Hollywood celebrates WTO victory

The US has won its two year old case against China at the WTO’s dispute settlement panel. The dispute centred on the Chinese state monopoly on the import of foreign books and films, with the US arguing that this constituted a barrier to trade.

This is one case where the political power of open trade is clear. The free exchange of cultural products like this one of the best things about globalisation and, as the Chinese government surely knows, the seductive power of American culture and its aspirational themes and ideas can be a democratising force. In short, American books and films will seem pretty subversive to an authoritarian government. Unfortunately, however, according to the FT:

foreign industry executives, who did not wish to be named, said they saw little chance of Beijing overturning the decision from the WTO in Geneva.

“They will definitely appeal but they understand that it’s just for gaining practice in dealing with trade disputes, not because they expect victory,” said one executive.

It’s here that the rise of China is a concern for the international trade regime. A rising hegemon upsets the balance of powers that currently keeps the system ticking over. Whilst many will welcome the decline of US hegemony at the WTO, the rise of a self-interested and rapidly growing China isn’t a particularly appealing prospect either. We can definitely expect a lot more trade conflict between the US and China in future. Luckily, the pacific effect of free trade is widely acknowledged.

Though, on that note, I’d like to suggest that it’s not free trade that stops wars, but rather the existence of a set of rules and norms to manage trade. It’s the institutionalisation of trade politics more than the nature of those politics that reduces conflict. It’s not an unimportant distinction.

http://www.wto.org/english/news_e/news09_e/363r_e.htm

Doha redux

The WTO is worried about rising protectionism though The Economist isn’t. Probes investigating protectionism are up though and dumping is on the rise. Perhaps we might say that ‘the collapse in world trade has stopped, but there is no sign of a recovery‘ as yet.

Meanwhile, a Doha Deal Begins to Look Nearer and G8+G5 Call for Doha Conclusion in 2010 while WTO says Global Crisis will Boost Doha Round. Maybe a a crisis round of trade negotiations? But India damps hopes of new Doha talks. Daniel Drezner thinks it could all be some kind of trap. If in doubt (and who wouldn’t be?), just visit Ron Kirk on Faceboook.

For the record, posting is slim because I’m still writing my dissertation on the concept of trade justice. At some point, I’ll get round to posting a summary of it here. I just have to work out what I think first. Do not adjust your sets.

Another trade toon

Maybe I should start a collection. (Incidentally, Peter Vale’s publishing a book about cartoons and South Africa’s international relations.) Anyway, this cartoon is from bilaterals.org. Sorry about the small size.

Fairtrade as ’supermarket internationalism’

Matthias Varul has a nuanced assessment of fairtrade over at e-IR – it’s worth a read and I reckon he’s got it pretty much spot on. To top and tail it:

The idea of fairtrade is, at first glance, a paradoxical one. Observing that the capitalist world market works to the disfavour of producers in the Third World, left wing and Christian campaigners from the 1970s onwards tried to use this unfair market to establish equitable North-South trade relations. The paradox is encapsulated in the slogan: “In the market against the market”…

Fairtrade goods on the supermarket shelves may be sometimes misused to buy a clear conscience – but at the same time they are the bad conscience of the postcolonial world of consumption. The Adam Smith Institute complains about a “moral monopoly” that the fairtrade movement has established – and in a way it’s fair to say that it has. There now is compelling plausibility for fairtrade. Such plausibility might not be strong enough a reason to determine individual purchasing decisions – but it may prepare the ground for institutional safeguards and legislation that might one day make fairtrade a thing of the past by making sure all trade is fair.

I’ll probably be blogging more about this as my dissertation progresses. Dr Varul is also running a day seminar on the topic in October – more info here.

New DFID white paper

On 6 July, DFID published its new White Paper , promising to:

Maintain our commitment to people in poverty

Work to make sure every pound of UK aid is spent well

Work for sustained, fair and green growth

Help make people safe and secure

Increase our investment in international organisations and continue to lead reforms with real impact

Commit to helping vulnerable countries adapt to climate change and develop in a low carbon way

Reinforce our partnerships with charities, faith groups, trade unions, businesses and others

Meet our aid target of 0.7% of UK income by 2013

So far, so pedestrian. It looks like the white paper is essentially advocating a pretty straightforward continuation of current policy. More superficially, as predicted, British aid efforts have been rebranded as ‘UKaid’, in a similar manner to the American USAID programme.

However, the ODI are concerned, as am I, that DFID is neglecting trade. As Oxfam have famously argued, ‘if Africa, East Asia, South Asia, and Latin America were each to increase their share of world exports by one per cent, the resulting gains in income would lift 128 million people out of poverty.’ Pascal Lamy, writing in the Wall Street Journal, predictably agrees that ‘developing countries need trade’. Expect yet another update on Doha progress in relation to the Obama administration shortly.

World trade forecasting

Part I:

Part II:

Doha prospects, Pangloss-style

The new USTR, Ron Kirk has announced that he’s interested in pushing ahead on Doha and is aware of a need for a ‘new approach’. However, the FT reports that:

WTO members have given a cool reception to a proposal by the US and Canada that negotiators should drop their so far unsuccessful efforts to agree a general formula for cutting tariffs on farm and industrial goods in favour of a bilateral “request-offer” procedure used in past trade rounds.

This procedure would overcome objections by US farmers and business groups that the myriad flexibilities and exceptions for developing countries built into the present approach make it impossible to see what market access they will gain in practice.

He’s right, at least, that a new approach is necessary. That the WTO needs reforming is not in doubt, but even in the shorter-term, the style of negotiations will have to change in order for Doha to get anywhere.

According to Reuters:

Kirk took up a Canadian proposal to move beyond the current focus of talks which aim to reach an outline deal on the formulas for cutting tariffs and subsidies, known in WTO jargon as modalities, and go straight into detailed bilateral negotiations on cutting individual tariffs, known as scheduling.

U.S. ambassador Peter Allgeier told Wednesday’s meeting this was not about skipping modalities or dropping multilateral talks but supplementing them in the interests of transparency…

It could work like this. A U.S. negotiator sits down with her Indian counterpart to get a sense of how many U.S. tractors India would be willing to import, and at what duty. In return, the Indian diplomat would make clear how many temporary work visas India would seek in return.

But as IPE Zone rightly asks, ‘if you’re just going to have a noodle bowl of bilateral deals, scheduling, or whatever you call it, doesn’t that render a multilateral round superfluous?’ I’ve always tended to lean to the view that a multilateral trading regime is preferable to an ad hoc, bilteral one. That may be just some idealistic liberal internationalism in me. But despite its flaws, the WTO is in principle democratically constituted and provides the best chance for developing countries to make their case. It’s a lot easier to get bullied if it’s just you and the other guy and he’s got you over a barrel.

Whatever Ron Kirk might think about the pragmatism of his new approach, we are faced with the old question: is a bad deal better or worse than no deal at all?

Pre-European election activism

War on Want are running a campaign to encourage voters to lobby their local candidate for the European parliament on the subject of the EU’s trade politics. Their template looks like this:

I am writing to you as a constituent deeply concerned that European trade policies are exacerbating poverty and misery across the world. I would like to see a major change in the EU’s approach to international trade, so that it puts the needs and rights of poor people before commercial advantage for European companies.

As such, I want to vote for a candidate that will take action to help bring about a full-scale rethink of the EU’s trade policy and to ensure that it prioritises development, environmental sustainability and human rights in the world’s poorest countries. Please sign the pledge below to show your commitment to take action.

“If elected as a Member of the European Parliament in June 2009, I pledge to undertake some or all of the following activities:

• Write to the Trade Commissioner Baroness Ashton, and to the President of the European Commission, José Manuel Barroso, urging them to commit to a rethink before the end of 2009.
• Demand a cross-committee investigation in the European Parliament of the development, environment and human rights impacts of EU trade policies in developing countries.
• Sign a resolution in the European Parliament in support of a rethink of the EU’s trade strategy and policies.
• In Autumn 2009, actively participate in scrutiny of the new European Commission and its trade and development strategies.
• Write to the President of the European Commission, José Manuel Barroso and to the Commissioner of Administrative Affairs, Audit and Anti-Fraud, Siim Kallas, to call for a mandatory register of lobbyists.”

Aside from the manifest righteousness of the cause itself, it is pleasing to see an NGO asking its supporters to do something more than just sign an electronic petition. War on Want’s campaign is asking us to enagage in some real interaction with our (would-be) elected representatives. That’s how it’s meant to work in a democratic society. More of this sort of thing, please!

Coffee, aid and trade

Whilst I am still working on various projects before the end of formal teaching, my thoughts have begun to turn to my dissertation, which will address the topic of trade justice – what it means, how it works and so on. If that sounds vague, that’s because (at this stage at least) it is. This video should give you some idea of what I might be looking at and why I’m going to be looking at it: because trade is more important than aid.

If that piques your interest, you can find out more and take action at the film’s website.

The new transatlantic dialogue, trade wars, China and the IMF

I’m currently snowed under with work (Czechoslovakian democratisation, the prognosis for US hegemony, miscellaneous presentations and dissertation planning, since you ask), so apologies for the lack of posts. Things should even out from the beginning of June. In the meantime, there’s a few things I’d like to flag up.

• The Friedrich Naumann Stiftung für die Freiheit is running another online conference, this time on ‘The New Transatlantic Dialogue’. It is ongoing until 16 May and looks sure to be informative and useful.
• The epic beef-hormone conflict looks like it is coming to an end, while the nascent cheese war seems to have been nipped in the bud too.
• The Financial Times has an interesting profile of President Obama’s trade brinkmanship.
• The Guardian’s business section on Monday contained the headline ‘Europe accused of protectionism‘.
• The Catholic Times reports that ‘Pope accused of Catholic leanings’.
• Ngaire Woods discusses the influence of China on Bretton Woods reform.

A G20 roundup

The London Summit

Alex Evans at Global Dashboard is reporting on the current state of negotiations at the summit and all-round good egg Adam Groves interviews Mr Billy Bragg in the City of London. While just about every respectable politician in the world is sounding off about the importance of avoiding protectionism (with their fingers crossed), a contrarian Noreena Hertz in The Times calls for protectionism. Though, on that note, prospects for Doha are predictably bleak.

The crisis and the developing world

Jeremy Seabrook thinks Gandhi had the right idea (he really didn’t).The FT has a nice supplement on the the financial crisis in Africa and the UK is boosting foreign aid (a bit).

Global governance

There’s some big academic thinking from Saskia Sassen at oD about a world economy powered by finance. Stiglitz et al. at the UN are arguing for the G20 to be replaced by a Global Economic Council, while the Sec-Gen is afraid of total meltdown. On the subject of disaster, we should apparently be expecting a ‘”perfect storm” of food energy and water shortages’ sometime before 2030. More broadly, Timothy Garton Ash highlights the G2 (US and China) in the light of the EU’s failure to work cohesively. The New Statesman, on similar lines, believes that ‘no-one rules the world’ and CEPR welcomes us to a truly multi-polar state of affairs.

Stories from recent American trade history

2001: Developing countries agree to a new trade round. The Doha Round was to be a ‘development round’. These countries agreed on the condition that the round would work towards significantly reducing agricultural subsidies in industrialised countries.

2002: George W. Bush signs into law the Farm Security and Rural Investment Act, increasing agricultural subsidies by 80%.

***

Another story from 2002: A proposal was made to loosen WTO intellectual property (TRIPS) rules in order to allow countries to use generic drugs instead of their more expensive (read: unaffordable) patented versions without fear of being punished for copyright violation. This would apply only during a public health emergencies such as the AIDS/HIV pandemic. American pharmaceutical companies subsequently donated $50 million to Republican Congressional candidates. Representative Nancy Johnson ($204,817 donation), Senator Orrin Hatch ($387,824 donation) and Senator Charles Grassley ($100,000 donation) were amongst the Republicans who opposed the plan. The US vetoed the proposal at the WTO. Of the 144 members, it was the only one in opposition.

Obama administration on Doha

The FT is reporting that:

Barack Obama’s administration signalled it would take a tough line in global trade negotiations on Monday, saying the Doha round of talks was tilted against the US.

I don’t mean to be bolshy about this, but my natural reaction is to say that I hope it the round is titled against the US. It seems only fair. Or rather, it should be tilted against developed countries in general. I’m quite happy for the US and EU to face similar pressures, but it has long been accepted that developing countries deserve special treatment (not that they have always received it). It seems disingenuous for the wealthiest country in the world to cry foul at this point. The FT quotes a USTR report as saying:

It will be necessary to correct the imbalance in the current negotiations in which the value of what the United States would be expected to give is well-known and easily calculable, whereas the broad flexibilities available to others leaves unclear the value of new opportunities for our workers, farmers and businesses.

Given that it has been the United States that has been consistently in favour of highly inflexible economic regimes, I’m not hugely swayed by this argument either. Concerns are really growing now about the protectionist noises coming from the BHO administration. We shall have to see if anything interesting comes of the PM’s meeting with President Obama today, as well as awaiting the London Summit, of course.

Ha-Joon Chang on the crisis

Ha-Joon Chang has an article in the latest issue of Prospect magazine, taking the unorthodox position that protectionism is in fact exactly what the global economy needs now:

The reality is that free trade has never worked very well, especially for developing countries, but it is going to malfunction even more in the coming years. Rather than trying to nurse this ailing sacred cow back to health, we should slaughter it—and concentrate our energy on designing a new system of international trade that pragmatically mixes free trade and protectionism.

Dr Chang has long argued that developed countries achieved their economic dominance through economic nationalism, along with a range of policies that are now denied to today’s developing world. I’ve just started to read his seminal book Kicking Away the Ladder, so expect more from me on this topic in the future.

Chinese import figures

I’ve just read that China’s imports decreased by a shocking 43.1% last month. (For the record, here in Britain the latest data I have is for December, when imports fell 2.5% and exports rose half a point.) Not sure what to make of the Chinese figures, other than the obvious. Knowing where the most significant indicators of the overall situation can be found is difficult, especially at a time like this. But that’s got to be a serious blow. Interestingly, with all the focus on US politics, this is the first I’ve heard of the Chinese stimulus plan.

Also, see IPE Zone’s discussion of China’s role in the crisis. However, according to the BBC:

Professor Sun Lijian, from Shanghai’s Fudan University is one of the optimists.

He says he has not yet seen evidence of a serious trouble in China and argues that if economic activity had seized up, the stock market would have collapsed, the price of real estate would have fallen sharply and across the country enterprises would be closing.

Others insist that this, or something close to it, is already taking place, though the professor disagrees.

“The Chinese economy is slowing down, but this is not a hard landing,” he insists.

“You can’t look at it from a western point of view.

“In western countries, if a business doesn’t make a profit, then its employees lose their jobs. In China it’s different.

Cheese eating/beef hormone dodging protection monkeys

President Obama may be about to get in some trouble with José Bové, according to FP’s Passport blog. And you don’t want that. Bové is the Chuck Norris of the anti-globalisation movement. Or something.

The global financial crisis at the institutional level: an update via links

The Economist and the ICTSD note that despite G-20 promises, Russia and India are increasing industrial tariffs.

A Reuters report is sceptical of the seriousness with which Bretton Woods reform is being taken. DFID’s view is fairly predictable, not least because the Minister was addressing the CBI. The BBC’s Robert Peston has an extended piece on what he’s calling the ‘New Capitalism’.

WTO meeting cancelled due to lack of ‘political drive’

The saga continues. To the surprise of no one at all, the proposed December WTO mini-ministerial will now not take place. As predicted, political (and global financial) circumstances prevent the creation of any useful deal at this time. As for January, most people do not expect an incoming Obama administration to pay a great deal of attention to the WTO for a good while.

I don’t know why I bother posting about these any more. I think in future I’ll just leave it until something actually happens instead of wasting pixels on previewing pie-in-the-sky meetings. I certainly don’t want to become a WTO-groupie. There are other things in the world, especially at the moment. At any rate, it doesn’t look like anything of note will be happening on the Rue de Lausanne in the near future.

A press release from the WTO said that Pascal Lamy had not “detected the political drive” in his ongoing discussions with trade negotiators. Lamy added:

I recognize that this is a disappointment for everyone, one that I fully share. And for many of you it is not just a disappointment; it is an economic setback since it delays much-needed good economic news. And we seriously need to have this in mind as we move forward. However, we need to face reality and act in a way which is consistent with the responsibility we all share for the well-being of the multilateral trading system.

Of course, while the credibility of the WTO sinks lower, the claims of (some) world leaders to be fighting protectionism in the context of the financial crisis are starting to ring hollow.

I’d like to draw your attention to a ’snap analysis’ at Reuters (hat tip: Emmanuel).

Upcoming WTO meeting preview

The Doha Round drags on in Geneva, to a degree. Pascal Lamy has suggested that this could occur ‘in a window of time somewhere around 13-14-15 December’ (ICTSD).

However, circumstances do not augur well for any significant breakthroughs. The twilight period that George W. Bush must endure until Barack Obama is inaugurated in January means that there is little appetite or political muscle available for a US-led deal.

Additionally, the degree of President-Elect Obama’s interest in the round is debateable. There is little prospect of either the outgoing or incoming president pushing any agreement through Congress.

Indeed, according to The Guardian, a letter from the Democrat chairs and leading Republican members of both the Ways and Means and Finance Committees  ‘warned George Bush against trying to fast-track a trade deal for the end of the year.’

The FT also reports that the US’s position in WTO discussions has been uncompromising. According to Gopal Pillai, the Indian commerce secretary, ‘almost every other country is prepared to leave detailed discussion until later but the US wants specific commitments now’.

After the failure of the last mini-ministerial, it is hard to see what progress could be made at this time.

Obama and trade

I had promised a pre-election post about Obama vs McCain on free trade. That never happened I’m sorry to say, but here are a couple of viewpoints on how President-Elect Obama’s trade policy seems to be shaping up.

• Becerra’s a bad choice for trade post (LA Times)
• Goolsbee Tries Selling the Pro-Trade Obama (IPE Zone)