http://www.cato-at-liberty.org/2008/02/15/who-are-the-real-free-traders-in-congress/
Thursday, February 28, 2008
Competition Not Protection For U.S. Automakers in Canada
Competition not protection for Automakers
http://www.thestar.com/printArticle/303443
Try harder to sell cars overseas: Emerson
TheStar.com - Business
Trade minister rejects Hargrove's demand for restrictions on imports
February 14, 2008
Richard Brennan
OTTAWA BUREAU
OTTAWA–The Big Three automakers should try harder to sell their vehicles to other countries rather than expect the federal government to put up protectionist trade barriers, International Trade Minister David Emerson says.
"But the reality is the industry has not focused on non-North American markets, whether it's Korea or any other non-North American market," Emerson said yesterday, reacting to suggestions from Canadian Auto Workers president Buzz Hargrove that Ottawa put trade restrictions on imported vehicles.
"Buzz always kind of speaks the rhetoric of free trade but when it comes right down to it, I'm not convinced he's a true free trader," Emerson told reporters.
Hargrove told a news conference on Tuesday that if reciprocal trade measures are not introduced soon, General Motors Corp. and Ford Motor Co. Ltd., particularly, could go belly up within a decade.
"What he is saying is that he wants us to negotiate access into the Korean and Japanese market for vehicles and parts and obviously that's what a free-trade negotiation is about," Emerson said. "And yet they seem to want us to walk away from the free-trade negotiations. So I'm a little puzzled by it.
"I don't think modern trade negotiations are about those kinds of deals. I don't think major economies like Japan and Korea would be interested in that kind of a deal."
Canada and the United States signed in 1965 the Automotive Products Trade Agreement, which kept Canada's auto industry healthy for 35 years. But the World Trade Organization determined in February 2000 that the Auto Pact violated international trading rules and the agreement formally came to an end in February 2001.
While Hargrove still talks about the days of the North American Auto Pact, Emerson said those days are gone.
"The Auto Pact was a very tender small step, a careful step toward North American free trade and it had built into it all kinds of production safeguards that kept it from actually being a free-trade agreement," Emerson said.
"We eventually went to free trade but that was after many, many years of people reducing their nervousness about our ability to compete in a North American market."
Emerson said North American industry exports only about one-third of 1 per cent of production, but Hargrove said that's because there is no political pressure on countries like Korea and Japan to buy vehicles made by GM, Ford and Chrysler.
"They're not exporting to any significant markets outside of North America. The Canadian auto industry is fundamentally focused on the North American market," he said.
http://www.thestar.com/printArticle/303443
Try harder to sell cars overseas: Emerson
TheStar.com - Business
Trade minister rejects Hargrove's demand for restrictions on imports
February 14, 2008
Richard Brennan
OTTAWA BUREAU
OTTAWA–The Big Three automakers should try harder to sell their vehicles to other countries rather than expect the federal government to put up protectionist trade barriers, International Trade Minister David Emerson says.
"But the reality is the industry has not focused on non-North American markets, whether it's Korea or any other non-North American market," Emerson said yesterday, reacting to suggestions from Canadian Auto Workers president Buzz Hargrove that Ottawa put trade restrictions on imported vehicles.
"Buzz always kind of speaks the rhetoric of free trade but when it comes right down to it, I'm not convinced he's a true free trader," Emerson told reporters.
Hargrove told a news conference on Tuesday that if reciprocal trade measures are not introduced soon, General Motors Corp. and Ford Motor Co. Ltd., particularly, could go belly up within a decade.
"What he is saying is that he wants us to negotiate access into the Korean and Japanese market for vehicles and parts and obviously that's what a free-trade negotiation is about," Emerson said. "And yet they seem to want us to walk away from the free-trade negotiations. So I'm a little puzzled by it.
"I don't think modern trade negotiations are about those kinds of deals. I don't think major economies like Japan and Korea would be interested in that kind of a deal."
Canada and the United States signed in 1965 the Automotive Products Trade Agreement, which kept Canada's auto industry healthy for 35 years. But the World Trade Organization determined in February 2000 that the Auto Pact violated international trading rules and the agreement formally came to an end in February 2001.
While Hargrove still talks about the days of the North American Auto Pact, Emerson said those days are gone.
"The Auto Pact was a very tender small step, a careful step toward North American free trade and it had built into it all kinds of production safeguards that kept it from actually being a free-trade agreement," Emerson said.
"We eventually went to free trade but that was after many, many years of people reducing their nervousness about our ability to compete in a North American market."
Emerson said North American industry exports only about one-third of 1 per cent of production, but Hargrove said that's because there is no political pressure on countries like Korea and Japan to buy vehicles made by GM, Ford and Chrysler.
"They're not exporting to any significant markets outside of North America. The Canadian auto industry is fundamentally focused on the North American market," he said.
East Africans Fail to Remove Technical Market Access Barriers Amongst Themselves, Despite Adverse Impact on Trade Flows
East Africa: Remove Trade Barriers
http://allafrica.com/stories/200802120616.html
The Citizen (Dar es Salaam)
EDITORIAL
11 February 2008
Posted to the web 12 February 2008
A workshop was told In Dar es Salaam recently that no member of the East African Community (EAC) has removed non-tariff barriers. This is despite approval of the EAC Council of Ministers that partner states form committees to oversee the issue.
Formation of the national committees was an attempt to address the problem of non-tariff barriers on trade which would now be removed in order to make the movement of goods between member states smooth.
We are a bit perplexed why partner states have not taken steps to implement such an important issue which affects the trade pattern of member states.
For, as it is now, there are many impediments towards smooth trade among them. These hinder the movement of goods from one country to another, contrary to the very purpose of forming the EAC.
Leading forms of barriers include police road blocks, standards requirements, customs procedures, documentation and poor application of the rules of origin.
It is disheartening that while other economic blocks take steps towards closer cooperation the EAC seems to be marking time. And with the turmoil in Kenya it is anybody's guess if member states will ever take steps to implement the resolution of the EAC council of ministers. Let's wait and see.
http://allafrica.com/stories/200802120616.html
The Citizen (Dar es Salaam)
EDITORIAL
11 February 2008
Posted to the web 12 February 2008
A workshop was told In Dar es Salaam recently that no member of the East African Community (EAC) has removed non-tariff barriers. This is despite approval of the EAC Council of Ministers that partner states form committees to oversee the issue.
Formation of the national committees was an attempt to address the problem of non-tariff barriers on trade which would now be removed in order to make the movement of goods between member states smooth.
We are a bit perplexed why partner states have not taken steps to implement such an important issue which affects the trade pattern of member states.
For, as it is now, there are many impediments towards smooth trade among them. These hinder the movement of goods from one country to another, contrary to the very purpose of forming the EAC.
Leading forms of barriers include police road blocks, standards requirements, customs procedures, documentation and poor application of the rules of origin.
It is disheartening that while other economic blocks take steps towards closer cooperation the EAC seems to be marking time. And with the turmoil in Kenya it is anybody's guess if member states will ever take steps to implement the resolution of the EAC council of ministers. Let's wait and see.
India Won't Tolerate Any More Barriers
'India will retaliate if faced with non-tariff trade barriers'
February 8, 2008
http://www.hindu.com/thehindu/holnus/000200802081866.htm
The Hindu
Bangalore (PTI): India on Friday warned that it will retaliate against countries that seek to impose non-tariff barriers to trade on its exporters.
Without taking names, Commerce and Industry Minister Kamal Nath told exporters at a meeting here that the sub- continent nation has become a key market to some of these countries, which could not afford to lose out on it.
He was replying to questions about some countries creating hindrances to trade by invoking labour laws, packaging standards and safety measures.
Last year, some leading international clothing brands had put a freeze on sourcing of readymade garments from an Indian manufacturer citing employment of child labour. It had nearly caused a diplomatic stand-off between India and the Netherlands.
Industry estimates had pegged the growth of garment sourcing from India at 12 per cent. Other estimates suggested that clothing and textile production in India by foreign brands would touch USD 22-25 billion this year.
The textile industry, an employment intensive sector, is already said to have suffered the worst by the rupee's appreciation against the US dollar.
Nath said India's strength lies in its credibility and should be leveraged in the face of stiff competition offered by global players.
He said India was negotiating trade agreements with various countries to strengthen its position on trade.
India's inherent strength of being a large market and her ability to topping technology and innovation has made the country into a key supply source, the minister said.
February 8, 2008
http://www.hindu.com/thehindu/holnus/000200802081866.htm
The Hindu
Bangalore (PTI): India on Friday warned that it will retaliate against countries that seek to impose non-tariff barriers to trade on its exporters.
Without taking names, Commerce and Industry Minister Kamal Nath told exporters at a meeting here that the sub- continent nation has become a key market to some of these countries, which could not afford to lose out on it.
He was replying to questions about some countries creating hindrances to trade by invoking labour laws, packaging standards and safety measures.
Last year, some leading international clothing brands had put a freeze on sourcing of readymade garments from an Indian manufacturer citing employment of child labour. It had nearly caused a diplomatic stand-off between India and the Netherlands.
Industry estimates had pegged the growth of garment sourcing from India at 12 per cent. Other estimates suggested that clothing and textile production in India by foreign brands would touch USD 22-25 billion this year.
The textile industry, an employment intensive sector, is already said to have suffered the worst by the rupee's appreciation against the US dollar.
Nath said India's strength lies in its credibility and should be leveraged in the face of stiff competition offered by global players.
He said India was negotiating trade agreements with various countries to strengthen its position on trade.
India's inherent strength of being a large market and her ability to topping technology and innovation has made the country into a key supply source, the minister said.
WTO Finds That China Employed Illegal Protectionist Border Tariffs & Indirect 'Local-Working' Subsidies
WTO rules against China on car parts; Finds in favour of Canada, U.S. and EU
http://www.theglobeandmail.com/servlet/story/LAC.20080214.RCHINA14/TPStory/Business
theglobeandmail.com
STEVEN CHASE
With files from AP
February 14, 2008
OTTAWA -- The World Trade Organization has for the first time ruled against China for breaking global trade law in a precedent-setting case over car part imports that is expected to spur further challenges aimed at forcing Beijing to open its markets.
Yesterday's interim decision by the WTO found in favour of Canada, the United States and the European Union, all of which complained that China is raising unfair barriers to imports of foreign car parts.
China only joined the 151-member WTO in 2001 and while the state-heavy economy faces several challenges to its trade behaviour at the global body, yesterday's ruling is the first decision handed down.
International Trade Minister David Emerson cheered the ruling - which is officially secret until March despite being leaked yesterday - saying the decision may help open up a new market for
Canadian auto parts makers.
Print Edition - Section Front
"Hopefully it will bring about change in the practices that China's been applying," he said. "With our companies in such tough shape right now, a growing market is critically important to restoring health to our Canadian auto parts industry."
The WTO ruling is only an interim decision but the global referee's adjudicators have never changed their minds in the final version of their rulings. It could take more than a year for the case to conclude, but when it does, China may be forced to alter its behaviour or face trade sanctions from Ottawa, Washington and Brussels.
The WTO reportedly found that China was breaking agreed-upon global trade rules by taxing imports of car parts at the same higher rate levied on foreign-assembled autos.
"It's rendering it uneconomic for Canadian parts suppliers in this market," Mr. Emerson said of China's tax rate.
Toronto trade lawyer Lawrence Herman with Cassels Brock & Blackwell LLP predicts more WTO challenges of Chinese trade barriers.
Mr. Herman noted China's growing importance as an export destination, particularly for U.S. goods. "I think it's the beginning of many more such cases where the U.S. is taking on China, rightly or wrongly, for not complying with WTO rules," he said. "The huge U.S. trade deficit with China can't be ignored."
U.S. exports to China have more than quadrupled between 1996 and 2006, when they hit $55.2-billion (U.S.). That same year, the U.S. trade deficit with China hit $233-billion.
The three trade powers argued at the WTO that China's tariff was discouraging auto makers from using imported car parts for the vehicles they assemble in China. As a result, car parts firms had an incentive to shift production to China, costing Americans, Canadians and Europeans their jobs, they said.
The ruling will be closely watched by makers of batteries and brakes, seats and spark plugs on both sides of the Atlantic, including U.S.-based Delphi Corp. (General Motors' former parts supplier) and Robert Bosch GmbH in Germany.
China, which can appeal the ruling, claims the tariffs are intended to stop whole cars being imported in large chunks, allowing companies to avoid the higher tariff rates for finished cars. It argues all measures are consistent with WTO rules and do not discriminate against foreign auto parts.
But the U.S. and EU say China promised not to treat parts as whole cars when it joined the WTO in 2001.
[This point is significant in light of the prior 1998 WTO case Indonesia – Certain Measures Affecting the Automobile Industry (WT/DS54,55,59 & 64/R). US and EU allege that two sets of Indonesia measures constitute subsidies that cause ‘serious prejudice’ to their interests within the meaning of SCM Art. 5 (c). They alleged that the effect of the ‘subsidies’ was to displace or impede imports of ‘like’ products from the EC and US into the subsidizing Indonesian market. In other words, the prices of 'like' EC and US autos were significantly undercut by the subsidized national car company, and thus discriminated against in the marketplace.
The first set of measures entailed a ‘grant’ of National Car company status to Indonesian car companies that met specified criteria as to ownership of facilities, use of trademarks and technology. The ‘benefits’ provided were exemption from luxury tax on car National Car sales and exemption from import duties. They were maintainable by meeting increasing local content requirements.
The second set of measures provided that National Cars manufactured in a foreign country by Indonesian nationals and that fulfill (20%) local content requirements shall be treated the same as ‘National Cars’ (exemption from luxury tax and import duties). The 20% local content requirement was deemed satisfied if the overseas car manufacturer ‘counter-purchases’ Indonesian parts and components that account for 25% or more of the cost & freight (C&F) value of the imported cars. Indonesia maintained a duty of 200 percent on imports of finished passenger cars. As a result, almost ALL passenger cars imported into Indonesia including the EC and US models in question were imported as ‘completely knocked down’ (CKD) kits and assembled in Indonesia.
The WTO Appellate Body (AB) did not consider that an unassembled product ipso facto was NOT a ‘like’ product to that product assembled. The AB considered that a tariff classification was a useful tool in ‘like’ product analysis. It noted how the Gen’l Rules for Interpreting Harmonized System stated that any reference in a heading to an article shall include a reference to that article incomplete or unfinished, provided, the incomplete or unfinished article has the essential character of the complete or finished article.
The AB believed that a comparable approach to the relation between assembled and unassembled products made good sense in the context of that dispute. Due to the high Indonesian duties, ‘completely built-up, EC and US producers shipped ‘cars in a box’ to Indonesia. Consequently, they could properly be considered to have characteristics closely resembling those of a completed car. In WTO jurisprudence, the AB employed a ‘Big Accordion’ of ‘likeness’.]
http://www.theglobeandmail.com/servlet/story/LAC.20080214.RCHINA14/TPStory/Business
theglobeandmail.com
STEVEN CHASE
With files from AP
February 14, 2008
OTTAWA -- The World Trade Organization has for the first time ruled against China for breaking global trade law in a precedent-setting case over car part imports that is expected to spur further challenges aimed at forcing Beijing to open its markets.
Yesterday's interim decision by the WTO found in favour of Canada, the United States and the European Union, all of which complained that China is raising unfair barriers to imports of foreign car parts.
China only joined the 151-member WTO in 2001 and while the state-heavy economy faces several challenges to its trade behaviour at the global body, yesterday's ruling is the first decision handed down.
International Trade Minister David Emerson cheered the ruling - which is officially secret until March despite being leaked yesterday - saying the decision may help open up a new market for
Canadian auto parts makers.
Print Edition - Section Front
"Hopefully it will bring about change in the practices that China's been applying," he said. "With our companies in such tough shape right now, a growing market is critically important to restoring health to our Canadian auto parts industry."
The WTO ruling is only an interim decision but the global referee's adjudicators have never changed their minds in the final version of their rulings. It could take more than a year for the case to conclude, but when it does, China may be forced to alter its behaviour or face trade sanctions from Ottawa, Washington and Brussels.
The WTO reportedly found that China was breaking agreed-upon global trade rules by taxing imports of car parts at the same higher rate levied on foreign-assembled autos.
"It's rendering it uneconomic for Canadian parts suppliers in this market," Mr. Emerson said of China's tax rate.
Toronto trade lawyer Lawrence Herman with Cassels Brock & Blackwell LLP predicts more WTO challenges of Chinese trade barriers.
Mr. Herman noted China's growing importance as an export destination, particularly for U.S. goods. "I think it's the beginning of many more such cases where the U.S. is taking on China, rightly or wrongly, for not complying with WTO rules," he said. "The huge U.S. trade deficit with China can't be ignored."
U.S. exports to China have more than quadrupled between 1996 and 2006, when they hit $55.2-billion (U.S.). That same year, the U.S. trade deficit with China hit $233-billion.
The three trade powers argued at the WTO that China's tariff was discouraging auto makers from using imported car parts for the vehicles they assemble in China. As a result, car parts firms had an incentive to shift production to China, costing Americans, Canadians and Europeans their jobs, they said.
The ruling will be closely watched by makers of batteries and brakes, seats and spark plugs on both sides of the Atlantic, including U.S.-based Delphi Corp. (General Motors' former parts supplier) and Robert Bosch GmbH in Germany.
China, which can appeal the ruling, claims the tariffs are intended to stop whole cars being imported in large chunks, allowing companies to avoid the higher tariff rates for finished cars. It argues all measures are consistent with WTO rules and do not discriminate against foreign auto parts.
But the U.S. and EU say China promised not to treat parts as whole cars when it joined the WTO in 2001.
[This point is significant in light of the prior 1998 WTO case Indonesia – Certain Measures Affecting the Automobile Industry (WT/DS54,55,59 & 64/R). US and EU allege that two sets of Indonesia measures constitute subsidies that cause ‘serious prejudice’ to their interests within the meaning of SCM Art. 5 (c). They alleged that the effect of the ‘subsidies’ was to displace or impede imports of ‘like’ products from the EC and US into the subsidizing Indonesian market. In other words, the prices of 'like' EC and US autos were significantly undercut by the subsidized national car company, and thus discriminated against in the marketplace.
The first set of measures entailed a ‘grant’ of National Car company status to Indonesian car companies that met specified criteria as to ownership of facilities, use of trademarks and technology. The ‘benefits’ provided were exemption from luxury tax on car National Car sales and exemption from import duties. They were maintainable by meeting increasing local content requirements.
The second set of measures provided that National Cars manufactured in a foreign country by Indonesian nationals and that fulfill (20%) local content requirements shall be treated the same as ‘National Cars’ (exemption from luxury tax and import duties). The 20% local content requirement was deemed satisfied if the overseas car manufacturer ‘counter-purchases’ Indonesian parts and components that account for 25% or more of the cost & freight (C&F) value of the imported cars. Indonesia maintained a duty of 200 percent on imports of finished passenger cars. As a result, almost ALL passenger cars imported into Indonesia including the EC and US models in question were imported as ‘completely knocked down’ (CKD) kits and assembled in Indonesia.
The WTO Appellate Body (AB) did not consider that an unassembled product ipso facto was NOT a ‘like’ product to that product assembled. The AB considered that a tariff classification was a useful tool in ‘like’ product analysis. It noted how the Gen’l Rules for Interpreting Harmonized System stated that any reference in a heading to an article shall include a reference to that article incomplete or unfinished, provided, the incomplete or unfinished article has the essential character of the complete or finished article.
The AB believed that a comparable approach to the relation between assembled and unassembled products made good sense in the context of that dispute. Due to the high Indonesian duties, ‘completely built-up, EC and US producers shipped ‘cars in a box’ to Indonesia. Consequently, they could properly be considered to have characteristics closely resembling those of a completed car. In WTO jurisprudence, the AB employed a ‘Big Accordion’ of ‘likeness’.]
"It will be instructive to see how China responds," U.S. Trade Representative Susan Schwab said in a recent interview with Associated Press. "If, as we hope and expect, China will be found in contravention of its WTO obligations, hopefully that will help those forces within China that have been advocating reform."
Mexican Trade Barriers May Help Immigration Flow to US
End of trade barriers may send many Mexican farmers north
San Antonio News (MySA.com)
February 20, 2008
San Antonio News (MySA.com)
February 20, 2008
Are Cuban Trade Sanctions a Vestige of the Past??
http://www.latimes.com/business/la-fi-cubaecon20feb20,1,7782700.story?track=rss
From the Los Angeles Times
FIDEL CASTRO STEPS DOWN: U.S. businesses are eager to jump in
For many, the question is when, not if, trade barriers against Cuba will be lifted, a veteran observer says.
By Marla Dickerson
Los Angeles Times Staff WriterFebruary 20, 2008
MEXICO CITY — With Fidel Castro stepping aside, California vegetable growers, Alabama chicken producers and Kansas wheat farmers -- not to mention scores of other nonagricultural businesses -- see new opportunity to push for an expansion of U.S.-Cuba trade.
America has quietly become the largest foreign supplier of food products to the communist nation, thanks to a loosening of the long-standing U.S. trade embargo against the island nation in 2000. U.S. farmers sold an estimated $437 million worth of agricultural products to Cuba last year, according to the U.S.-Cuba Trade and Economic Council. The Cuban government puts the figure even higher, at more than $600 million.
Though the U.S. has limited its trade to mostly agricultural items, economic rivals such as China have been much more aggressive -- cutting deals with Cuba to develop its oil reserves and other natural resources. With a population of more than 11 million just 90 miles off the U.S. coast, Cuba is a largely untapped market for American goods and services.
"We're leaving billions of dollars on the table," said Kirby Jones, president of Alamar Associates, a Maryland-based consulting firm that advises companies interested in doing business in Cuba. "By any measure, [U.S. policy] has been a failure."
U.S. officials said Tuesday that there were no immediate plans for further easing of the 46-year-old trade embargo. Experts said American policymakers would proceed cautiously given that Castro is still alive, and given that Florida, with its powerful anti-Castro lobby of Cuban Americans, may play a decisive role in the U.S. presidential election.
Still, some veteran observers said that Castro's departure marks another small but inevitable step toward closer trade ties with Cuba, particularly at a time when globalization is forcing the U.S. to fight for market share in every corner of the globe.
"Most [American] businesspeople are thinking in terms of 'when' instead of 'if' " the embargo is lifted, said Mario Sacasa, senior vice president for international programs with the Beacon Council, a Miami-based economic development organization. "Their question is always: 'Why does the U.S. trade with other non-democratic governments but not with Cuba?' "
For nearly half a century, the trade embargo has been an unassailable feature of U.S. foreign policy, strongly supported by South Florida's conservative Cuban American community. Thousands of people lost their homes, businesses and other private property to Castro's communist regime, a bitter memory that has shaped U.S. policy ever since.
But another powerful U.S. lobby -- farmers -- has managed to crack that blockade ever so slightly.
Under pressure from agriculture groups, Congress in late 2000 approved sales of commodities and food products to the island, as long as Cuba paid upfront in cash and the transactions weren't handled by U.S. banks.
Despite those tricky terms, trade took off almost immediately. By 2003, the United States had surpassed the European Union as Cuba's largest foreign supplier of agricultural products, according to the U.S. International Trade Commission.
Major exports include corn, chicken, wheat, soybeans and rice. A parade of U.S. representatives and trade delegations have traveled to Cuba in recent years to try to strike trade deals.
But California, America's largest farm state, sells virtually nothing to Cuba. Exports in 2006 totaled a paltry $735,000, mostly in tomatoes, almonds and table grapes, according to the latest figures available from the state.
Last month California sent a large agricultural delegation to Cuba in the hopes of cultivating stronger trade ties with the Caribbean nation. Golden State growers are looking for opportunities wherever they present themselves, said Ken Gilliland, director of international trade for the Western Growers Assn.
He said critics' contention that California farmers would be propping up a communist regime by selling fruit and vegetables to Cuba just doesn't ring true with the state's producers.
"We're not talking about some sensitive technology or computers or arms or anything like that. We're talking about food," Gilliland said. "Practically the whole world is already trading with Cuba." U.S. policy "just kind of puts us growers and producers at a disadvantage."
Countries such as China and Canada are exploring for petroleum in Cuban waters and helping the country develop its nickel reserves. Spanish companies have invested heavily in Cuba's tourism sector, and Brazil is looking to build roads and other infrastructure. India wants to cooperate with Cuba in science and high technology.
Some U.S. firms complain that the Cuban government has pressed them to lobby their legislators for an end to the American trade embargo in exchange for contracts -- a price some have found too steep, according to John Kavulich, a senior policy advisor with the U.S.-Cuba Trade and Economic Council.
"The problem is when the Cubans start putting conditions" on the contracts, said Kavulich, who declined to name companies that have been pressured in such a way.
Kavulich said that so far, U.S. businesspeople have shown little excitement about the changing of the guard in Cuba. "They know that nothing has changed," he said.
Still, consultant Jones said that the real shift that American businesses are waiting for will come out of Washington, not Havana, with the U.S. elections in November.
He said the departure of Castro, an impossibly polarizing figure, combined with new leadership in the White House could lead initially to small changes such as liberalizing U.S. travel restrictions to Cuba -- and perhaps bigger ones down the road.
"It's a recipe for rethinking and change," he said.
From the Los Angeles Times
FIDEL CASTRO STEPS DOWN: U.S. businesses are eager to jump in
For many, the question is when, not if, trade barriers against Cuba will be lifted, a veteran observer says.
By Marla Dickerson
Los Angeles Times Staff WriterFebruary 20, 2008
MEXICO CITY — With Fidel Castro stepping aside, California vegetable growers, Alabama chicken producers and Kansas wheat farmers -- not to mention scores of other nonagricultural businesses -- see new opportunity to push for an expansion of U.S.-Cuba trade.
America has quietly become the largest foreign supplier of food products to the communist nation, thanks to a loosening of the long-standing U.S. trade embargo against the island nation in 2000. U.S. farmers sold an estimated $437 million worth of agricultural products to Cuba last year, according to the U.S.-Cuba Trade and Economic Council. The Cuban government puts the figure even higher, at more than $600 million.
Though the U.S. has limited its trade to mostly agricultural items, economic rivals such as China have been much more aggressive -- cutting deals with Cuba to develop its oil reserves and other natural resources. With a population of more than 11 million just 90 miles off the U.S. coast, Cuba is a largely untapped market for American goods and services.
"We're leaving billions of dollars on the table," said Kirby Jones, president of Alamar Associates, a Maryland-based consulting firm that advises companies interested in doing business in Cuba. "By any measure, [U.S. policy] has been a failure."
U.S. officials said Tuesday that there were no immediate plans for further easing of the 46-year-old trade embargo. Experts said American policymakers would proceed cautiously given that Castro is still alive, and given that Florida, with its powerful anti-Castro lobby of Cuban Americans, may play a decisive role in the U.S. presidential election.
Still, some veteran observers said that Castro's departure marks another small but inevitable step toward closer trade ties with Cuba, particularly at a time when globalization is forcing the U.S. to fight for market share in every corner of the globe.
"Most [American] businesspeople are thinking in terms of 'when' instead of 'if' " the embargo is lifted, said Mario Sacasa, senior vice president for international programs with the Beacon Council, a Miami-based economic development organization. "Their question is always: 'Why does the U.S. trade with other non-democratic governments but not with Cuba?' "
For nearly half a century, the trade embargo has been an unassailable feature of U.S. foreign policy, strongly supported by South Florida's conservative Cuban American community. Thousands of people lost their homes, businesses and other private property to Castro's communist regime, a bitter memory that has shaped U.S. policy ever since.
But another powerful U.S. lobby -- farmers -- has managed to crack that blockade ever so slightly.
Under pressure from agriculture groups, Congress in late 2000 approved sales of commodities and food products to the island, as long as Cuba paid upfront in cash and the transactions weren't handled by U.S. banks.
Despite those tricky terms, trade took off almost immediately. By 2003, the United States had surpassed the European Union as Cuba's largest foreign supplier of agricultural products, according to the U.S. International Trade Commission.
Major exports include corn, chicken, wheat, soybeans and rice. A parade of U.S. representatives and trade delegations have traveled to Cuba in recent years to try to strike trade deals.
But California, America's largest farm state, sells virtually nothing to Cuba. Exports in 2006 totaled a paltry $735,000, mostly in tomatoes, almonds and table grapes, according to the latest figures available from the state.
Last month California sent a large agricultural delegation to Cuba in the hopes of cultivating stronger trade ties with the Caribbean nation. Golden State growers are looking for opportunities wherever they present themselves, said Ken Gilliland, director of international trade for the Western Growers Assn.
He said critics' contention that California farmers would be propping up a communist regime by selling fruit and vegetables to Cuba just doesn't ring true with the state's producers.
"We're not talking about some sensitive technology or computers or arms or anything like that. We're talking about food," Gilliland said. "Practically the whole world is already trading with Cuba." U.S. policy "just kind of puts us growers and producers at a disadvantage."
Countries such as China and Canada are exploring for petroleum in Cuban waters and helping the country develop its nickel reserves. Spanish companies have invested heavily in Cuba's tourism sector, and Brazil is looking to build roads and other infrastructure. India wants to cooperate with Cuba in science and high technology.
Some U.S. firms complain that the Cuban government has pressed them to lobby their legislators for an end to the American trade embargo in exchange for contracts -- a price some have found too steep, according to John Kavulich, a senior policy advisor with the U.S.-Cuba Trade and Economic Council.
"The problem is when the Cubans start putting conditions" on the contracts, said Kavulich, who declined to name companies that have been pressured in such a way.
Kavulich said that so far, U.S. businesspeople have shown little excitement about the changing of the guard in Cuba. "They know that nothing has changed," he said.
Still, consultant Jones said that the real shift that American businesses are waiting for will come out of Washington, not Havana, with the U.S. elections in November.
He said the departure of Castro, an impossibly polarizing figure, combined with new leadership in the White House could lead initially to small changes such as liberalizing U.S. travel restrictions to Cuba -- and perhaps bigger ones down the road.
"It's a recipe for rethinking and change," he said.
Russian Regulatory Roulette: The Raising of Disguised Technical Barriers to Trade??
MOSCOW NEWS
Breaking Barriers
Breaking Barriers
http://mnweekly.rian.ru/business/20080221/55311414.html
21/02/2008
Last Friday, Chairman of the Association of European Businesses, Reiner Hartmann, and a delegation from the AEB, held a meeting with EU Commissioner for Trade, Peter Mandelson on customs, visas, taxation and intellectual property rights issues - the four main concerns identified by European businesses operating in Russia.
Specific challenges regarding customs barriers included customs clearance procedures and different interpretations of customs regulations. A spokesperson from AEB told The Moscow News on Wednesday that "there are numerous documents that need to be provided as well as high custom costs for imports of certain goods, more particularly for cigarettes, chemicals, electronics, machine building equipment and textiles."
Concerning taxation, European businesses said they were concerned about transfer pricing, criticizing the practice of "black listing" certain countries - among others Malta and Cyprus - using the sole criterion of the tax rate applicable in that country.
According to the Draft Law on Transfer Pricing, this rate should not be less than half the tax rate applicable in the Russian Federation, which means it should not amount to less than 12 percent. The AEB stated that "a special clause of information between the countries for tax rate difference shall be introduced. However, there could be possible discrimination between EU member states." The AEB did however welcome President Vladimir Putin's recent announcement that the VAT rate will decrease significantly in coming years, which will benefit European business as well as others.
In the area of Intellectual Property Rights, difficulties abounded. In particular, representatives from pharmaceutical and agrochemical sectors reported experiencing excessive red tape and "extremely protracted and messy procedures for the registration of new products and re-registration of existing products," the AEB said.
Moreover, software manufacturers detailed barriers for importing their products into Russia. The first step entails receiving approval from the Federal Security Service (FSB) to import the software. Following approval, the Ministry of Economy issues a license to the company, but the license remains valid only for that particular shipment.
As a result, software manufacturers currently find themselves repeating the entire application process each time anew. Additional disadvantages are incurred while waiting in line for import approval: the importer must pay a service fee while customs holds the product (which on average takes three weeks), Russian authorities may keep reference samples of items used to conduct tests, and yet another fee is levied for the test analysis from an FSB-recommended lab.
The meeting served as a continuation of AEB and European Commission cooperation within the framework of the EU Market Access Strategy, the goal of which consists of ensuring fair trade conditions for European companies doing business not only in Russia, but any third-party state. European businesses operating in Russia will take advantage of this channel for collectively communicating their hardships on a policy level.
In order to address some of these concerns, Commissioner Mandelson emphasized the importance of feedback from European companies in offering concrete cases of discriminatory trade barriers from their experience on the ground.
AEB Chairman Reiner Hartmann indicated AEB intentions to "intensify its participation in [this] process."
By C. Anne Shupe
China Concerned About America's Protectionist Trade Talk
International Herald Tribune
China's ambassador to the US chides America for its protectionist trade sentiments
http://www.iht.com/bin/printfriendly.php?id=10322428
The Associated Press
Saturday, February 23, 2008
INDIANAPOLIS: China's ambassador to the United States chided America for its protectionist trade sentiment while touting China's contributions throughout the world.
Ambassador Zhou Wenzhong, speaking Friday before about 200 people at Indiana University-Purdue University Indianapolis, also reiterated his country's hardline stance against Taiwan, saying its independence is out of the question.
"The 1.3 billion people on the mainland and the 23 million people in Taiwan are of the same blood and share a common destiny," he said. "We are willing to make every effort with the utmost sincerity to achieve peaceful reunification of the two sides ... but we will never allow anyone to separate Taiwan from the motherland in any name or by any means."
China claims Taiwan as its own and resists anything that appears to give the self-governing, democratic island the trappings of sovereignty. Officials in Beijing vow to attack at any declaration of Taiwanese independence and have stationed hundreds of missiles opposite Taiwan.
Zhou also noted that many "China-related" trade protection bills have been introduced in the U.S. Congress.
Americans are worried by claims that Beijing's low valuation of the yuan, its currency, makes Chinese goods cheaper in the United States and American products more expensive in China. U.S. lawmakers are considering bills that would punish China for what they contend are predatory trade practices blamed for contributing to the loss of millions of manufacturing jobs.
"The growing protectionist sentiments and the tendency to politicize economic and trade issues are especially worrisome," Zhou said.
Most of Zhou's roughly 40-minute talk focused on China's contributions to a number of world affairs, including negotiations between the two Koreas and improved relationships with Japan, India and Russia.
"We are ready to join hands with people across the world to promote the building of a harmonious world of enduring peace and a common prosperity," he said. "This is China's policy and long-term strategy."
He also noted that China has contributed more than 9,000 peacekeepers to United Nations operations around the globe.
"Working together, China and the United States effectively safeguard and enhance the peace, stability and the prosperity in the Asia-Pacific region and the rest of the world," he said.
Two protesters were quickly escorted out of the auditorium when they stood up while Zhou answered an audience question about human rights abuses in China.
China's ambassador to the US chides America for its protectionist trade sentiments
http://www.iht.com/bin/printfriendly.php?id=10322428
The Associated Press
Saturday, February 23, 2008
INDIANAPOLIS: China's ambassador to the United States chided America for its protectionist trade sentiment while touting China's contributions throughout the world.
Ambassador Zhou Wenzhong, speaking Friday before about 200 people at Indiana University-Purdue University Indianapolis, also reiterated his country's hardline stance against Taiwan, saying its independence is out of the question.
"The 1.3 billion people on the mainland and the 23 million people in Taiwan are of the same blood and share a common destiny," he said. "We are willing to make every effort with the utmost sincerity to achieve peaceful reunification of the two sides ... but we will never allow anyone to separate Taiwan from the motherland in any name or by any means."
China claims Taiwan as its own and resists anything that appears to give the self-governing, democratic island the trappings of sovereignty. Officials in Beijing vow to attack at any declaration of Taiwanese independence and have stationed hundreds of missiles opposite Taiwan.
Zhou also noted that many "China-related" trade protection bills have been introduced in the U.S. Congress.
Americans are worried by claims that Beijing's low valuation of the yuan, its currency, makes Chinese goods cheaper in the United States and American products more expensive in China. U.S. lawmakers are considering bills that would punish China for what they contend are predatory trade practices blamed for contributing to the loss of millions of manufacturing jobs.
"The growing protectionist sentiments and the tendency to politicize economic and trade issues are especially worrisome," Zhou said.
Most of Zhou's roughly 40-minute talk focused on China's contributions to a number of world affairs, including negotiations between the two Koreas and improved relationships with Japan, India and Russia.
"We are ready to join hands with people across the world to promote the building of a harmonious world of enduring peace and a common prosperity," he said. "This is China's policy and long-term strategy."
He also noted that China has contributed more than 9,000 peacekeepers to United Nations operations around the globe.
"Working together, China and the United States effectively safeguard and enhance the peace, stability and the prosperity in the Asia-Pacific region and the rest of the world," he said.
Two protesters were quickly escorted out of the auditorium when they stood up while Zhou answered an audience question about human rights abuses in China.
Candidates Convey Confusion Over Trade: There are No Silver Bullets
Decoding Candidates on Trade
Both voted to whack China for keeping its currency weak. Both back 2004 Democratic nominee John Kerry's plan to use the tax code to reward companies for keeping jobs in the U.S., though Mr. Obama does so more loudly.
Lately, the two have been maneuvering to see who can be nastier about Nafta. In the end, though, neither would abrogate the treaty. She would "review...and work with our trading partners to make necessary adjustments." He would "work to amend."
DISCUSS
What sort of trade policy do you think a President McCain or President Clinton or President Obama would -- or should -- pursue?
Veterans of the Bill Clinton White House say Mrs. Clinton was a loyal soldier, but often unenthusiastic, at best, about her husband's embrace of globalization. Pro-globalization Democrats long have been uneasy about her for that reason.
Until his campaign reached the Midwest, Mr. Obama sounded like the former president. "Like [Clinton Treasury Secretary] Bob Rubin, I am optimistic about...the ability of U.S. workers to compete in a free trade environment -- but only if we distribute the costs and benefits of globalization more fairly across the population," he wrote in his 2006 book. The big-company chief executives who belong to the Business Roundtable say almost the same thing.
But if Bill Clinton were running again, he'd probably put some distance between his campaign and his eight-year presidency. It's the voters, stupid.
In December, a Wall Street Journal/NBC News poll asked Americans whether the increasingly global nature of the U.S. economy was good ("because it has opened up new markets and resulted in more jobs") or bad ("because it has subjected American companies and employees to unfair competition and cheap labor.") By 58% to 28%, the respondents said it was bad.
MORE
By DAVID WESSEL
http://online.wsj.com/article/SB120354791005181195.html?mod=googlenews_wsj
The virtues of international trade and the pressures globalization is putting on American workers are becoming more prominent issues in the presidential campaign, even though the candidates most hostile to trade got trounced.
Sen. John McCain, the Republican, is the free trader in the race. "We need to continue to lower barriers to trade because 95% of the world's customers live outside the United States," Mr. McCain said recently in Michigan, where the jobless rate is 7.6%, the highest in the nation. "We need to have competitive manufacturing through lower health-care costs, lower taxes and opening new markets."
Mr. McCain has been a steady supporter of free trade in the Senate -- from the North American Free Trade Agreement to the pending U.S. trade pact with South Korea, which even some trade lovers find flawed.
By contrast, Democratic Sens. Hillary Clinton and Barack Obama are vying to be the bigger trade skeptic. As they fight for Ohio (jobless rate 6%), neither wants the mantle of former President Clinton, who shucked the populist strains of his 1992 campaign and became a champion of Nafta and China's entry into the World Trade Organization.
Both voted to whack China for keeping its currency weak. Both back 2004 Democratic nominee John Kerry's plan to use the tax code to reward companies for keeping jobs in the U.S., though Mr. Obama does so more loudly.
Lately, the two have been maneuvering to see who can be nastier about Nafta. In the end, though, neither would abrogate the treaty. She would "review...and work with our trading partners to make necessary adjustments." He would "work to amend."
DISCUSS
What sort of trade policy do you think a President McCain or President Clinton or President Obama would -- or should -- pursue?
Veterans of the Bill Clinton White House say Mrs. Clinton was a loyal soldier, but often unenthusiastic, at best, about her husband's embrace of globalization. Pro-globalization Democrats long have been uneasy about her for that reason.
Until his campaign reached the Midwest, Mr. Obama sounded like the former president. "Like [Clinton Treasury Secretary] Bob Rubin, I am optimistic about...the ability of U.S. workers to compete in a free trade environment -- but only if we distribute the costs and benefits of globalization more fairly across the population," he wrote in his 2006 book. The big-company chief executives who belong to the Business Roundtable say almost the same thing.
But if Bill Clinton were running again, he'd probably put some distance between his campaign and his eight-year presidency. It's the voters, stupid.
In December, a Wall Street Journal/NBC News poll asked Americans whether the increasingly global nature of the U.S. economy was good ("because it has opened up new markets and resulted in more jobs") or bad ("because it has subjected American companies and employees to unfair competition and cheap labor.") By 58% to 28%, the respondents said it was bad.
MORE
• Comparison of where candidates stand on trade (PDF)
From The Wall Street Journal/NBC News Poll:
"Do you think the fact that the American economy has become increasingly global is good because it has opened up new markets for American progress and resulted in more jobs, or bad because it has subjected American companies and employees to unfair competition and cheap labor?"
Dec. 2007 June 1997
Good 28% 42%
Bad 58% 48%
Equally Good & Bad 11% 7%
Not Sure 3% 3%
From the December 2007 poll:
Good Bad Equal/Not Sure
Professionals 37% 50% 13%
White collar 27% 58% 15%
Blue collar 15% 72% 13%
Retirees 23% 62% 15%
* * * * * * * * *
Democrats 25% 63% 12%
Republicans 32% 55% 13%
By contrast, in August 2007, the question drew a much less-hostile response: 48% bad to 42% good. (The rest weren't sure or deemed globalization equally good and bad.) President Bush has done little to ease Americans' anxiety; even some of his own appointees won't defend the administration's rejection of Democratic overtures on shoring up assistance to workers hurt by trade.
So what happens after Inauguration Day? Even Mr. McCain, if eager to press Mr. Bush's trade-pact agenda, would be likely to face a Democratic Congress elected by voters who, though they may shop for imported underwear at Wal-Mart, believe globalization is holding down their wages.
Neither Mrs. Clinton nor Mr. Obama is likely to be able to do much about trade deals already in effect, despite their campaign rhetoric. Neither, even in the heat of the Midwestern spotlight, is talking about new barriers to trade. The Depression-era Smoot-Hawley tariffs aren't coming back. And the Democrats' trade hard-liner, former Sen. John Edwards, has dropped out of the race.
The issue really is about what happens going forward. And the most likely answer on trade is not much. Barring an unlikely breakthrough in the Doha Round of world trade talks, neither Democrat is likely to make trade deals -- even renegotiated to incorporate labor and environmental standards -- a top priority.
The fate of the deal with South Korea will be the most important early test case: It's a big economy, far more significant than Peru or Panama. The new Korean government might be willing to reopen the agreement to save the pact from a Democratic president pledged to oppose it. But even if Mr. Obama wins, the "timeout" on trade deals that Mrs. Clinton proposes is the most likely outcome. And that could turn out to be a route to maintaining good parts of globalization, which would lose an up-or-down vote right now.
The anxiety about globalization among a huge swath of the electorate reflects widespread economic insecurity and a sense that the U.S. economy isn't delivering the goods for many. Tweaking trade deals or adding another program for workers hurt by imports won't salve those fears.
A "timeout" to try to fix flaws in the American health-care system and to streamline and expand worker-assistance programs so they help workers cope both with technology and trade could be the key to preserving the benefits of globalization in the long run.
Wednesday, February 6, 2008
Trading Places - The New Mercantilism
http://findarticles.com/p/articles/mi_m2751/is_79/ai_n13502257/print
Trading places
Peter F. Drucker
The National Interest
Spring, 2005
THE NEW world economy is fundamentally different from that of the fifty years following World War II. The United States may well remain the political and military leader for decades to come. It is likely also to remain the world's richest and most productive national economy for a long time (though the European Union as a whole is both larger and more productive). But the U.S. economy is no longer the single dominant economy.
The emerging world economy is a pluralist one, with a substantial number of economic "blocs." Eventually there may be six or seven blocs, of which the U.S.-dominated NAFTA is likely to be only one, coexisting and competing with the European Union (EU), MERCOSUR in Latin America, ASEAN in the Far East, and nation-states that are blocs by themselves, China and India. These blocs are neither "free trade" nor "protectionist", but both at the same time.
Even more novel is that what is emerging is not one but four world economies: a world economy of information; of money; of multinationals (one no longer dominated by American enterprises); and a mercantilist world economy of goods, services and trade. These world economies overlap and interact with one another. But each is distinct with different members, a different scope, different values and different institutions. Let us examine each in turn.
The World Economy of Information
INFORMATION AS a concept and a distinct category is an invention of the 18th century--of the newspaper in England and the encyclopedia in France. Within a century, information became global with the development of the modern postal system in the 1830s, followed almost immediately by the electric telegraph and the first computer language, the Morse Code. But unlike the newspaper and the encyclopedia, neither the postal service nor the telegraph made information public. On the contrary, they made it "privileged communication." "Public information" by contrast--newspapers, radio, television--ran one way only, from the publisher to the recipient. The editor rather than the reader decided what was "fit to print."
The Internet, in sharp contrast, makes information both universal and multidirectional rather than keeping it private or one-way. Everyone with a telephone and a personal computer has direct access to every, other human being with a phone and a PC. It gives everyone practically limitless access to information. And it gives everyone the ability to create information at minimal cost, that is, to create his own website and become a "publisher."
In the long run, the most important implication is probably the impact of information on mentality and awareness. It creates new affinities and new communities. The woman student in Shanghai who taps into the Internet remains Chinese, but she sees herself at the same time as a member of a worldwide, non-national "information society."
Businesses and professional groups such as lawyers and doctors have, of course, had access all along to worldwide information in their own field. But the Internet gives such access to the ultimate customer. In the United States at least (but apparently also in Japan and Europe), the ultimate customer now gets his information about plane schedules and airfares from the Internet rather than from a traditional travel agent. And while a good many book buyers in the United States still pick up and pay for the book of their choice at a bookstore in their neighborhood, an increasing number of them decide what books to buy by reading about them online first. An automobile still has to be serviced by a local dealer. But increasingly, buyers first study both their choice for the new car and their options for trading in their old car online before visiting a dealer.
What is already discernible is that, like all new distribution channels, this new information economy will change not only how customers buy, but what they buy. It will change customers' values and expectations, and with them how to promote goods and services, how to market and sell them, and how to service them online. In other words, Internet customers are becoming a new and distinct market. In the early years of the 21st century, power is shifting to the ultimate consumer.
There is no distance in this world economy. Everything is "local." The potential customers searching for a product do not know--and do not care--where the products come from. This does not eliminate or even curtail protectionism. But it changes it. Tariffs can still determine where a product or service has to be bought. But they are increasingly unable to protect the domestic producers' price.
One example: To get the industrial Midwest with its 140,000 steel workers to vote Republican in congressional elections, President Bush slapped a prohibitive tariff on imports of steel from Europe and Japan in 2001. He got what he wanted: a (bare) Republican majority in the Congress. But while the large steel users (such as automobile makers, railroads and building contractors) were forced by the tariff to buy domestic, they immediately set about cutting their use of steel so as not to spend more on it than they would have had to spend had they been able to buy the imports. Bush's tariff action thus only accelerated the long-term decline of the traditional midwestern steel producers and the jobs they generate. Tariffs, in other words, can still force users to buy domestic, but they are no longer capable of protecting the domestic producers' prices. Those are set through information and on the world-market level.
This development underlies the steady shift in protectionism: from tariffs--the traditional way--to protection through rules, regulations and especially export subsidies. World trade has grown spectacularly in the last fifty years. The largest growth has been in subsidized farm exports from the developed world: western and central Europe, Australia, Canada and the United States. Farm subsidies are now the only net income of French farmers, as their crops produce nothing but net losses and are grown only as the entitlement for the subsidies. These subsidies are in fact a major--perhaps the major--cement of the Franco-German alliance, and with it, of the European Union.
The international organization designed to set world economic policy is the World Trade Organization (WTO). But its meetings and agreements deal less and less with trade and tariffs, and instead with rules, regulations and subsidies. The discipline of international economics still, in large measure, concerns itself with international trade--that is, with the flow of money, goods and services. But the essence of the new world economy is that it is, above all, an economy of information and truly a global economy.
The Global Oligopoly of Money
THE NEXT major economic crisis will most probably be a crisis of the U.S. dollar in the world economy. It will put to a severe test the oligopoly of the central banks of the developed countries that now rules over the world financial economy.
Sixty years ago, in the Bretton Woods meetings of 1944, which tried to refashion a world economy that had been devastated by depression and war, John Maynard Keynes, the 20th century's greatest economist, proposed a supra-national central bank. It was vetoed by the United States. The two institutions that Bretton Woods established instead, the Bank for International Development (World Bank) and the International Monetary Fund (IMF), are, despite their impressive names, auxiliary rather than central--the former mainly financing development projects, the latter providing financial first aid to governments in distress.
The Bretton Woods system was never the stable, "non-political" system Keynes wanted. It could not and did not prevent currencies from being overvalued or undervalued. Still, although it limped from one crisis to the next, the Bretton Woods system worked for most of the half-century after World War II. And there was only one reason why it worked (however poorly): the commitment to it of the United States and the strength of the U.S. dollar as the world's key currency.
The dollar is still the world's key currency. But the Bretton Woods system is being killed by the U.S. government deficit, which is fast becoming the sinkhole of the world financial economy. The persistent U.S. deficit creates a persistent deficit in the U.S. balance of payments, which make both the U.S. economy and the government increasingly dependent on massive injections of short-term and panic-prone money from abroad. The U.S. savings rate is barely high enough to finance the minimum capital needs of industry. It could, in all likelihood, be raised considerably by raising interest rates. But that is not only politically almost impossible; it would also require that a larger share of incomes go into savings rather than into consumption, with an inevitable collapse of an economy based on consumer spending and low interest rates, as for instance, the U.S. housing market.
The government deficit is therefore being financed almost in its entirety by foreign investments in the United States, mostly in government securities like short-term treasury notes and medium-term bonds. The Japanese are converting most, if not all, of their trade surplus with the United States into dollar-denominated U.S. government securities and have thus become the largest U.S. creditor.
It is often argued, especially in Washington, that the deficit is mostly an accounting mirage. Defense spending--the main cause of the deficit--enables other free countries to keep their own defense spending low, which then generates the surpluses these countries invest in U.S. government securities. But this is a political argument. The economic fact is that the United States increasingly borrows short term (U.S. securities can be sold overnight) to invest long term and with very limited liquidity. This, needless to say, is an unstable and volatile system. It would collapse if the foreign holders of U.S. government securities (above all, the Japanese) were for whatever reason (such as a crash in their own economy) to dump their holdings of U.S. government securities. It certainly cannot be extended indefinitely, which, among other serious drawbacks, calls into question the long-term viability of the Bush Doctrine's goal of defending and extending the "zone of freedom" around the world.
The World Economy of the Multinationals
THERE WERE 7,258 multinational companies worldwide in 1969. Thirty-one years later, in 2000, the number had increased ninefold to more than 63,000. By that year, multinationals accounted for 80 percent of the world's industrial production.
But what is a multinational? Most Americans would answer: a big American manufacturer with foreign subsidiaries. That is wrong in almost every particular.
American-based multinationals are only a fraction--and a diminishing one--of all multinationals. Only 185 of the world's 500 largest multinationals--fewer than 40 percent--are headquartered in the United States (the European Union has 126, Japan 108). And multinationals are growing much faster outside the United States, especially in Japan, Mexico, and lately, Brazil.
Furthermore, most multinationals are not big. Rather, they are mostly small- to medium-sized enterprises. Typical perhaps is a German manufacturer of specialized surgical instruments who, with $20 million in sales and with plants in eleven countries, has around 60 percent of the world market in the field. And only a fraction of multinationals are manufacturers. Banks are probably the largest single group of multinationals, followed by insurance companies such as Germany's Allianz, financial-services institutions such as GE Finance Corporation and Merrill Lynch, wholesale distributors (especially in pharmaceuticals), and retailers like Japan's Ito Yokado.
The traditional multinational was indeed a domestic company with foreign subsidiaries, like Coca-Cola. But the new multinationals are increasingly being managed as one integrated business regardless of national boundaries, and the managers of the "foreign subsidiaries" are seen and treated as just another group of "division managers" rather than as top managements of semi-autonomous businesses. Internally, new multinationals are often not even organized by geography, but worldwide by products or services, such as one worldwide division for cleaning products or short-term inventory loans. They are increasingly organized by "markets": fully-developed markets (such as western and northern Europe or Japan); "developing markets" (eastern Europe, Latin America and parts of East Asia); and the "underdeveloped markets" and big "blocs" (China, Russia and India)--each with different objectives and strategies.
Finally, the new multinationals are increasingly not domestic companies with foreign subsidiaries, but are more likely to be domestic companies with foreign partners. They are being built through alliances, know-how agreements, marketing agreements, joint research, joint management development programs and so on. They require very different management skills; they must persuade, not command. The typical old multinational began planning with the questions: "What do we want to achieve? What are our objectives?" The first question in the new multinational is likely to be: "What do our partners value? What do they want to achieve? What are their competencies?" And in turn: "What do they need to know about our values, our goals, our competencies?"
We have almost no data on the world economy of the multinationals. Our statistics are primarily domestic. Nor do we truly understand the multinational and how it is being managed. How, for instance, does a multinational pharmaceutical company decide in what country first to introduce a new drug? How does a medium-sized multinational, like the German surgical-instrument maker mentioned earlier, decide whether to keep importing into the United States? To buy a small American competitor who has become available? To build its own plant in the United States and to start manufacturing there?
Our dominant economic theories--both Keynes and Friedman's monetarism--assume that any but the smallest national economy can be managed in isolation from world economy and world society. With an estimated 30 percent of the U.S. workforce affected by foreign trade (and a much higher percentage in most European countries), this is patently absurd. But an economic theory of the world economy exists so far only in fragments. It is badly needed. In the meantime, however, the world economy of multinationals has become a truly global one, rather than one dominated by America and by U.S. companies.
The New Mercantilism
THE MODERN state was invented by the French political philosopher Jean Bodin in his 1576 book Six Livres de la Republique. He invented the state for one purpose only: to generate the cash needed to pay the soldiers defending France against a Spanish army financed by silver from the New World--the first standing army since the Romans' more than a thousand years earlier. Mercenaries have to be paid in cash, and the only way to obtain a large and reliable cash income over any period--at a time when domestic economies had not yet been fully monetized and could therefore not yield a permanent tax--was a revenue obtained through keeping imports low while pushing exports and subsidizing them.
It took 300 years--the time until the unification of Germany and Italy in the 19th century--before Bodin's political invention, the nation-state, came to dominate Europe. But his mercantilism was adopted almost immediately by every European government, large or small. It remained the reigning philosophy until Adam Smith showed the absurdity of believing (as mercantilism does) that a nation can get rich by robbing its neighbors.
Twenty-five years after Smith, mercantilism was still the doctrine that underlay America's first and most important work in political theory, The Report on Manufacturers (1791) by Alexander Hamilton. And almost a century later, in the second half of the 19th century, Bismarck based the new German Empire on Bodin's mercantilism as adapted to Europe by Hamilton's great German admirer, Friedrich List, in his 1841 book, The National System of Political Economy. However discredited as economic theory, mercantilism, not Adam Smith's free trade, thus became the policy and practice of governments virtually everywhere (except for one century in the UK).
But mercantilism is increasingly becoming the policy of "blocs" rather than of individual nation-states. These blocs--with the European Union the most structured one, and the U.S.-dominated NAFTA trying to embrace the entire Western Hemisphere (or at least North and Central America)--are becoming the integrating units of the new world economy. Each bloc is trying to establish free trade internally and to abolish within the bloc all hurdles, restrictions and impediments, first to the movement of goods and money and ultimately to the movement of people. The United States, for instance, has proposed extending NAFTA to embrace all of Central America.
At the same time, each bloc is becoming more protectionist against the outside. The most extreme protectionism, as already discussed, consists of rules with respect to agriculture and the protection of farm incomes. But similar protectionism is certain to develop for blue-collar workers in the manufacturing industry, and for the same reason: They are becoming an endangered species, the victims of productivity.
In the United States for instance, manufacturing production increased in volume by at least 30 percent during the 1990s. It has at least doubled since 1960, and may even have tripled. (We have only money figures and have to guess at volume.) But manual workers in industrial production in the same period decreased from some 35 percent of the work force to barely more than 13 percent--and their numbers are still going down. Total employment in the manufacturing industry has remained the same proportion of the work force--it probably has even gone up. But the growth has been in white-collar work rather than the manual kind.
A mercantilist world economy, however, faces the same problems that led to the ultimate collapse of mercantilist national policies: It is impossible to export unless someone imports. This means, as Adam Smith showed 250 years ago, that the blocs must concentrate on those areas in which they have comparative advantages. In today's technology and world economy, that means concentrating on an area of knowledge work. Such concentration is already beginning. India is emerging as a world leader in applied-knowledge work--its comparative advantage is the 150 million well-educated Indians whose main language is English. China may similarly attain leadership through its world-class competence in manufacturing management--the legacy of the communist emphasis on output and production.
And just as it was for the mercantilists of 17th- and 18th-century Europe, an adequate home market (or access to one, as the Swiss and Dutch had to the markets of Germany and central Europe in the 19th century) is the most effective base for being competitive in the world economy. This "home market"--small enough to be protected and big enough to be competitive--is what the "blocs" provide.
Thus, the European Union is already in the process of creating the institutions for its bloc to be effective in this world economy: a European Parliament, a European Central Bank, a European Cartel Office and so on. Even the French, reluctantly, are integrating their economy and their industries--and even their agriculture--into the economy, the industries and the agriculture of the EU (provided that the Germans foot the bill).
The United States, of course, has been a genuine bloc and a nation-state all along. Its economic institutions have been federal, at least since the creation of the Interstate Commerce Commission and the Federal Reserve Banking System. U.S. institutions like the Federal Reserve Bank of New York also act, in emergencies (such as the recent collapse of the Mexican peso) as the agent of NAFTA.
WHAT, THEN, is likely to be the future relationship between these two blocs? The United States has openly announced its policy of extending NAFTA to all of Latin America. And while NAFTA means free trade within the bloc, it also means high protection externally, and especially high protection against Europe. Officially, the United States is still committed to worldwide free trade. But the actual result of its policies is that a zone of preferential trade agreements is gradually emerging around the United States--not unlike the bloc that is the EU. The world economy is thus fast coming to look far more like the mercantilism of Alexander Hamilton than like Adam Smith's free trade. It is fast becoming an "interzonal" rather than an "international" world economy.
But a new kind of mercantilist rivalry is emerging in this new economy--one in which the United States suffers from little-noticed disadvantages. For instance, the EU is seeking to export its regulations (and to impose its high regulatory costs on the United States) through international agreements, the reinterpretation of WTO rules, and the growing acceptance of EU standards in third markets. (1) It is also promoting its new currency, the euro, as a rival and alternative to the dollar as the world's reserve currency--a step that, if it succeeded, would greatly reduce the U.S. government's ability to attract foreign funds to finance its deficit and thus maintain the Bush Doctrine. Nor can the United States be certain of maintaining the solidarity of its own bloc in competition with the EU.
Several Latin American states are going slow" on the negotiations to extend NAFTA for political reasons. The EU is itself seeking closer trade and economic relationships with Latin America through partnership talks with MERCOSUR. And the recent trend of Latin American politics has been to drift away from "neo-liberalism" and towards a Left perennially tempted by anti-yanqui protectionism. What is different today is that the EU offers these political forces the ability to choose free trade while simultaneously resisting U.S. "hegemony." The United States could therefore find itself with a smaller "home market" than rival blocs, but with the same high-cost regulations, in a world of intense mercantilist competition.
For thirty years after World War II, the U.S. economy dominated practically without serious competition. For another twenty years it was clearly the world's foremost economy and especially the undisputed leader in technology and innovation. Though the United States today still dominates the world economy of information, it is only one major player in the three other world economies of money, multinationals and trade. And it is facing rivals that, either singly or in combination, could conceivably make America Number Two.
(1) For more, see Lawrence Kogan, "Exporting Europe's Protectionism", The National Interest (Fall 2004).
Peter F. Drucker is a writer, consultant and teacher. His most recent book is Managing the Next Society (2002).
COPYRIGHT 2005 The National Interest, Inc.
Trading places
Peter F. Drucker
The National Interest
Spring, 2005
THE NEW world economy is fundamentally different from that of the fifty years following World War II. The United States may well remain the political and military leader for decades to come. It is likely also to remain the world's richest and most productive national economy for a long time (though the European Union as a whole is both larger and more productive). But the U.S. economy is no longer the single dominant economy.
The emerging world economy is a pluralist one, with a substantial number of economic "blocs." Eventually there may be six or seven blocs, of which the U.S.-dominated NAFTA is likely to be only one, coexisting and competing with the European Union (EU), MERCOSUR in Latin America, ASEAN in the Far East, and nation-states that are blocs by themselves, China and India. These blocs are neither "free trade" nor "protectionist", but both at the same time.
Even more novel is that what is emerging is not one but four world economies: a world economy of information; of money; of multinationals (one no longer dominated by American enterprises); and a mercantilist world economy of goods, services and trade. These world economies overlap and interact with one another. But each is distinct with different members, a different scope, different values and different institutions. Let us examine each in turn.
The World Economy of Information
INFORMATION AS a concept and a distinct category is an invention of the 18th century--of the newspaper in England and the encyclopedia in France. Within a century, information became global with the development of the modern postal system in the 1830s, followed almost immediately by the electric telegraph and the first computer language, the Morse Code. But unlike the newspaper and the encyclopedia, neither the postal service nor the telegraph made information public. On the contrary, they made it "privileged communication." "Public information" by contrast--newspapers, radio, television--ran one way only, from the publisher to the recipient. The editor rather than the reader decided what was "fit to print."
The Internet, in sharp contrast, makes information both universal and multidirectional rather than keeping it private or one-way. Everyone with a telephone and a personal computer has direct access to every, other human being with a phone and a PC. It gives everyone practically limitless access to information. And it gives everyone the ability to create information at minimal cost, that is, to create his own website and become a "publisher."
In the long run, the most important implication is probably the impact of information on mentality and awareness. It creates new affinities and new communities. The woman student in Shanghai who taps into the Internet remains Chinese, but she sees herself at the same time as a member of a worldwide, non-national "information society."
Businesses and professional groups such as lawyers and doctors have, of course, had access all along to worldwide information in their own field. But the Internet gives such access to the ultimate customer. In the United States at least (but apparently also in Japan and Europe), the ultimate customer now gets his information about plane schedules and airfares from the Internet rather than from a traditional travel agent. And while a good many book buyers in the United States still pick up and pay for the book of their choice at a bookstore in their neighborhood, an increasing number of them decide what books to buy by reading about them online first. An automobile still has to be serviced by a local dealer. But increasingly, buyers first study both their choice for the new car and their options for trading in their old car online before visiting a dealer.
What is already discernible is that, like all new distribution channels, this new information economy will change not only how customers buy, but what they buy. It will change customers' values and expectations, and with them how to promote goods and services, how to market and sell them, and how to service them online. In other words, Internet customers are becoming a new and distinct market. In the early years of the 21st century, power is shifting to the ultimate consumer.
There is no distance in this world economy. Everything is "local." The potential customers searching for a product do not know--and do not care--where the products come from. This does not eliminate or even curtail protectionism. But it changes it. Tariffs can still determine where a product or service has to be bought. But they are increasingly unable to protect the domestic producers' price.
One example: To get the industrial Midwest with its 140,000 steel workers to vote Republican in congressional elections, President Bush slapped a prohibitive tariff on imports of steel from Europe and Japan in 2001. He got what he wanted: a (bare) Republican majority in the Congress. But while the large steel users (such as automobile makers, railroads and building contractors) were forced by the tariff to buy domestic, they immediately set about cutting their use of steel so as not to spend more on it than they would have had to spend had they been able to buy the imports. Bush's tariff action thus only accelerated the long-term decline of the traditional midwestern steel producers and the jobs they generate. Tariffs, in other words, can still force users to buy domestic, but they are no longer capable of protecting the domestic producers' prices. Those are set through information and on the world-market level.
This development underlies the steady shift in protectionism: from tariffs--the traditional way--to protection through rules, regulations and especially export subsidies. World trade has grown spectacularly in the last fifty years. The largest growth has been in subsidized farm exports from the developed world: western and central Europe, Australia, Canada and the United States. Farm subsidies are now the only net income of French farmers, as their crops produce nothing but net losses and are grown only as the entitlement for the subsidies. These subsidies are in fact a major--perhaps the major--cement of the Franco-German alliance, and with it, of the European Union.
The international organization designed to set world economic policy is the World Trade Organization (WTO). But its meetings and agreements deal less and less with trade and tariffs, and instead with rules, regulations and subsidies. The discipline of international economics still, in large measure, concerns itself with international trade--that is, with the flow of money, goods and services. But the essence of the new world economy is that it is, above all, an economy of information and truly a global economy.
The Global Oligopoly of Money
THE NEXT major economic crisis will most probably be a crisis of the U.S. dollar in the world economy. It will put to a severe test the oligopoly of the central banks of the developed countries that now rules over the world financial economy.
Sixty years ago, in the Bretton Woods meetings of 1944, which tried to refashion a world economy that had been devastated by depression and war, John Maynard Keynes, the 20th century's greatest economist, proposed a supra-national central bank. It was vetoed by the United States. The two institutions that Bretton Woods established instead, the Bank for International Development (World Bank) and the International Monetary Fund (IMF), are, despite their impressive names, auxiliary rather than central--the former mainly financing development projects, the latter providing financial first aid to governments in distress.
The Bretton Woods system was never the stable, "non-political" system Keynes wanted. It could not and did not prevent currencies from being overvalued or undervalued. Still, although it limped from one crisis to the next, the Bretton Woods system worked for most of the half-century after World War II. And there was only one reason why it worked (however poorly): the commitment to it of the United States and the strength of the U.S. dollar as the world's key currency.
The dollar is still the world's key currency. But the Bretton Woods system is being killed by the U.S. government deficit, which is fast becoming the sinkhole of the world financial economy. The persistent U.S. deficit creates a persistent deficit in the U.S. balance of payments, which make both the U.S. economy and the government increasingly dependent on massive injections of short-term and panic-prone money from abroad. The U.S. savings rate is barely high enough to finance the minimum capital needs of industry. It could, in all likelihood, be raised considerably by raising interest rates. But that is not only politically almost impossible; it would also require that a larger share of incomes go into savings rather than into consumption, with an inevitable collapse of an economy based on consumer spending and low interest rates, as for instance, the U.S. housing market.
The government deficit is therefore being financed almost in its entirety by foreign investments in the United States, mostly in government securities like short-term treasury notes and medium-term bonds. The Japanese are converting most, if not all, of their trade surplus with the United States into dollar-denominated U.S. government securities and have thus become the largest U.S. creditor.
It is often argued, especially in Washington, that the deficit is mostly an accounting mirage. Defense spending--the main cause of the deficit--enables other free countries to keep their own defense spending low, which then generates the surpluses these countries invest in U.S. government securities. But this is a political argument. The economic fact is that the United States increasingly borrows short term (U.S. securities can be sold overnight) to invest long term and with very limited liquidity. This, needless to say, is an unstable and volatile system. It would collapse if the foreign holders of U.S. government securities (above all, the Japanese) were for whatever reason (such as a crash in their own economy) to dump their holdings of U.S. government securities. It certainly cannot be extended indefinitely, which, among other serious drawbacks, calls into question the long-term viability of the Bush Doctrine's goal of defending and extending the "zone of freedom" around the world.
The World Economy of the Multinationals
THERE WERE 7,258 multinational companies worldwide in 1969. Thirty-one years later, in 2000, the number had increased ninefold to more than 63,000. By that year, multinationals accounted for 80 percent of the world's industrial production.
But what is a multinational? Most Americans would answer: a big American manufacturer with foreign subsidiaries. That is wrong in almost every particular.
American-based multinationals are only a fraction--and a diminishing one--of all multinationals. Only 185 of the world's 500 largest multinationals--fewer than 40 percent--are headquartered in the United States (the European Union has 126, Japan 108). And multinationals are growing much faster outside the United States, especially in Japan, Mexico, and lately, Brazil.
Furthermore, most multinationals are not big. Rather, they are mostly small- to medium-sized enterprises. Typical perhaps is a German manufacturer of specialized surgical instruments who, with $20 million in sales and with plants in eleven countries, has around 60 percent of the world market in the field. And only a fraction of multinationals are manufacturers. Banks are probably the largest single group of multinationals, followed by insurance companies such as Germany's Allianz, financial-services institutions such as GE Finance Corporation and Merrill Lynch, wholesale distributors (especially in pharmaceuticals), and retailers like Japan's Ito Yokado.
The traditional multinational was indeed a domestic company with foreign subsidiaries, like Coca-Cola. But the new multinationals are increasingly being managed as one integrated business regardless of national boundaries, and the managers of the "foreign subsidiaries" are seen and treated as just another group of "division managers" rather than as top managements of semi-autonomous businesses. Internally, new multinationals are often not even organized by geography, but worldwide by products or services, such as one worldwide division for cleaning products or short-term inventory loans. They are increasingly organized by "markets": fully-developed markets (such as western and northern Europe or Japan); "developing markets" (eastern Europe, Latin America and parts of East Asia); and the "underdeveloped markets" and big "blocs" (China, Russia and India)--each with different objectives and strategies.
Finally, the new multinationals are increasingly not domestic companies with foreign subsidiaries, but are more likely to be domestic companies with foreign partners. They are being built through alliances, know-how agreements, marketing agreements, joint research, joint management development programs and so on. They require very different management skills; they must persuade, not command. The typical old multinational began planning with the questions: "What do we want to achieve? What are our objectives?" The first question in the new multinational is likely to be: "What do our partners value? What do they want to achieve? What are their competencies?" And in turn: "What do they need to know about our values, our goals, our competencies?"
We have almost no data on the world economy of the multinationals. Our statistics are primarily domestic. Nor do we truly understand the multinational and how it is being managed. How, for instance, does a multinational pharmaceutical company decide in what country first to introduce a new drug? How does a medium-sized multinational, like the German surgical-instrument maker mentioned earlier, decide whether to keep importing into the United States? To buy a small American competitor who has become available? To build its own plant in the United States and to start manufacturing there?
Our dominant economic theories--both Keynes and Friedman's monetarism--assume that any but the smallest national economy can be managed in isolation from world economy and world society. With an estimated 30 percent of the U.S. workforce affected by foreign trade (and a much higher percentage in most European countries), this is patently absurd. But an economic theory of the world economy exists so far only in fragments. It is badly needed. In the meantime, however, the world economy of multinationals has become a truly global one, rather than one dominated by America and by U.S. companies.
The New Mercantilism
THE MODERN state was invented by the French political philosopher Jean Bodin in his 1576 book Six Livres de la Republique. He invented the state for one purpose only: to generate the cash needed to pay the soldiers defending France against a Spanish army financed by silver from the New World--the first standing army since the Romans' more than a thousand years earlier. Mercenaries have to be paid in cash, and the only way to obtain a large and reliable cash income over any period--at a time when domestic economies had not yet been fully monetized and could therefore not yield a permanent tax--was a revenue obtained through keeping imports low while pushing exports and subsidizing them.
It took 300 years--the time until the unification of Germany and Italy in the 19th century--before Bodin's political invention, the nation-state, came to dominate Europe. But his mercantilism was adopted almost immediately by every European government, large or small. It remained the reigning philosophy until Adam Smith showed the absurdity of believing (as mercantilism does) that a nation can get rich by robbing its neighbors.
Twenty-five years after Smith, mercantilism was still the doctrine that underlay America's first and most important work in political theory, The Report on Manufacturers (1791) by Alexander Hamilton. And almost a century later, in the second half of the 19th century, Bismarck based the new German Empire on Bodin's mercantilism as adapted to Europe by Hamilton's great German admirer, Friedrich List, in his 1841 book, The National System of Political Economy. However discredited as economic theory, mercantilism, not Adam Smith's free trade, thus became the policy and practice of governments virtually everywhere (except for one century in the UK).
But mercantilism is increasingly becoming the policy of "blocs" rather than of individual nation-states. These blocs--with the European Union the most structured one, and the U.S.-dominated NAFTA trying to embrace the entire Western Hemisphere (or at least North and Central America)--are becoming the integrating units of the new world economy. Each bloc is trying to establish free trade internally and to abolish within the bloc all hurdles, restrictions and impediments, first to the movement of goods and money and ultimately to the movement of people. The United States, for instance, has proposed extending NAFTA to embrace all of Central America.
At the same time, each bloc is becoming more protectionist against the outside. The most extreme protectionism, as already discussed, consists of rules with respect to agriculture and the protection of farm incomes. But similar protectionism is certain to develop for blue-collar workers in the manufacturing industry, and for the same reason: They are becoming an endangered species, the victims of productivity.
In the United States for instance, manufacturing production increased in volume by at least 30 percent during the 1990s. It has at least doubled since 1960, and may even have tripled. (We have only money figures and have to guess at volume.) But manual workers in industrial production in the same period decreased from some 35 percent of the work force to barely more than 13 percent--and their numbers are still going down. Total employment in the manufacturing industry has remained the same proportion of the work force--it probably has even gone up. But the growth has been in white-collar work rather than the manual kind.
A mercantilist world economy, however, faces the same problems that led to the ultimate collapse of mercantilist national policies: It is impossible to export unless someone imports. This means, as Adam Smith showed 250 years ago, that the blocs must concentrate on those areas in which they have comparative advantages. In today's technology and world economy, that means concentrating on an area of knowledge work. Such concentration is already beginning. India is emerging as a world leader in applied-knowledge work--its comparative advantage is the 150 million well-educated Indians whose main language is English. China may similarly attain leadership through its world-class competence in manufacturing management--the legacy of the communist emphasis on output and production.
And just as it was for the mercantilists of 17th- and 18th-century Europe, an adequate home market (or access to one, as the Swiss and Dutch had to the markets of Germany and central Europe in the 19th century) is the most effective base for being competitive in the world economy. This "home market"--small enough to be protected and big enough to be competitive--is what the "blocs" provide.
Thus, the European Union is already in the process of creating the institutions for its bloc to be effective in this world economy: a European Parliament, a European Central Bank, a European Cartel Office and so on. Even the French, reluctantly, are integrating their economy and their industries--and even their agriculture--into the economy, the industries and the agriculture of the EU (provided that the Germans foot the bill).
The United States, of course, has been a genuine bloc and a nation-state all along. Its economic institutions have been federal, at least since the creation of the Interstate Commerce Commission and the Federal Reserve Banking System. U.S. institutions like the Federal Reserve Bank of New York also act, in emergencies (such as the recent collapse of the Mexican peso) as the agent of NAFTA.
WHAT, THEN, is likely to be the future relationship between these two blocs? The United States has openly announced its policy of extending NAFTA to all of Latin America. And while NAFTA means free trade within the bloc, it also means high protection externally, and especially high protection against Europe. Officially, the United States is still committed to worldwide free trade. But the actual result of its policies is that a zone of preferential trade agreements is gradually emerging around the United States--not unlike the bloc that is the EU. The world economy is thus fast coming to look far more like the mercantilism of Alexander Hamilton than like Adam Smith's free trade. It is fast becoming an "interzonal" rather than an "international" world economy.
But a new kind of mercantilist rivalry is emerging in this new economy--one in which the United States suffers from little-noticed disadvantages. For instance, the EU is seeking to export its regulations (and to impose its high regulatory costs on the United States) through international agreements, the reinterpretation of WTO rules, and the growing acceptance of EU standards in third markets. (1) It is also promoting its new currency, the euro, as a rival and alternative to the dollar as the world's reserve currency--a step that, if it succeeded, would greatly reduce the U.S. government's ability to attract foreign funds to finance its deficit and thus maintain the Bush Doctrine. Nor can the United States be certain of maintaining the solidarity of its own bloc in competition with the EU.
Several Latin American states are going slow" on the negotiations to extend NAFTA for political reasons. The EU is itself seeking closer trade and economic relationships with Latin America through partnership talks with MERCOSUR. And the recent trend of Latin American politics has been to drift away from "neo-liberalism" and towards a Left perennially tempted by anti-yanqui protectionism. What is different today is that the EU offers these political forces the ability to choose free trade while simultaneously resisting U.S. "hegemony." The United States could therefore find itself with a smaller "home market" than rival blocs, but with the same high-cost regulations, in a world of intense mercantilist competition.
For thirty years after World War II, the U.S. economy dominated practically without serious competition. For another twenty years it was clearly the world's foremost economy and especially the undisputed leader in technology and innovation. Though the United States today still dominates the world economy of information, it is only one major player in the three other world economies of money, multinationals and trade. And it is facing rivals that, either singly or in combination, could conceivably make America Number Two.
(1) For more, see Lawrence Kogan, "Exporting Europe's Protectionism", The National Interest (Fall 2004).
Peter F. Drucker is a writer, consultant and teacher. His most recent book is Managing the Next Society (2002).
COPYRIGHT 2005 The National Interest, Inc.
Exporting Europe's Protectionism
http://www.itssd.org/Publications/Kogan%20TNI%2077FINAL.pdf
Exporting Europe's Protectionism
Lawrence A. Kogan
The National Interest Journal
Number 77, Fall 2004, pp. 91-99
Due to its different view concerning the role of 'science' in assessing and managing public risks, the EU has effectively challenged the U.S./WTO risk evaluation framework seeking to establish the precautionary principle, a 'better safe than sorry' rule, as an absolute international standard by which all products, no matter where they are produced, are determined to be safe or harmful.
This challenge threatens the competitiveness of U.S. and other non-EU industries because it seeks to transform the current predictable risk-based evaluation system premised on objective empirical (technical) science, exposure data and, to a large extent, economic cost benefit analysis, into a subjective framework in which pre-risk assessment screening based on cultural moral values and demographic risk aversion (consumer fear perceptions) and hazard profiling based on intrinsic substance characteristics prevails.
The EU has endeavored to change the current framework by embedding the precautionary principle into overly stringent health and safety and environment regulations and technical product standards (in excess of international standards), and then exporting those regulations and standards abroad down industry supply chains throughout the world via international treaties, international standardization bodies and bilateral technical capacity building intiatives.
Examples of this include EU biotech labeling and traceability regulations that implement EU obligations under the Biosafety Protocol to the U.N. Biodiversity Convention and the proposed EU REACH regulation, which is intended to serve as a template for global chemicals management.
In essence, the EU exports the high cost of precautionary regulation and standardization abroad in order to 'level the global economic playing field' (as a form of protectionism to compensate) for its lagging, less cost-efficient or otherwise technologically underdeveloped industries.
Lastly, the EU and its member states also fund non-governmental environmental groups, both in Europe and other countries, that are actively engaged in pursuing antiglobalization and anti-technology campaigns. These campaigns threaten government and company technological innovation and research and development programs.
Exporting Europe's Protectionism
Lawrence A. Kogan
The National Interest Journal
Number 77, Fall 2004, pp. 91-99
Due to its different view concerning the role of 'science' in assessing and managing public risks, the EU has effectively challenged the U.S./WTO risk evaluation framework seeking to establish the precautionary principle, a 'better safe than sorry' rule, as an absolute international standard by which all products, no matter where they are produced, are determined to be safe or harmful.
This challenge threatens the competitiveness of U.S. and other non-EU industries because it seeks to transform the current predictable risk-based evaluation system premised on objective empirical (technical) science, exposure data and, to a large extent, economic cost benefit analysis, into a subjective framework in which pre-risk assessment screening based on cultural moral values and demographic risk aversion (consumer fear perceptions) and hazard profiling based on intrinsic substance characteristics prevails.
The EU has endeavored to change the current framework by embedding the precautionary principle into overly stringent health and safety and environment regulations and technical product standards (in excess of international standards), and then exporting those regulations and standards abroad down industry supply chains throughout the world via international treaties, international standardization bodies and bilateral technical capacity building intiatives.
Examples of this include EU biotech labeling and traceability regulations that implement EU obligations under the Biosafety Protocol to the U.N. Biodiversity Convention and the proposed EU REACH regulation, which is intended to serve as a template for global chemicals management.
In essence, the EU exports the high cost of precautionary regulation and standardization abroad in order to 'level the global economic playing field' (as a form of protectionism to compensate) for its lagging, less cost-efficient or otherwise technologically underdeveloped industries.
Lastly, the EU and its member states also fund non-governmental environmental groups, both in Europe and other countries, that are actively engaged in pursuing antiglobalization and anti-technology campaigns. These campaigns threaten government and company technological innovation and research and development programs.
Europe Wields Antitrust Law as an Imperialist Sword & Protectionist Shield
http://online.wsj.com/article/SB120053154686996085.html?mod=googlenews_wsj
REVIEW & OUTLOOK
Europe v. U.S. Business
January 17, 2008; Page A16
EU competition chief Neelie Kroes's determination to cow large, successful American firms with antitrust laws is nothing new. But the latest Brussels sally against Microsoft is a good time for Washington to wake up to Europe's regulatory imperialism.
In September, EU courts upheld Brussels's landmark 2004 ruling and €497 million fine against Microsoft. That case hinged on Microsoft's "bundling" of its Media Player with its dominant Windows operating system and alleged refusal to provide rivals with technology to write software that worked with Microsoft programs. Ms. Kroes is now going for the jugular. The formal inquiry she announced Monday focuses on Microsoft's packaging of its Internet Explorer Web browser with Windows, and the compatibility of its popular Office software suite with rival programs.
Brussels has also set its sights on other large U.S. firms. Just since September, EU antitrust regulators have dialed up a case against Qualcomm, continued processing claims against Intel, charged MasterCard with setting illegal fees, searched for reasons to block Google's purchase of DoubleClick, and forced Apple to cut prices for digital songs (though the iPod maker was cleared of any wrongdoing).
All of these cases target American companies that have already come under antitrust scrutiny in the U.S. But Brussels is an attractive venue for competitors to use European antitrust litigation to hobble a rival. We've seen a stampede of lawyers descend on the European capital since September's Microsoft ruling. The U.S. Justice Department has reacted, at most, with a stern press release. There was no American response as far as we could see to Monday's Microsoft news. Words do matter, as Barack Obama says. So does their absence.
Euro-American regulatory cooperation is currently in vogue, with the first meeting last fall of the Trans-Atlantic Economic Council and Washington's recent acceptance of international accounting standards. If there's one legal area that could benefit from such camaraderie, it's antitrust. We're not talking about an International Competition Court but, rather, mutual recognition of American rulings on U.S. companies and EU oversight of European firms. Other countries that want to sign up to the standards could also be included.
We're under no illusions that an arrangement on antitrust would come easily. Brussels seems to enjoy its newfound power. And while U.S. and EU laws on issues such as mergers have been converging, there's still a great deal of water between the two on the treatment of monopolies. For example, American authorities aren't as quick as their Continental counterparts to dismiss the benefits that dominant firms like Microsoft can offer consumers.
In the long run, Europe would also benefit from mutual recognition. In fast-growing economies like China, antitrust law is developing apace. What will be the reaction in Paris and Berlin when French and German companies start encountering "antitrust" cases in Beijing or Seoul?
Today's antitrust multiple-jeopardy -- Intel currently faces litigation in Europe, Japan, South Korea and New York -- is a potential disaster for business. If antitrust cooperation seems a long way off, that's all the more reason for Washington to start fighting back against European overreach.
REVIEW & OUTLOOK
Europe v. U.S. Business
January 17, 2008; Page A16
EU competition chief Neelie Kroes's determination to cow large, successful American firms with antitrust laws is nothing new. But the latest Brussels sally against Microsoft is a good time for Washington to wake up to Europe's regulatory imperialism.
In September, EU courts upheld Brussels's landmark 2004 ruling and €497 million fine against Microsoft. That case hinged on Microsoft's "bundling" of its Media Player with its dominant Windows operating system and alleged refusal to provide rivals with technology to write software that worked with Microsoft programs. Ms. Kroes is now going for the jugular. The formal inquiry she announced Monday focuses on Microsoft's packaging of its Internet Explorer Web browser with Windows, and the compatibility of its popular Office software suite with rival programs.
Brussels has also set its sights on other large U.S. firms. Just since September, EU antitrust regulators have dialed up a case against Qualcomm, continued processing claims against Intel, charged MasterCard with setting illegal fees, searched for reasons to block Google's purchase of DoubleClick, and forced Apple to cut prices for digital songs (though the iPod maker was cleared of any wrongdoing).
All of these cases target American companies that have already come under antitrust scrutiny in the U.S. But Brussels is an attractive venue for competitors to use European antitrust litigation to hobble a rival. We've seen a stampede of lawyers descend on the European capital since September's Microsoft ruling. The U.S. Justice Department has reacted, at most, with a stern press release. There was no American response as far as we could see to Monday's Microsoft news. Words do matter, as Barack Obama says. So does their absence.
Euro-American regulatory cooperation is currently in vogue, with the first meeting last fall of the Trans-Atlantic Economic Council and Washington's recent acceptance of international accounting standards. If there's one legal area that could benefit from such camaraderie, it's antitrust. We're not talking about an International Competition Court but, rather, mutual recognition of American rulings on U.S. companies and EU oversight of European firms. Other countries that want to sign up to the standards could also be included.
We're under no illusions that an arrangement on antitrust would come easily. Brussels seems to enjoy its newfound power. And while U.S. and EU laws on issues such as mergers have been converging, there's still a great deal of water between the two on the treatment of monopolies. For example, American authorities aren't as quick as their Continental counterparts to dismiss the benefits that dominant firms like Microsoft can offer consumers.
In the long run, Europe would also benefit from mutual recognition. In fast-growing economies like China, antitrust law is developing apace. What will be the reaction in Paris and Berlin when French and German companies start encountering "antitrust" cases in Beijing or Seoul?
Today's antitrust multiple-jeopardy -- Intel currently faces litigation in Europe, Japan, South Korea and New York -- is a potential disaster for business. If antitrust cooperation seems a long way off, that's all the more reason for Washington to start fighting back against European overreach.
Monday, February 4, 2008
European Commission Considers Import Carbon Tariffs
European Commission Considers Import Carbon Tariffs
http://www.environmentalleader.com/2008/01/09/european-commission-considers-import-carbon-tariffs
Environmental Leader
January 9, 2008
The European Commission is contemplating a carbon tariff on goods from countries where greenhouse gas emission policies do not equal European standards, according to Business Week. The tariff system would force companies that export products to Europe to buy EU emissions permits through the Emissions Trading Scheme.
France strongly supports the tariff. European Trade Commissioner Peter Mandelson said that such a scheme would be hard to implement and could lead to trade disputes.
The European Commission is also considering an expansion of the ETS, according to Reuters.
Current trading of carbon credits on the ETS market is worth $37 billion annually, and the commission is considering a proposal that would greatly increase that value by decreasing the percentage of free carbon credits that are distributed to European power generators and manufacturers. 90 percent are currently given out for free whereas 60 percent would be auctioned off annually beginning in 2013.
Only a few months ago, the European Union gave parliamentary approval to a plan that requires airlines flying to and from Europe to offset some of their emissions by buying CO2 allowances on the open market.
http://www.environmentalleader.com/2008/01/09/european-commission-considers-import-carbon-tariffs
Environmental Leader
January 9, 2008
The European Commission is contemplating a carbon tariff on goods from countries where greenhouse gas emission policies do not equal European standards, according to Business Week. The tariff system would force companies that export products to Europe to buy EU emissions permits through the Emissions Trading Scheme.
France strongly supports the tariff. European Trade Commissioner Peter Mandelson said that such a scheme would be hard to implement and could lead to trade disputes.
The European Commission is also considering an expansion of the ETS, according to Reuters.
Current trading of carbon credits on the ETS market is worth $37 billion annually, and the commission is considering a proposal that would greatly increase that value by decreasing the percentage of free carbon credits that are distributed to European power generators and manufacturers. 90 percent are currently given out for free whereas 60 percent would be auctioned off annually beginning in 2013.
Only a few months ago, the European Union gave parliamentary approval to a plan that requires airlines flying to and from Europe to offset some of their emissions by buying CO2 allowances on the open market.
Sudden EU Commission Change of Heart on CO2 Rules Against Industry???? It's the Economy Stupid!!
http://www.planetark.org/dailynewsstory.cfm/newsid/46516/story.htm
EU to Set Easier CO2 Regime for Heavy Industries
Paul Taylor
Planet Ark
January 21, 2008
BRUSSELS - Europe's steel, aluminium and cement industries will have a special, less strict regime for greenhouse gas emissions under European Commission proposals to fight climate change to be announced this week.
After weeks of intense lobbying by business and governments, EU sources said on Sunday those three energy-intensive industries would be introduced more slowly into a new system for auctioning permits to emit carbon dioxide (CO2) from 2013.
The sources insisted on anonymity because wrangling is continuing in the Commission on final details of the proposals on CO2 emissions, renewable energy sources, biofuels and carbon sequestration to be unveiled on Wednesday.
A key flaw of the EU's Emissions Trading Scheme -- the main instrument for curbing pollution blamed for global warming -- has been that governments issued emission permits for free, handing industry windfall profits.
Under a planned reform, the sources said most sectors covered by the ETS will have to buy about one-fifth of emission permits from 2013 -- fewer than in early drafts of the proposal -- rising annually to reach 100 percent in 2020.
Those sectors include energy and power generation, including refineries, despite fierce lobbying by European oil majors BP and Shell to go easy on refineries.
The overall aim is to reduce European emissions of CO2 by at least 20 percent by 2020 compared to 1990 levels.
[MY, MY: HOW EU ASPIRATIONS FOR ENLIGHTENED ENVIRONMENTALISM HAVE FALLEN!!]
However, the sources said the EU executive was sensitive to concerns that the three big energy-intensive industries could be driven out of Europe if subjected to the same regime.
[EU COMMISSION SMELLS THE COFFEE!!]
"Those concerns are being sufficiently taken into account through the benchmarking regime and a different allocation regime," one official said.
WHITTLED DOWN
He declined to give figures but said energy-intensive industries would have a bigger initial allocation than originally planned, a lower starting point for the percentage of emissions permits to be auctioned and a slower phase-in.
The Carbon Trust, a British government-funded body charged with helping companies cut emissions, warned earlier this month that cement, steel, aluminium, chemicals, fertiliser and pulp and paper businesses might be hurt by the stricter EU regime.
But the sources said officials had whittled down the number of energy-intensive sectors likely to enjoy special treatment to just the three.
Europe's top business lobby last week attacked Commission plans to implement the deep emissions cuts agreed by EU leaders last year, saying that auctioning pollution permits could hurt industry in global competition.
"In the absence of a comprehensive international agreement, auctioning of allowances will harm the competitiveness of European companies, especially in energy-intensive industries," BusinessEurope Secretary-General Philippe de Buck wrote in a letter to Commission President Jose Manuel Barroso.
The draft proposal provides for a review in 2011 of the impact on energy-intensive industries, depending on whether there has been an international pact on curbing emissions by then.
The EU package will also propose mandatory national targets for cutting CO2 emissions from buildings, heating and cooling and transport, as well as binding national targets for using renewable energy sources in power generation. (Editing by Caroline Drees)
EU to Set Easier CO2 Regime for Heavy Industries
Paul Taylor
Planet Ark
January 21, 2008
BRUSSELS - Europe's steel, aluminium and cement industries will have a special, less strict regime for greenhouse gas emissions under European Commission proposals to fight climate change to be announced this week.
After weeks of intense lobbying by business and governments, EU sources said on Sunday those three energy-intensive industries would be introduced more slowly into a new system for auctioning permits to emit carbon dioxide (CO2) from 2013.
The sources insisted on anonymity because wrangling is continuing in the Commission on final details of the proposals on CO2 emissions, renewable energy sources, biofuels and carbon sequestration to be unveiled on Wednesday.
A key flaw of the EU's Emissions Trading Scheme -- the main instrument for curbing pollution blamed for global warming -- has been that governments issued emission permits for free, handing industry windfall profits.
Under a planned reform, the sources said most sectors covered by the ETS will have to buy about one-fifth of emission permits from 2013 -- fewer than in early drafts of the proposal -- rising annually to reach 100 percent in 2020.
Those sectors include energy and power generation, including refineries, despite fierce lobbying by European oil majors BP and Shell to go easy on refineries.
The overall aim is to reduce European emissions of CO2 by at least 20 percent by 2020 compared to 1990 levels.
[MY, MY: HOW EU ASPIRATIONS FOR ENLIGHTENED ENVIRONMENTALISM HAVE FALLEN!!]
However, the sources said the EU executive was sensitive to concerns that the three big energy-intensive industries could be driven out of Europe if subjected to the same regime.
[EU COMMISSION SMELLS THE COFFEE!!]
"Those concerns are being sufficiently taken into account through the benchmarking regime and a different allocation regime," one official said.
WHITTLED DOWN
He declined to give figures but said energy-intensive industries would have a bigger initial allocation than originally planned, a lower starting point for the percentage of emissions permits to be auctioned and a slower phase-in.
The Carbon Trust, a British government-funded body charged with helping companies cut emissions, warned earlier this month that cement, steel, aluminium, chemicals, fertiliser and pulp and paper businesses might be hurt by the stricter EU regime.
But the sources said officials had whittled down the number of energy-intensive sectors likely to enjoy special treatment to just the three.
Europe's top business lobby last week attacked Commission plans to implement the deep emissions cuts agreed by EU leaders last year, saying that auctioning pollution permits could hurt industry in global competition.
"In the absence of a comprehensive international agreement, auctioning of allowances will harm the competitiveness of European companies, especially in energy-intensive industries," BusinessEurope Secretary-General Philippe de Buck wrote in a letter to Commission President Jose Manuel Barroso.
The draft proposal provides for a review in 2011 of the impact on energy-intensive industries, depending on whether there has been an international pact on curbing emissions by then.
The EU package will also propose mandatory national targets for cutting CO2 emissions from buildings, heating and cooling and transport, as well as binding national targets for using renewable energy sources in power generation. (Editing by Caroline Drees)
EU Comes Clean on Climate Change Costs: GHG Reduction Rules Will Significantly Harm European Industry Competitiveness
http://www.environmentalleader.com/2008/01/10/new-eu-co2-plans-will-affect-heavy-industry
New EU CO2 Plans Will Affect Heavy Industry
January 10, 2008
EU officials have acknowledged that a new plan to tighten greenhouse gas admissions will take a toll on the competiveness of some heavy industries, reports this article. The new rules will be unveiled by the European Commission on January 23.
According to official documents, the aluminum producers would be most affected, while chemical, steel and cement makers, to comply with the new standards, would have to raise prices between 5 and 48 percent. Reportedly, the EU executive is still divided on whether to introduce measures that would protect some sectors, such as energy intensive industries.
[REPORTS LIKE THESE ONCE AGAIN VALIDATE PREVIOUS ITSSD RESEARCH]
Overall, it’s estimated that should the changes occur, Europe’s GDP would drop by 0.1 percent but that jobs lost in the affected industries would be offset by new opportunities in the low-carbon economy.
The commission is also considering a carbon tariff on goods from countries whose emission policies aren’t as strong as Europe’s.
New EU CO2 Plans Will Affect Heavy Industry
January 10, 2008
EU officials have acknowledged that a new plan to tighten greenhouse gas admissions will take a toll on the competiveness of some heavy industries, reports this article. The new rules will be unveiled by the European Commission on January 23.
According to official documents, the aluminum producers would be most affected, while chemical, steel and cement makers, to comply with the new standards, would have to raise prices between 5 and 48 percent. Reportedly, the EU executive is still divided on whether to introduce measures that would protect some sectors, such as energy intensive industries.
[REPORTS LIKE THESE ONCE AGAIN VALIDATE PREVIOUS ITSSD RESEARCH]
Overall, it’s estimated that should the changes occur, Europe’s GDP would drop by 0.1 percent but that jobs lost in the affected industries would be offset by new opportunities in the low-carbon economy.
The commission is also considering a carbon tariff on goods from countries whose emission policies aren’t as strong as Europe’s.
Environmental Demagoguery: Measuring and Labeling Wine's Carbon Footprint is Needless Undertaking; Will Raise Consumer Costs & Reduces Quality of Life
Bordeaux To Measure Wine’s CO2 Footprint
Environmental Leader
January 29, 2008
http://www.environmentalleader.com/2008/01/29/bordeaux-to-measure-wines-co2-footprint
The Bordeaux Wine Board (CIVB) is launching a project to measure the GHG the region’s industry is producing. The project, called “Bilan Carbone” in French, will run for the next six months in association with the French Environment Agency, and the CIVB says the results will be released in September.
The aim of the study is to give an overview of all emissions resulting from growing and tending vines, making wine, and bottling, storage and delivery. It will also look at associated activities such as personnel, packaging, vine treatments and waste management. According to Roland Feredj, CIVB director, the study will cost about $70,000.Last November, the first-ever attempt at a carbon neutral vineyard in France began in Bordeaux’s Medoc region.
[MORE FRENCH PROTECTIONISM]
Another Bordeaux winemaking family, the Despagne Family, has already launched a carbon reduction project, planting 25 acres of sunflowers that will be used to produce fuel for tractors, but they said studying carbon emissions was a challenge. The Despagnes are using an Australian protocol, developed by Australian wine industry consultant, Provisor, and the Yalumba Wine Company, to measure their GHG and compare them with global standards.
*************************************************************************************
http://afp.google.com/article/ALeqM5gnFLyvTdnNFpzMEUeeN5bbRa0teg
Associated France Presse
Bordeaux to measure wine's CO2 footprint
Environmental Leader
January 29, 2008
http://www.environmentalleader.com/2008/01/29/bordeaux-to-measure-wines-co2-footprint
The Bordeaux Wine Board (CIVB) is launching a project to measure the GHG the region’s industry is producing. The project, called “Bilan Carbone” in French, will run for the next six months in association with the French Environment Agency, and the CIVB says the results will be released in September.
The aim of the study is to give an overview of all emissions resulting from growing and tending vines, making wine, and bottling, storage and delivery. It will also look at associated activities such as personnel, packaging, vine treatments and waste management. According to Roland Feredj, CIVB director, the study will cost about $70,000.Last November, the first-ever attempt at a carbon neutral vineyard in France began in Bordeaux’s Medoc region.
[MORE FRENCH PROTECTIONISM]
Another Bordeaux winemaking family, the Despagne Family, has already launched a carbon reduction project, planting 25 acres of sunflowers that will be used to produce fuel for tractors, but they said studying carbon emissions was a challenge. The Despagnes are using an Australian protocol, developed by Australian wine industry consultant, Provisor, and the Yalumba Wine Company, to measure their GHG and compare them with global standards.
*************************************************************************************
http://afp.google.com/article/ALeqM5gnFLyvTdnNFpzMEUeeN5bbRa0teg
Associated France Presse
Bordeaux to measure wine's CO2 footprint
BORDEAUX, France (AFP) —
The Bordeaux region, one of France's premier wine growing regions, is launching an ambitious project to measure the industry's greenhouse gas emissions to bolster its environmental standards.
The Bordeaux Wine Board (Conseil Interprofessionel des Vins de Bordeaux or CIVB) said it wanted to find out just how much carbon dioxide, one of the main culprits in global warming, it generated.
"We know we produce 756 million bottles of wine per year and that 40 percent of that is exported," said Laurent Charlier of the CIVB, who will be working with environmental consultant Jean Marc Jancovici on the project.
"This study should give a clear idea of what different methods of production or shipment mean, in terms of environmental cost," he said.
[THIS IS NOTHING MORE THAN FRENCH CLIMATE CHANGE CHICANERY - THE FRENCH WINE INDUSTRY IS UNDER INCREASING COMPETITION FROM LOWER COST PRODUCERS FROM AROUND THE WORLD...]
The project, called "Bilan Carbone" in French, will run for the next six months in association with the French Environment Agency (ADEME), and the CIVB says the results will be released in September.
Jancovici, who has worked with the French government, France Telecom, Sony, Alcatel and luxury goods company LVMH, was also responsible for a similar project for producers in the Champagne region.
CIVB director, Roland Feredj, said the launch in October last year of France¹s national environmental action plan was in part responsible for the CIVB initiative but there is a practical side as well.
"Everyone is concerned with the costs of (wine) production, so if we can find ways of saving money and reducing carbon emissions, that would be ideal."
The aim of the study, which Feredj said would cost about 50,000 euros (70,000 dollars), are to give an overview of all emissions resulting from growing and tending vines, making wine, and bottling, storage and delivery.
It will also look at associated activities such as personnel, packaging, vine treatments and waste management.
"We intend to find out the carbon emissions for making different styles of wine," Charlier said. "And at what stages we need to concentrate our efforts to mitigate the emissions."
One Bordeaux winemaking family that has already launched a carbon reduction project, planting 10 hectares (25 acres) of sunflowers that will be used to produce fuel for tractors, welcomed the move, but said studying carbon emissions was a challenge.
"We think it's good and we are going to be part of the study group," said Aymeric Fournier for the Despagne Family which owns 300 hectares of vineyards in Bordeaux.
"This will give us an overview of the situation but it is a complicated thing to do," he warned.
"We started seriously in the spring of 2007 -- although we had already planted the sunflowers -- to look at our carbon emissions but deciding how far to take each measurement is not easy," Fournier said.
"For example, with any of the products needed for the vineyard we need to ask, how far has this come, how much carbon was emitted in its making? Or take the different cars and different distances that employees drive to work. It is a very detailed calculation," he said.
The Despagnes are already using an Australian protocol, developed by Australian wine industry consultant, Provisor, and the Yalumba Wine Company, to to measure their greenhouse gas emissions and compare them with global standards.
"It is quite a piece of work but we are determined to go ahead with it. It helps so much to have this kind of framework. We were a bit stumped as to where to go next before we saw this," Fournier said. "
The Future of Doha...
The Future of Doha: Can the Doha Trade Round Be Saved?
http://www.businessweek.com/globalbiz/content/jan2008/gb20080128_519854.htm?campaign_id=rss_daily
January 28, 2008
by Sean O'Grady
BusinessWeek
Peter Mandelson, the European Union trade commissioner, has warned about the consequences if the Doha round of world trade talks were to fail this year.
Mr Mandelson pointed to the approaching US elections as the effective deadline for the consummation of the negotiations, after which the delays associated with the new American administration would effectively kill the process.
A new president would inevitably need to review the negotiations, and Mr Mandelson thought that the Doha round was unlikely to be at the top of their in-tray. The process of appointing, nominating and gaining congressional approval for new trade officials could also take many months.
At the World Economic Forum in Davos, Mr Mandelson said that while 2007 had been called a "year of opportunity", 2008 would be "the year of necessity". He added that he had been struck by business figures who had felt "frustrated" by the length of time taken (the Doha round was launched in 2001), and who perceived that "the level of ambition has fallen". He said that they had urged him not to give up, but also not to allow the negotiations to "linger on" and to give them a "decent burial".
Mr Mandelson suggested that if the Doha round were to be abandoned, economically valuable elements already agreed could be extracted from it, such as a package of development aid. Even so, he was sceptical about the extent to which such "cherry-picking" might be possible.
Mr Mandelson said that "the caravans would move on" if an agreement were not reached in 2008, with countries and trading blocs moving to a series of bilateral treaties in place of the Doha round. These, he conceded, would be beneficial, but still be "no substitute" for a comprehensive multilateral arrangement which would more firmly build in the gains for free trade that have been made in the past few decades.
Since the onset of the credit crisis and the general slowdown in world economic growth, political pressures for protection have been growing, particularly in parts of Europe and the United States. Opposition to sovereign wealth funds and calls for tighter regulation of financial markets are two examples of how recent economic events have fuelled resistance to trade liberalisation.
Last month, Mr Mandelson attacked Hillary Clinton, the US presidential candidate, over her attitude to free trade. He described Mrs Clinton's views on global trade as "disappointing", "misplaced" and symptomatic of a new trend towards protectionism in the West.
In recent days sources close to Mr Mandelson have suggested that more progress was being made than the public realised, and expressed hope that the certainty of a change of incumbent in the White House would force the pace of change.
For her part, the US trade envoy, Susan Schwab, reiterated the commitment of the Bush administration to the success of the talks. The Indian Minister for Trade and Commerce, Kamal Nath, said that he was prepared to negotiate on commerce, but would not do so in matters of "livelihood and security".
Arguments about the level of agricultural subsidies in the West and the willingness of developing nations to open up their markets in services have bedevilled the talks for some time, despite evident goodwill on the part of most of the participants. Informal meetings of 25 trade ministers plus the World Trade Organisation chief, Pascal Lamy, and Mr Mandelson over the weekend do not appear to have resulted in a breakthrough.
http://www.businessweek.com/globalbiz/content/jan2008/gb20080128_519854.htm?campaign_id=rss_daily
January 28, 2008
by Sean O'Grady
BusinessWeek
Peter Mandelson, the European Union trade commissioner, has warned about the consequences if the Doha round of world trade talks were to fail this year.
Mr Mandelson pointed to the approaching US elections as the effective deadline for the consummation of the negotiations, after which the delays associated with the new American administration would effectively kill the process.
A new president would inevitably need to review the negotiations, and Mr Mandelson thought that the Doha round was unlikely to be at the top of their in-tray. The process of appointing, nominating and gaining congressional approval for new trade officials could also take many months.
At the World Economic Forum in Davos, Mr Mandelson said that while 2007 had been called a "year of opportunity", 2008 would be "the year of necessity". He added that he had been struck by business figures who had felt "frustrated" by the length of time taken (the Doha round was launched in 2001), and who perceived that "the level of ambition has fallen". He said that they had urged him not to give up, but also not to allow the negotiations to "linger on" and to give them a "decent burial".
Mr Mandelson suggested that if the Doha round were to be abandoned, economically valuable elements already agreed could be extracted from it, such as a package of development aid. Even so, he was sceptical about the extent to which such "cherry-picking" might be possible.
Mr Mandelson said that "the caravans would move on" if an agreement were not reached in 2008, with countries and trading blocs moving to a series of bilateral treaties in place of the Doha round. These, he conceded, would be beneficial, but still be "no substitute" for a comprehensive multilateral arrangement which would more firmly build in the gains for free trade that have been made in the past few decades.
Since the onset of the credit crisis and the general slowdown in world economic growth, political pressures for protection have been growing, particularly in parts of Europe and the United States. Opposition to sovereign wealth funds and calls for tighter regulation of financial markets are two examples of how recent economic events have fuelled resistance to trade liberalisation.
Last month, Mr Mandelson attacked Hillary Clinton, the US presidential candidate, over her attitude to free trade. He described Mrs Clinton's views on global trade as "disappointing", "misplaced" and symptomatic of a new trend towards protectionism in the West.
In recent days sources close to Mr Mandelson have suggested that more progress was being made than the public realised, and expressed hope that the certainty of a change of incumbent in the White House would force the pace of change.
For her part, the US trade envoy, Susan Schwab, reiterated the commitment of the Bush administration to the success of the talks. The Indian Minister for Trade and Commerce, Kamal Nath, said that he was prepared to negotiate on commerce, but would not do so in matters of "livelihood and security".
Arguments about the level of agricultural subsidies in the West and the willingness of developing nations to open up their markets in services have bedevilled the talks for some time, despite evident goodwill on the part of most of the participants. Informal meetings of 25 trade ministers plus the World Trade Organisation chief, Pascal Lamy, and Mr Mandelson over the weekend do not appear to have resulted in a breakthrough.
Trade Outlook for China: China to Face Growing Trade Frictions
Trade Outlook for China: China to Face Growing Trade Frictions
http://www.china.org.cn/english/business/238596.htm
China.org.cn
January 8, 2008
China is going to face growing trade frictions in the years to come, said Li Ling, director of the Bureau of Fair Trade for Imports and Exports, inside the Ministry of Commerce, during an interview with the Economic Information Daily run by the state Xinhua News Agency.
The whole world will perceive China's rapid development in a more global and strategic view, said Li.
Chinese export products will encounter the most trade frictions around the world, said Li, warning steel, textile, machinery and electronic products and information products against such frictions this year.
As China has successively been the country that is subject to the most anti-dumping investigations in the world for many years, it has also become the country that has encountered the most anti-subsidy investigations in 2007.
Nowadays, trade barriers are set up in more diversified and disguised ways, said the director.
She gave five suggestions to help enterprises to cope with possible frictions:
1) better understanding of WTO rules and trade remedy investigations;
2) positive reactions in case of trade frictions;
3) improvement of internal management;
4) intensified industry discipline and observation of business ethics and market rules;
and
5) better adaptation to the international market.
For more details, please read the full story in Chinese (http://jjckb.xinhuanet.com/wzpd/2008-01/08/content_80555.htm).
http://www.china.org.cn/english/business/238596.htm
China.org.cn
January 8, 2008
China is going to face growing trade frictions in the years to come, said Li Ling, director of the Bureau of Fair Trade for Imports and Exports, inside the Ministry of Commerce, during an interview with the Economic Information Daily run by the state Xinhua News Agency.
The whole world will perceive China's rapid development in a more global and strategic view, said Li.
Chinese export products will encounter the most trade frictions around the world, said Li, warning steel, textile, machinery and electronic products and information products against such frictions this year.
As China has successively been the country that is subject to the most anti-dumping investigations in the world for many years, it has also become the country that has encountered the most anti-subsidy investigations in 2007.
Nowadays, trade barriers are set up in more diversified and disguised ways, said the director.
She gave five suggestions to help enterprises to cope with possible frictions:
1) better understanding of WTO rules and trade remedy investigations;
2) positive reactions in case of trade frictions;
3) improvement of internal management;
4) intensified industry discipline and observation of business ethics and market rules;
and
5) better adaptation to the international market.
For more details, please read the full story in Chinese (http://jjckb.xinhuanet.com/wzpd/2008-01/08/content_80555.htm).
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