. In which political culture is globalization more sustainable? One in ten Swedes think globalization is bad for their society. Five in 10 Americans do.

This is not just a challenge for the US: many European social models still do not pass these tests. Progressives in the US and Europe need to revive the New Deal case for governments that help people engage with open economies, rather than leave them exposed. Protective states do not have to be protectionist ones.

Europe and the US have a far greater capacity to continue to benefit from globalization than we seem to recognize. And far more to lose from a retreat from openness than we sometimes imagine. The world needs to hear this message from President Obama or McCain. Globalization needs America. America needs globalization.

The writer is EU Trade Commissioner

(China Daily June 17, 2008)