http://www.europe.org.uk/index/-/id/137
Eco-fashion
Europe in the UK
As the Craft Council's exhibition 'Well Fashioned: Eco Style in the UK' begins its nationwide tour, Lucy Lethbridge tells us more about 'green' couture in Europe.
The very idea of environmentally-friendly fashion may seem a contradiction in terms. Clothes that are fairly traded, vegetable-dyed, animal-loving, free of pesticides, harmful chemicals and toxic bleach and made entirely by adults paid a living wage? You must be talking hemp jerkins or homespun cardigans dyed with woad - it's surely not haute couture, or even faintly trendy.
But think again. Fashion designers, boutiques and clothing companies all over Europe are the latest to ride the wave of ethical, environmental, sustainable, ecologically-aware products that currently account for a massive £24 billion of the UK market alone.
The success of eco-friendly designers like the Dutch firm Kuyichi demonstrates that there is increasing interest in where your clothing comes from as well as what it looks like. This business is about more than just shopping and fashion: Kuyichi advertises itself first and foremost by its ethical credentials: the company has been responsible for "5,000,000 metres of organic yarn"; 450 farmers growing our organic cotton in India; 15 per cent of our profits go to the people who help make Kuyichi".
Who wouldn't want to be part of such a beneficent world force - even if it meant paying a lot more for a t-shirt than in Primark or Matalan? The fact is that once you know that cotton growing is so heavy on the use of chemicals that 25 per cent of the world's pesticides are used on cotton alone - well, it rather puts you off that cheap T-shirt in bright, bright white. (Take a look at the Clean Clothes Campaign - ww.cleanclothes.org - supported by Oxfam and other European NGOs for some firsthand information on the truth behind the T-shirt - and don't think that if it was made in an eastern Europe sweatshop it makes it more ethical than one made in an Asian sweatshop.)
Environmental NGO Greenpeace are active campaigners in support of textiles that demonstrate an environmentally and socially responsible source. They have compiled a detailed directory, Natural Matters, (http://www.naturalmatters.net/) of organic cotton manufacturers and sustainable clothing producers. As one designer said to me, "You need to be on one of these green directories - it gives credibility".
There are jeans made with organic denim; recycled jumpers, saris and evening dresses; clothes and jewellery made in co-operatives that pay fair wages to women in developing countries; a booming industry in pesticide-free baby clothes; shoes made with vegetable-dyed leather from happy cows. What is more, they all look pretty good: sharp, cosmopolitan, fashionable - and not remotely like the smelly, saggy sackcloth of the hippyish past.
Eco-fashion is now attracting the interest of top designers as well as fashion graduates who are setting up businesses allied with organisations, banks and NGOs such as Solidaridad, the Dutch campaigners for organic and fairly-traded cotton, the Soil Association, the British campaign group for organic agriculture, and Triodos (http://www.triodos.com/), the Europe-wide bank, founded in the Netherlands, which lends only to enterprises concerned sustainable and ethical businesses, that makes "positive contributions to the environment and to social projects". James Niven of Triodos in Bristol says that the interest is growing: "Ethical fashion is not just an outside runner but a really good and robust business proposition".
The European Union itself has established an "EU Eco-label" in the shape of a flower logo which is awarded to companies that have been checked by independent experts who will vouch for their eco-credentials.
[ http://ec.europa.eu/environment/ecolabel/index_en.htm -
http://www.eco-label.com/default.htm ]
[??? - THESE PEOPLE ARE HARDLY EXPERTS - RATHER THEY ARE SELF-APPOINTED ENVIRO-GURUS WITH DELEGATED GOVERNMENT ENFORCEMENT POWERS THAT IMPOSE THEIR PREFERENCES ON COMPANIES & CONSUMERS!!] who will vouch for their eco-credentials ???].
The Soil Association in Britain has an accredited list of organic textile suppliers including growers of hemp - perhaps the most environmentally friendly and under-used of crops. ["The Soil Association is the UK's leading campaigning and certification organisation for organic food and farming... The Soil Association symbol can be found on over 70% of Britain's organic produce - a guarantee that it has been grown or produced to the highest standards of organic integrity [??]. We also undertake certification of timber and wood products. Soil Association Certification Ltd enforces these standards through certification and regular inspections of producers, processors and suppliers."
The imagination and ingenuity of these emerging designers is inspiring. Kate Goldsworthy lectures on sustainable textiles and fashion at Chelsea College of Art in London, one of the only art colleges in Europe to offer a course on sustainability and fashion. She has noticed a "massive" rise in the number of students wanting to apply for the course:
"There is now a much more ingrained ethos about sustainability. People are beginning to react against the speed and profligacy of the fashion cycle". Instead of worrying about quick-change fashion next season, eco-designers are concerned about creating clothing that won't be thrown away, but will be handed down for generations. Take Amy Twigger, of Keep & Share, based in Shropshire, who makes beautiful, hand-made jumpers - only one at a time and to order: Twigger says: "I'm trying to create pieces that people will keep and will rise above trends. They are perennial classics". As fashion historian Jane Mulvagh puts it: "In fact what is happening is that people are beginning to rediscover the make-do and mend ethos of their grandparents - a period when cuffs were turned, stockings were darned and clothes were made to last. If it means paying more, it also means that you take care of these clothes because you respect the craftsmanship that has gone into them".
The ingenuity and imagination of the new generation of designers is dazzling. They have taken recycling out of the thrift shops and converted them into marvels of one-off chic. Edson Raupp, for example, a Brazilian-German designer, based in London, makes bags out of classically tailored English suits that had been consigned to the dustbin or the charity shop. A chalk-striped suit, beautifully tailored of the finest cloth, can make four witty bags. The buttons are then collected, dyed in different colours and sewn onto evening bags in long trailing strands held together by plastic label tags. Finally the suits' labels are cut out and sewn onto other bags in collages. Raupp buys secondhand suits in bulk. He started by purchasing them in charity shops but now finds he needs to go to the organisations that supply the shops to have them delivered in the quantity he now needs.
The Indian Sari is another garment that has undergone a remarkable transformation. Sittal Hari of Sari Couture buys up unwanted or second-hand saris in enormous quantities and has them made into beautiful jackets, skirts and coats. British-born Hari was inspired to start her business when she visited relatives in India bringing with her old saris as presents from her family. She found her relatives didn't want them, and wondering what she could do with these beautiful lengths of fabric she came up with the idea of Sari Couture. All the garments (which start at £200) are made in a factory in London as Hari wants to keep the production local. "We are totally dedicated to recycling" she says, "and we see it as part of our company ethos to go out and talk to schools and give workshops on how to reuse and re-make beautiful things". Hittal set up Sari Couture with a grant of £5000 from London Re-made, an initiative to help recycling projects established by the Mayor of London's office (http://www.londonremade.com/). It has a brief to support what the Office calls "enviro-entrepeneurs", small and medium-sized businesses with a recycling and environmental policy - and it has a fund of £1.8 million from the London Development Agency behind it.
Among the other ethical businesses it has sponsored is Beyond Skin, a vegetarian shoe label.
Lancelot Clark, of the Clark Shoes dynasty, and his son Galahad, have continued the Quaker ideals of their shoemaking forebears with the Worn Again range of their shoe company Terra Plana. Their anti-apathy trainers are made from materials such as old tyres, used coffee-bags, army surplus jackets and scrap car-seat leather. And they look really pretty good. At a different end of the market, in France, Michele and Olivier Chatenet make divine clothing from second-hand haute couture pieces - an Yves St Laurent evening dress remodelled into a two-piece suit perhaps or a silk skirt. In Finland, for the sportier, lumberjacking kind of fashionisti, Globe Hope make heavy-duty utilitarian pieces out of old hospital textiles and army uniforms.
Eco-fashion is not just the concern of a few idealists content to pay over the odds for an unbleached baby-gro. With shoppers more informed now about the real story behind a new T-shirt or a pair of jeans or trainers, it makes good business sense to look for ethical ways to make and market fashion products. Caring, saving, recycling - it's beginning to hit the catwalk. And you don't have to be a vegetarian to get in on the act either. The designers behind Romp, makers of the most luxurious fur, leather and suede coats (all of them the product of happy, free-range, organically-fed animals identified by name and destined for food anyway) puts it like this: "If you don't care at all you are probably quite sad and lonely and I hope that you get some love and learn to smile again soon".
Yes, I know, some of those virtuous "mission statements" can be annoying: but don't let them put you off, this is booming business and makes good sense for everyone from designer to maker to wearer.
The Craft Council's Touring exhibition 'Well Fashioned: Eco Style in the UK' can be seen here:
· The City Gallery, Leicester: 15 July to 26 Aug 2006
· The Design Centre, Barnsley: 7 Sep to 20 Oct 2006
· City Museum & Records Office, Portsmouth: 4 Nov 2006 to 7 Jan 2007
· Bilston Craft Gallery, Wolverhampton: 20 Jan to 3 March 2007
© Lucy Lethbridge. All views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to the European Commission.
The European Commission Representation in the United Kingdom maintains this website to enhance public access to information about its initiatives and European Union policies in general. Our goal is to keep this information timely and accurate. If errors are brought to our attention, we will try to correct them. However the Commission accepts no responsibility or liability whatsoever with regard to the information on this site.
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THE EU ECO-LABEL IS CENTRAL TO EUROPE'S CAMPAIGN TO PROMOTE ENLIGHTENED ENVIRONMENTALISM THROUGHOUT THE WORLD. CONSEQUENTLY, ECO-LABELS ARE A CREATURE OF EU GOVERNMENTAL REGULATION.
The EU Ecolabel (The Flower) is the EU's own high-level award scheme for products which meet very high environmental standards. Businesses which can show that their product meets the demanding criteria set by the scheme can apply to the body running the scheme in their member state (the Competent Body) to use the Ecolabel's Flower logo on the product and in advertising.
The scheme currently covers twenty-four product groups, including tourist accommodation and campsites, and the logo appears on thousands of products across Europe. The Ecolabel was originally established by an EU Regulation in 1992, which was revised in 2000. The Commission, which coordinates the running of the scheme, is currently reviewing and revising it again. The public consultation, which was carried out through an online questionnaire, was the second part of a process which began with an evaluation study in 2005.
The evaluation study concluded that the original ideas behind the voluntary scheme were still valid and desirable from a business perspective: The EU Ecolabel provides EU consumers with an environmental certification they can trust, unlike certain other labels which are 'selfclaims'. Additionally it can give businesses the opportunity to use one label for all their pan- European or global marketing.
In summary the study showed that:
• The Ecolabel has contributed to setting targets for better environmental product
performance;
• It has influenced the demand for suppliers to meet high environmental standards;
• Companies participating in the EU scheme use the Ecolabel in their marketing
campaigns;
• Neither users nor non-users of the Ecolabel want to see the label abolished;
• The concept of the EU Ecolabel is preferred to that of national labels.
However:
• There is still low awareness and uneven geographic take-up of the label;
• There are insufficient product group categories;
• It suffers from cumbersome procedures and organisational structures - i.e. bureaucracy which limit the Scheme's ability to grow and respond to opportunities;
• Fees and cost of getting the label are perceived as barriers;
• There is a lack of perceived public purchasing benefits.
See Report on the Public Consultation Revision of the EU Ecolabel Regulation (EC) No 1980/2000, European Commission (Oct. 2007) at: http://ec.europa.eu/environment/ecolabel/pdf/revision/revision_report2007.pdf .
THE 2007 REPORT FOLLOWED FROM A PRIOR 2005 STUDY PREPARED BY CONSULTANTS ON BEHALF OF THE DIRECTORATE GENERAL ENVIRONMENT, OF THE EU COMMISSION. THE PRIOR STUDY REFLECTS HOW EUROPEAN INDUSTRY LOBBIED FOR EU GOVERNMENTAL INVOLVEMENT TO ENSURE A COMPETITIVE ADVANTAGE THROUGH USE OF EU REGIONAL 'ECO-LABEL' & ENVIRONMENTAL MANAGEMENT SYSTEM
STANDARDS (EMAS). THIS WAS THOUGHT POSSIBLE BY EMBEDDING ECO-LABEL CERTIFICATION, VERIFICATION & PERFORMANCE STANDARDS/REQUIREMENTS WITHIN EU REGULATIONS AND BY INCORPORATING THEM INTO GOVERNMENT PUBLIC PROCUREMENT REQUIREMENTS
B7. Desired incentives and measures for the EU Eco-label revision:
• Information and promotion campaigns and other actions aimed at increasing the knowledge and the demand of the EU Eco-label are perceived as the most effective measures for supporting the scheme and endorsing its success as a marketing opportunity.
• External incentives are also widely requested. Fiscal incentives, such as tax abatement, are thought to be effective, insofar as they enable producers to lower the costs and prices of Eco-labelled products. Another of the ‘most wanted’ incentives is the inclusion of the EU Eco-label as a facilitating condition for public procurement.
• Other desirable measures directly relate to various modifications that can be introduced in the Regulation or in its institutional and applicative framework, such as a higher number of product groups or a further extension of the EU Eco-label to services.
• Outsourcing the EU Eco-label to an entirely private body obtains a low degree of support (but also the idea of making it entirely Commission-managed also raises many objections).
• Lowering the number and/or the stringency of the criteria to make the scheme ‘easier’ is not strongly supported (although on the whole the idea is favoured by the literature).
• Finally, it should be emphasised that the proposal of having a graded label, strongly debated in recent years, has been definitively rejected.
C1. Evidence and desired incentives:
• To some extent, the product dimension is already part of EMAS: the environmental management system influences product performance in other phases of the life-cycle and/or in the supply chain.
• There is a certain awareness of the potential benefits emerging from a stronger link and synergy between EMAS and the EU Eco-label.
• “Synergy” between the two voluntary schemes does not mean merging them, but exploiting all the possible opportunities for mutual reinforcement.
• ISO type III labels can be a synergetic tool for both schemes: many opportunities were identified (both in the desk and in the in-field research) for pursuing integration with ISO type III labels, with reference to operational, marketing and institutional synergies.
• A major issue for the revision of both the schemes is integrating and linking them with existing legislation and environmental policies (to a wider extent).
In particular, a considerable consensus was found during the desk and in-field research on the strong need for integrating and embedding EMAS and the EU Eco-label in other product-related policy and private-certification instruments (other labels and forms of certifications, other IPP tools, etc.).
• A more general request is also being made by stakeholders and organisations taking part in the two schemes for a truly effective and consistent embedding of EMAS and the EU Eco-label in existing and forthcoming legislation, in policy implementation and even in the enforcement of environmental legislation (e.g. regulatory relief and flexibility). Some of the most frequently suggested policy areas for promoting synergy are, for EMAS: the IPPC directive, the Emission trading directive, the Seveso Bis Directive; for the EU Eco-label: EuP, RoHS and, to a minor extent, REACH.
The prior findings was set forth in a 2005 study prepared a group of consultants for the Directorate General Environment, of the EU Commission.
See “EVER: Evaluation of EMAS and Eco-label for their Revision”, Executive Summary (12/26/05) at: http://ec.europa.eu/environment/ecolabel/pdf/revision/executive_summary.pdf .
The full study is available at: http://ec.europa.eu/environment/ecolabel/pdf/revision/final_recommendations.pdfvironment/ecolabel/pdf/revision/final_recommendations.pdf .
See also Using Eco-Labels to Promote Producer & Consumer Behavior Modification May Very Well Give Rise to Disguised Trade Barriers, Admits UN
http://itssdinternationalstandards.blogspot.com/2008/03/using-eco-labels-to-promote-producer.html
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[THE EU HAS ALSO INTERVENED IN THE MARKETPLACE TO ESTABLISH AND MONITOR ECO-FRIENDLY FURNITURE PRODUCTION & PROCESSING, AS REFLECTED WITHIN ENVIRONMENTALLY FRIENDLY FURNITURE ECO-LABELING SCHEMES, AS PART OF THE EUROPEAN UNION'S SUSTAINABLE FOREST MANAGEMENT (SFM) POLICY FRAMEWORK
The EU had shown interest in tying ecolabelling and furniture product branding together with regional sustainable forest management policy as early as 2001.
A 2001 report prepared for the European Commission recommended that SFM certification be included as an indispensable criterion for award of such a label, through official EU involvement, if necessary. ‘[I]f [private] demand does not exist, it can be created through awareness activities or through procurement requirements in the case of public procurements’ (emphasis added).
See Jurgen Barsch, E. Deliege and P.W.J. Luiten, The Feasibility of an EU Eco-Label for Furniture (FRG Umweltbundesamt (Federal Environmental Agency, February 2001), at pp. 31, 35, available at www.ec.europa.eu/environment/ecolabel/pdf/furniture/feas_study.pdf .
See also Discerning the Forest From the Trees: How Governments Use Ostensibly Private and Voluntary Standards to Avoid WTO Culpability
http://itssdinternationalstandards.blogspot.com/2008/01/discerning-forest-from-trees-how.html
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[ONE IMPORTANT QUESTION READERS SHOULD ASK THEMSELVES, GIVEN THE EMOTIONAL AND OBSSESSIVE CAMPAIGN WAGED BY EUROPEAN AND NOW CERTAIN AMERICAN (DEMOCRATIC PARTY) POLITICIANS (INCLUDING FORMER V.P. AL GORE, SENATORS CLINTON & OBAMA, AND THE 110TH CONGRESSIONAL MAJORITY, IS HOW CLOSELY DOES ENVIRONMENTALISM RESEMBLE CLASSICAL FACISM??? TO THIS END, READERS MAY FIND INFORMATIVE THE FOLLOWING WEBSITES. See, e.g. http://www.ecofascism.com/index.html .
READERS SHOULD AT LEAST CONSIDER THE FINDINGS OF THE FOLLOWING BOOK:
Ecofascism: Lessons from the German Experience
By Janet Biehl and Peter Staudenmaier© Copyright: 1995
Janet Biehl and Peter StaudenmaierLibrary of Congress Cataloguing-in-Publication DataBiehl, Janet, 1953-- Ecofascism: lessons from the German experience / by Janet Biehl and Peter Staudenmaier p. cm. Includes bibliographical references. ISBN 1-873176 73 2 (paper) 1. Green movement--Germany--History--20th century. 2. Fascism-- Germany. 3. Environmental policy--Germany. 4. Environmentalism. 5. Political policy--Germany--History. 6. Right and left (Political science) 7. Grünen (Political party) I. Staudenmaier, Peter, 1965-- . II. Title HC79.E5B5 1995 304.2'0943'--dc20 95-40752
CIP British Library Cataloguing in Publication DataA catalogue record for this title is available from the British Library.First published in 1995 by AK Press AK Press 22 Lutton Place P.O. Box 40682 Edinburgh, Scotland San Francisco, CA EH8 9PE 94140-0682
http://www.spunk.org/texts/places/germany/sp001630/janet.html
Monday, March 31, 2008
Wednesday, March 26, 2008
110th Congress' Obstruction of Colombia-US Free Trade Agreement Foolishly Harms American Exporters As Well As Colombian Businesses & Democracy
http://www.azcentral.com/arizonarepublic/opinions/articles/0312wed2-12.html
To a freer Latin America
Mar. 12, 2008 12:00 AM
By obstructing a free-trade agreement with Colombia, Congress is achieving a mathematical impossibility.
If opposition to the deal made no sense in terms of rational self-interest when it was sealed between the U.S. and Colombia in 2006, it makes even less sense now. Less than zero sense.
The agreement signed in November 2006 effectively stabilized an imbalance between the countries.
Most Colombian exports to this country arrive largely duty-free, courtesy of the 1991 Andean Trade Preference Act, which reduced or eliminated trade barriers to Latin American countries that took effective steps to fight drug-trafficking. A former narco-terror hell on Earth, Colombia has taken greater steps to fight the narcotics cartels than, arguably, any nation in the region.
The same relaxed trade rules do not hold for U.S. exports to the South American nation, however.
In 2006, for example, Arizona companies exported a relatively paltry $9.8 million worth of manufactured goods and electronics to Colombia, according to the U.S. Department of Commerce. And they paid a healthy fee for that privilege, including tariffs of 10 to 20 percent.
Congressional approval of the Colombian free-trade agreement would strike that imbalance and almost certainly would prove an immediate godsend to Arizona manufacturers that do business with Bogota.
Even as a matter of politics, the obstruction makes no sense.
Since assuming office in 2002, Colombian President Alvaro Uribe has made huge progress in stabilizing his formerly war-torn nation. He has created one of the most stable democracies on a continent that otherwise seems to be backsliding toward its tragic roots of totalitarianism, despotism and revolution.
Uribe's long-standing friendship with the U.S. - which is to say, his friendship with President Bush - is the source of his unpopularity on Capitol Hill, of course.
That political principle - any friend of my enemy is my enemy - took center stage on March 1 when Uribe sent his commandos a mile and a half into neighboring Ecuador to take out an encampment of narco-terrorists, killing notorious rebel leader Raul Reyes.
To a freer Latin America
Mar. 12, 2008 12:00 AM
By obstructing a free-trade agreement with Colombia, Congress is achieving a mathematical impossibility.
If opposition to the deal made no sense in terms of rational self-interest when it was sealed between the U.S. and Colombia in 2006, it makes even less sense now. Less than zero sense.
The agreement signed in November 2006 effectively stabilized an imbalance between the countries.
Most Colombian exports to this country arrive largely duty-free, courtesy of the 1991 Andean Trade Preference Act, which reduced or eliminated trade barriers to Latin American countries that took effective steps to fight drug-trafficking. A former narco-terror hell on Earth, Colombia has taken greater steps to fight the narcotics cartels than, arguably, any nation in the region.
The same relaxed trade rules do not hold for U.S. exports to the South American nation, however.
In 2006, for example, Arizona companies exported a relatively paltry $9.8 million worth of manufactured goods and electronics to Colombia, according to the U.S. Department of Commerce. And they paid a healthy fee for that privilege, including tariffs of 10 to 20 percent.
Congressional approval of the Colombian free-trade agreement would strike that imbalance and almost certainly would prove an immediate godsend to Arizona manufacturers that do business with Bogota.
Even as a matter of politics, the obstruction makes no sense.
Since assuming office in 2002, Colombian President Alvaro Uribe has made huge progress in stabilizing his formerly war-torn nation. He has created one of the most stable democracies on a continent that otherwise seems to be backsliding toward its tragic roots of totalitarianism, despotism and revolution.
Uribe's long-standing friendship with the U.S. - which is to say, his friendship with President Bush - is the source of his unpopularity on Capitol Hill, of course.
That political principle - any friend of my enemy is my enemy - took center stage on March 1 when Uribe sent his commandos a mile and a half into neighboring Ecuador to take out an encampment of narco-terrorists, killing notorious rebel leader Raul Reyes.
Many congressional Democrats condemned Uribe for daring to chase the murderous, kidnap-happy
terrorists into a nation that fawns over the drug-running revolutionaries.
Many of them, too, sided in the resulting border flare-up with Uribe's mortal enemy in South American, Hugo Chavez, the leftist president of Venezuela whose popularity in Congress is directly proportional to his hostility to Bush.
Trade protectionism, and the economic menace that surely would accompany it, is in the air this election season.
But snubbing a trade deal with staunchly democratic Colombia - a deal that is pure win-win for the U.S. - makes no sense, regardless.
Congress is protecting no one by fighting the Colombia trade agreement. It should approve the measure now.
Many of them, too, sided in the resulting border flare-up with Uribe's mortal enemy in South American, Hugo Chavez, the leftist president of Venezuela whose popularity in Congress is directly proportional to his hostility to Bush.
Trade protectionism, and the economic menace that surely would accompany it, is in the air this election season.
But snubbing a trade deal with staunchly democratic Colombia - a deal that is pure win-win for the U.S. - makes no sense, regardless.
Congress is protecting no one by fighting the Colombia trade agreement. It should approve the measure now.
Europe Shouldn't Wait for Hillary Or Obama If It Wishes To Secure Further Trade Liberalization During the Doha Round
http://www.iht.com/articles/2008/03/10/business/rtrinside11.php
Prospects grim as negotiators push for a global trade deal
By Paul Taylor
Reuters
Monday, March 10, 2008
International Herald Tribune
BRUSSELS: To hear some U.S. presidential candidates and European leaders talk, you would think hard times lay ahead for advocates of free trade.
Prospects grim as negotiators push for a global trade deal
By Paul Taylor
Reuters
Monday, March 10, 2008
International Herald Tribune
BRUSSELS: To hear some U.S. presidential candidates and European leaders talk, you would think hard times lay ahead for advocates of free trade.
Senators Hillary Rodham Clinton and Barack Obama in the Democratic primaries are criticizing the North American Free Trade Agreement with Canada and Mexico and vowing to renegotiate it to protect American workers.
Clinton, with strong backing from U.S. organized labor, has advocated a "time out" in trade liberalization and questioned whether the theory of comparative advantage that underpins free trade still applies in the 21st century.
On the other side of the Atlantic, President Nicolas Sarkozy of France has urged Europeans to stop being naïve about trade and to develop "a real system of community preferences" to protect European Union agriculture and industry from unfair competition.
Clinton, with strong backing from U.S. organized labor, has advocated a "time out" in trade liberalization and questioned whether the theory of comparative advantage that underpins free trade still applies in the 21st century.
On the other side of the Atlantic, President Nicolas Sarkozy of France has urged Europeans to stop being naïve about trade and to develop "a real system of community preferences" to protect European Union agriculture and industry from unfair competition.
[WHAT SARKOZY IS REALLY SAYING, IN NUANCED FRENCH FASHION, IS THAT, GIVEN THE PRESENT ERA OF GLOBALIZATION
IT IS NOW TIME TO UPDATE FORTRESS EUROPE'S PROTECTIONIST DEFENSES WITH NON-TARIFF TECHNICAL BARRIERS TO TRADE DISGUISED AS 'CULTURAL PREFERENCES']
Political opposition has forced the EU's trade commissioner, Peter Mandelson, to delay changes in anti-dumping duties meant to take account of the interests of European firms that produce goods in low-cost countries.
Mandelson has broad powers to negotiate trade agreements on behalf of the 27-nation bloc, but France is doing its best to handcuff him and organized a caucus of 20 farm ministers last month to warn against further concessions on agriculture.
Brussels trade diplomats say that the commissioner, who is British, has long been viewed with suspicion in many member states because of his liberal views on trade and that his influence may be waning.
Mandelson has broad powers to negotiate trade agreements on behalf of the 27-nation bloc, but France is doing its best to handcuff him and organized a caucus of 20 farm ministers last month to warn against further concessions on agriculture.
Brussels trade diplomats say that the commissioner, who is British, has long been viewed with suspicion in many member states because of his liberal views on trade and that his influence may be waning.
All this sets a grim backdrop for negotiators at the World Trade Organization, who are preparing yet another "final push" for a global deal to cut tariffs and remove trade barriers. Their aim is to clinch a deal before President George W. Bush leaves office next January.
Turmoil on financial markets and a sharp economic slowdown, especially in the United States, have fueled calls for protecting jobs in wealthy countries.
The trade organization's director general, Pascal Lamy, says the downturn on both sides of the Atlantic should focus minds on the benefits of a trade agreement, not least because failure would damage confidence in the world economy. Keith Rockwell, a spokesman for the agency, said, "Do you fix the roof when the sun is shining or when it's raining? Either way, it's still a good idea to fix the roof."
Politically, a failure of the rules-based multilateral system to deliver progress on trade could undermine European hopes for a more ambitious international agreement in 2009 to curb the greenhouse gas emissions that are blamed for global warming.
As with climate change, a trade deal requires concessions from big emerging nations like India, Brazil and China, which want to be able to protect key sectors of their economies from competition from rich countries.
Those conflicts seriously threaten the trade talks, as does the reluctance of wealthy nations to reduce radically the longstanding protection of their farmers.
"I share the skepticism that anything good will come out of the Doha Development Agenda," said Adam Posen of the Peterson Institute for International Economics in Washington, using the name given to the trade round that began in Qatar in 2001.
Posen said that whoever wins the White House in November, Congress will make trade conditional on labor and environmental standards to shut out cheap competition, mainly from Asia.
Andre Sapir, a trade economist at the Free University of Brussels and former adviser to the European Commission, agrees that the climate in the United States is not favorable for new trade deals, although the Europeans should still push for one.
"You need some bad economic news to make a trade agreement necessary as a booster of confidence," he said. "But even if there is a deal now, the chances are that something is going to be reopened after the U.S. election."
U.S. trade diplomats in Europe are using Clinton's rhetoric and fears of a more protectionist U.S. administration to try to focus on the need to complete a trade deal now.
One senior diplomat, speaking on condition of anonymity because of the sensitivity of the issue, said his message to European counterparts was: "Don't wait for Hillary."
Turmoil on financial markets and a sharp economic slowdown, especially in the United States, have fueled calls for protecting jobs in wealthy countries.
The trade organization's director general, Pascal Lamy, says the downturn on both sides of the Atlantic should focus minds on the benefits of a trade agreement, not least because failure would damage confidence in the world economy. Keith Rockwell, a spokesman for the agency, said, "Do you fix the roof when the sun is shining or when it's raining? Either way, it's still a good idea to fix the roof."
Politically, a failure of the rules-based multilateral system to deliver progress on trade could undermine European hopes for a more ambitious international agreement in 2009 to curb the greenhouse gas emissions that are blamed for global warming.
As with climate change, a trade deal requires concessions from big emerging nations like India, Brazil and China, which want to be able to protect key sectors of their economies from competition from rich countries.
Those conflicts seriously threaten the trade talks, as does the reluctance of wealthy nations to reduce radically the longstanding protection of their farmers.
"I share the skepticism that anything good will come out of the Doha Development Agenda," said Adam Posen of the Peterson Institute for International Economics in Washington, using the name given to the trade round that began in Qatar in 2001.
Posen said that whoever wins the White House in November, Congress will make trade conditional on labor and environmental standards to shut out cheap competition, mainly from Asia.
Andre Sapir, a trade economist at the Free University of Brussels and former adviser to the European Commission, agrees that the climate in the United States is not favorable for new trade deals, although the Europeans should still push for one.
"You need some bad economic news to make a trade agreement necessary as a booster of confidence," he said. "But even if there is a deal now, the chances are that something is going to be reopened after the U.S. election."
U.S. trade diplomats in Europe are using Clinton's rhetoric and fears of a more protectionist U.S. administration to try to focus on the need to complete a trade deal now.
One senior diplomat, speaking on condition of anonymity because of the sensitivity of the issue, said his message to European counterparts was: "Don't wait for Hillary."
Wednesday, March 12, 2008
Other-Than-Trade Regulations: Do They Protect Foreign Investors, Domestic Industries or Local Employment??
http://www.ft.com/cms/s/0/58699264-ef9c-11dc-8a17-0000779fd2ac.html
Concern grows over global trade regulation
By Alan Beattie
Financial Times
March 12 2008
Amid the noisy battering the North American Free Trade Agreement is taking from both Democratic presidential hopefuls, one recent statement from Hillary Clinton was particularly resonant. “We will have a very clear view of how we’re going to review Nafta,” the New York senator said. “We’re going to take out the ability of foreign companies to sue us because of what we do to protect our workers.”
[IS THIS MERELY POLITICAL PANDERING??]
The treaties and tribunals that regulate international investment have become both more powerful and more controversial as global trade becomes less about goods flowing across borders and more about multinationals siting abroad. Concern is growing not only among US presidential candidates but also among emerging market governments and development campaigners.
There are now nearly 3,000 bilateral investment treaties (BITs) between countries worldwide, designed to protect foreign-owned companies from discrimination, arbitrary nationalisation or other unfair treatment by the host country government.
The tribunals that settle disputes between investors and authorities are generally modelled on ad hoc commercial arbitration panels rather than public courts. The International Centre for the Settlement of Investment Disputes (ICSID), one of the world’s most prominent arbitration panels, operates out of the World Bank in Washington.
Argentina has been hit by dozens of arbitration cases since its financial crisis in 2001-02, when Buenos Aires forcibly changed contracts from dollars into pesos and froze utility prices to cushion the impact on Argentine consumers. Foreign companies including Mobil, France Telecom and Vivendi have won a string of rulings against Argentina at the ICSID, awarding them hundreds of millions of dollars in compensation for lost earnings.
But Argentina has so far declined to pay any of the awards, and has argued that the financial crisis was an emergency that gave it permission under international law to breach contracts.
[UNDER WHAT CIRCUMSTANCES DO GOVERNMENTS HAVE THE RIGHT TO EXEMPT THEMSELVES FROM INVESTMENT TREATY OBLIGATIONS??]
The ICSID is also embroiled in a controversy involving Bolivia, which last year became the first country to announce its withdrawal from the ICSID’s jurisdiction. Bolivia lost a prominent case to Bechtel, the US engineering and construction company, after cancelling a water supply contract. It has argued that the tribunal should ignore cases filed after Bolivia gave the foreign investors notice to withdraw.
Meanwhile, ExxonMobil is claiming billions of dollars in compensation from Venezuela at the ICSID after walking away from an oil project following government attempts to take control.
Development campaigners say the tribunals violate national sovereignty. A recent petition from 863 campaign groups including Friends of the Earth and the Sierra Club called on the ICSID to stop hearing cases against Bolivia. Sarah Anderson of the left-leaning Institute for Policy Studies said: “The global petition reflects growing concerns around the world about a system of investor rights that undermines democracy and human rights.”
And as Mrs Clinton suggested, even the White House and Congress were surprised and disturbed when the US ended up being on the end of several high-profile claims under Nafta. With companies from emerging markets like India and China investing abroad, the rich countries could find themselves increasingly targeted by litigation.
Nonetheless, the system of international investment arbitration continues to expand its reach. European and American business lobbies, often dominated by service sector companies like telecommunications, retailers and banks that invest abroad, are keen on new investment treaties and on adding investment rules to broader trade deals.
The US is pursuing BITs with the “Brics” (Brazil, Russia, India and China) group of emerging market countries. A US trade official says that Washington’s model for BITs deals with some of the problems encountered under Nafta by including rules against frivolous claims, along with consolidation procedures allowing multiple claims to be considered simultaneously rather than clog up the system. But the official adds: “It is inconceivable to think that we would sign a [BIT] without provisions for investor-state litigation.”
That aspect may prove a sticking point for some. Brazil, Latin America’s largest recipient of foreign direct investment, has traditionally been suspicious about investment treaties. A senior Brazilian foreign ministry official said recently that the Argentine example was “very politically visible” and that it would be enormously difficult to get investor-state arbitration through the country’s congress.
One Washington trade lawyer says: “The US business community clearly still likes BITs. But why Brazil or any other country would agree to sign one after looking at Argentina defeats me.”
...................................................
Argentina case shows panel’s flaws
Arbitration panels such as the International Centre for the Settlement of Investment Disputes (ICSID) aim to operate quietly – critics would say secretively – and quickly.
An ad hoc arbitration panel convened from practising lawyers rather than a regularly sitting court with permanent judges, ICSID has a review committee with limited powers rather than a formal appeals process.
Such a committee recently looked at one of ICSID’s rulings against Argentina – a $133m award to CMS, a US energy company – and concluded that, while the original panel had made “manifest errors of law”, it lacked the power to overturn the judgment.
Luke Peterson, editor of Investment Treaty News, a widely read briefing service, says: “Such a curious outcome has infuriated Argentina, at the same time as it has stoked debate amongst observers as to whether [ICSID] needs an overhaul – including perhaps an appeals court with greater powers to correct any mistakes.”
The involvement of governments in the rulings raises the political stakes, particularly for a country such as Argentina in which politicians have repeatedly blamed foreign investors and institutions such as the International Monetary Fund for the country’s periodic crises.
A Washington trade lawyer says: “When the [ICSID] challenge committee says that a decision is flawed but still has to be enforced, they essentially make it politically impossible for the government of Argentina to pay.”
But for many lawyers, introducing an appeals procedure would defeat the whole object – to provide swift and binding decisions without recourse to sometimes slow, biased or corrupt national court systems. “In an ad hoc arbitration process, it makes no sense to have an appeal,” says Robert Volterra at the law firm Latham Watkins, the lead attorney for Bechtel in the Bolivia case.
“It is just one ad hoc group of lawyers evaluating the same facts and law as another ad hoc group of lawyers has just done.”
Copyright The Financial Times Limited 2008
Concern grows over global trade regulation
By Alan Beattie
Financial Times
March 12 2008
Amid the noisy battering the North American Free Trade Agreement is taking from both Democratic presidential hopefuls, one recent statement from Hillary Clinton was particularly resonant. “We will have a very clear view of how we’re going to review Nafta,” the New York senator said. “We’re going to take out the ability of foreign companies to sue us because of what we do to protect our workers.”
[IS THIS MERELY POLITICAL PANDERING??]
The treaties and tribunals that regulate international investment have become both more powerful and more controversial as global trade becomes less about goods flowing across borders and more about multinationals siting abroad. Concern is growing not only among US presidential candidates but also among emerging market governments and development campaigners.
There are now nearly 3,000 bilateral investment treaties (BITs) between countries worldwide, designed to protect foreign-owned companies from discrimination, arbitrary nationalisation or other unfair treatment by the host country government.
The tribunals that settle disputes between investors and authorities are generally modelled on ad hoc commercial arbitration panels rather than public courts. The International Centre for the Settlement of Investment Disputes (ICSID), one of the world’s most prominent arbitration panels, operates out of the World Bank in Washington.
Argentina has been hit by dozens of arbitration cases since its financial crisis in 2001-02, when Buenos Aires forcibly changed contracts from dollars into pesos and froze utility prices to cushion the impact on Argentine consumers. Foreign companies including Mobil, France Telecom and Vivendi have won a string of rulings against Argentina at the ICSID, awarding them hundreds of millions of dollars in compensation for lost earnings.
But Argentina has so far declined to pay any of the awards, and has argued that the financial crisis was an emergency that gave it permission under international law to breach contracts.
[UNDER WHAT CIRCUMSTANCES DO GOVERNMENTS HAVE THE RIGHT TO EXEMPT THEMSELVES FROM INVESTMENT TREATY OBLIGATIONS??]
The ICSID is also embroiled in a controversy involving Bolivia, which last year became the first country to announce its withdrawal from the ICSID’s jurisdiction. Bolivia lost a prominent case to Bechtel, the US engineering and construction company, after cancelling a water supply contract. It has argued that the tribunal should ignore cases filed after Bolivia gave the foreign investors notice to withdraw.
Meanwhile, ExxonMobil is claiming billions of dollars in compensation from Venezuela at the ICSID after walking away from an oil project following government attempts to take control.
Development campaigners say the tribunals violate national sovereignty. A recent petition from 863 campaign groups including Friends of the Earth and the Sierra Club called on the ICSID to stop hearing cases against Bolivia. Sarah Anderson of the left-leaning Institute for Policy Studies said: “The global petition reflects growing concerns around the world about a system of investor rights that undermines democracy and human rights.”
And as Mrs Clinton suggested, even the White House and Congress were surprised and disturbed when the US ended up being on the end of several high-profile claims under Nafta. With companies from emerging markets like India and China investing abroad, the rich countries could find themselves increasingly targeted by litigation.
Nonetheless, the system of international investment arbitration continues to expand its reach. European and American business lobbies, often dominated by service sector companies like telecommunications, retailers and banks that invest abroad, are keen on new investment treaties and on adding investment rules to broader trade deals.
The US is pursuing BITs with the “Brics” (Brazil, Russia, India and China) group of emerging market countries. A US trade official says that Washington’s model for BITs deals with some of the problems encountered under Nafta by including rules against frivolous claims, along with consolidation procedures allowing multiple claims to be considered simultaneously rather than clog up the system. But the official adds: “It is inconceivable to think that we would sign a [BIT] without provisions for investor-state litigation.”
That aspect may prove a sticking point for some. Brazil, Latin America’s largest recipient of foreign direct investment, has traditionally been suspicious about investment treaties. A senior Brazilian foreign ministry official said recently that the Argentine example was “very politically visible” and that it would be enormously difficult to get investor-state arbitration through the country’s congress.
One Washington trade lawyer says: “The US business community clearly still likes BITs. But why Brazil or any other country would agree to sign one after looking at Argentina defeats me.”
...................................................
Argentina case shows panel’s flaws
Arbitration panels such as the International Centre for the Settlement of Investment Disputes (ICSID) aim to operate quietly – critics would say secretively – and quickly.
An ad hoc arbitration panel convened from practising lawyers rather than a regularly sitting court with permanent judges, ICSID has a review committee with limited powers rather than a formal appeals process.
Such a committee recently looked at one of ICSID’s rulings against Argentina – a $133m award to CMS, a US energy company – and concluded that, while the original panel had made “manifest errors of law”, it lacked the power to overturn the judgment.
Luke Peterson, editor of Investment Treaty News, a widely read briefing service, says: “Such a curious outcome has infuriated Argentina, at the same time as it has stoked debate amongst observers as to whether [ICSID] needs an overhaul – including perhaps an appeals court with greater powers to correct any mistakes.”
The involvement of governments in the rulings raises the political stakes, particularly for a country such as Argentina in which politicians have repeatedly blamed foreign investors and institutions such as the International Monetary Fund for the country’s periodic crises.
A Washington trade lawyer says: “When the [ICSID] challenge committee says that a decision is flawed but still has to be enforced, they essentially make it politically impossible for the government of Argentina to pay.”
But for many lawyers, introducing an appeals procedure would defeat the whole object – to provide swift and binding decisions without recourse to sometimes slow, biased or corrupt national court systems. “In an ad hoc arbitration process, it makes no sense to have an appeal,” says Robert Volterra at the law firm Latham Watkins, the lead attorney for Bechtel in the Bolivia case.
“It is just one ad hoc group of lawyers evaluating the same facts and law as another ad hoc group of lawyers has just done.”
Copyright The Financial Times Limited 2008
Sunday, March 9, 2008
Policy Implications: Clinton and Obama on International Trade Policy, NAFTA, and SWF’s
Policy Implications: Clinton and Obama on International Trade Policy, NAFTA, and SWF’s
By Osman Aziz
ITSSD Intern, Blogmaster of the ITSSD Journal on Economic Freedom
Much rhetoric has been exchanged on the campaign trail regarding the status of free trade and the future (or lack thereof) it has in American foreign policy. Both democratic hopefuls Hillary Clinton and Barack Obama have been in a perpetual state of flux over the status of NAFTA (North Atlantic Free Trade Agreement) and the perceived ills that it has accrued for the people of America. However acidic such criticisms of free trade may have appeared on the cameras, questions abound to the actual positions of each candidate on the undeniable progress that trade liberalization has taken in the world. Given the track record, neither Obama nor Clinton actually appear to be enemies of a free trade paradigm, which begs the question as to why such critical stances need to be taken against free trade agreements that, on the whole, have provided greater benefits than damages.
“In the minds of hard-core opponents of free trade, both Mrs. Clinton and Mr. Obama have checkered records in the Senate on trade agreements. Both voted against the Central American Free Trade Agreement but supported a trade pact with Peru last year, citing the inclusion of labor and environmental provisions that were not part of Nafta. Opponents, however, said crucial provisions in Nafta that led to jobs being shipped overseas were also part of the Peru agreement. Mrs. Clinton and Mr. Obama were also among only a dozen Senate Democrats who voted for a trade agreement with Oman in 2006.”[1]
The questions being framed as a position of political pandering is undeniable given the records that both candidates have on trade; but the irrefutable consequences of publicly assailing free trade policies could carry over to other aspects of international trade policy. Recent controversy over the ascendancy of Sovereign Wealth Funds (‘SWFs’) and the apparent lack of “transparency” that they possess has sparked a backlash from Democrats and protectionists alike who point to, without proper knowledge, the inherent “political” interests involved in such funds. Senator Obama’s position on altering the tax code to subsidize businesses that keep jobs in the US also smack of an underlying misunderstanding of economic efficiency and the effect such a position can have on inflating the prices of consumer goods by retaining inefficient employment capacities for higher wages.[2]
The Senators' indirect call for more governmental intervention in the reshaping of NAFTA and the US’ global trade policy seems to reflect a broader ideological agenda. First, it would seem that the candidates are attempting to label ‘trade’ as the cause of what many anticipate will be a US recession. Second, it appears that the Clinton-Obama strategy is to cast more not less governmental intervention in the marketplace as the necessary ‘change’ or ‘solution’ that will bring the US out of its current economic malaise. However, with little to say about the causes and eventual outturn that the current subprime crises harbors with it, protectionism and the scepter of populism may only serve to drive the US economy into further disarray. What appears to underlie these sentiments, are the overlooked benefits that such agreements as NAFTA have really had on the US and the region as a whole.
“While it is politically incorrect to say so, NAFTA has been good for all of North America. By opening the continent to investment and trade, capital has found more efficient uses, with benefits to producers and consumers alike. In NAFTA's first decade after 1993, trade between the U.S. and Mexico multiplied to $232 billion from $81 billion. Trade with Canada has also blossomed, with Canadian exports to the U.S. by surface transport rising 79% in a decade and U.S. exports to Canada increasing 38%. The deal also increased U.S. productivity. U.S. firms found they could be more globally competitive by putting some manufacturing in Mexico or Canada while retaining high-end production in the U.S.” [3]
By virtue of the fact that the same can be said regarding the projected benefits of the US-Peru FTA a year down the road reveals the hidden side that neither Senator is willing to uncover, namely the increase in economic efficiency that is followed by the passing of such free trade agreements. The very fact that increases in real GDP for all three nations member to NAFTA by approximately 50% each is evidence unto itself of the successes it has yielded, adding further distress to either the withdrawal, or the amending of an agreement that has worked so far.[4] Unilateral withdrawal from NAFTA, a trade agreement that has epitomized the inherent benefits of trade liberalization would be a fool hardy move and would send the wrong signal to the rest of the world regarding the US’s stance on international treaties, which up to this point has been maintained by a track record of trust and reciprocity. The fact that much rhetoric over NAFTA was staged in Ohio begs the question as why such sentiments are not being capitalized on in Texas. Given the fact that Ohio suffers from a six percent unemployment rate may help to explain the shifting positions of Senators Clinton and Obama (whether or not job loss can be attributed to NAFTA is a matter discussed later). The fact that such critical stances haven’t been assumed in Texas is evidence of the Democrats’ incessant need to position regarding the matter of free trade.
“As fiercely as they've fought in Ohio over the issue, the rivals haven't focused much on free trade in Texas, which has seen job growth and a huge spike in exports since NAFTA went into effect in 1994. ‘Every trade agreement has winners and losers,’ said Southern Methodist University economist Thomas Osang, who studies free trade. Texas had many of the industries poised to benefit, notably electronics and chemicals, and those industries outweighed losers such as lumber and furniture roughly 2-1.”[5]
Although Senators Clinton and Obama capitalize on protectionist and neo-mercantilist rhetoric in securing the votes necessary for election, the potential policy implications that such talk will have up to this point seems innocuous at best. What should come at greater concern are new up and coming issues such as SWF’s and sparking further regional trade agreements after aggregate bilateral agreements stabilize macroeconomic policy. Hostility to these new issues have already arisen on the campaign trail, and with no definitive voting record to base any judgment off of, speculation becomes a tricky game. The recent move by the Department of the Treasury to increase oversight of SWF’s and the additional pressure being applied to the IMF, although not nearly as caustic as the perspective promoted by Clinton and Obama, smacks of the age old argument surrounding “oversight” and regulation.
“Second, we have proposed that the international community collaborate on the development of a multilateral framework for best practices. The International Monetary Fund, with support from the World Bank, should develop best practices for sovereign wealth funds, building on existing best practices for foreign exchange reserve management. These would provide guidance to new funds on how to structure themselves, reduce any potential systemic risk, and help demonstrate to critics that sovereign wealth funds can be responsible, constructive participants in the international financial system.”[6]
This sort of even-handed approach by US lawmakers and Hillary Clinton is diametrically opposed to the position adopted by Barack Obama. Citing that the largest investment arms are located predominantly in the Middle East, Obama crafted the debate surrounding SWF’s as a matter of the US’s reliance on oil from the region while ignoring wholesale the fact that such investment vehicles as the Abu Dhabi Investment Authority and Kuwait Investment Authority are reacting as developing countries would be expected to act. Although Senator Obama does echo the sentiment regarding oversight and greater transparency that Senator Clinton trail-blazed, it seems as though it is difficult to assess how these two candidates will react when placed in the Oval Office and are tasked with the responsibility to react to new trends originating from developing nations. The apparent dearth of information regarding such emerging trends as decoupling theory and international financial integration on the part of the politicians vying for office so far reflects a more deeper and profound misunderstanding of the macroeconomic policies that will need emerge in the near future to handle such trends. Subsidizing producers in the US that produce consumer goods will only provide for more expensive goods, which coupled with a weakening dollar, will severely affect foreign nations’ economies which rely off of a robust trade with the US.[7] It seems that the only ostensibly legitimate contentions that the Democrats have so far leveled against the existing establishment are issues over labor and environmental policies.
Contentions over NAFTA: Why the Labor Rights/Environmentalist/Job Loss argument carries little to no weight
The contention that NAFTA has provided for a negative paradigm in terms of labor rights and environmental protections reflect yet another disturbing trend, that of misinformation. Although much talk has been thrown about regarding the lack of a sustainable provision for labor rights in NAFTA, the very fact that a supplemental labor stipulation under the North American Agreement on Labor Cooperation (NAALC) is provided for under NAFTA contradicts such claims.[8] The existence of a five year strategic agreement through the Commission of Environmental Cooperation also provides a framework through which environmental policy can be worked out.[9] Both Hillary Clinton and Barack Obama lambaste NAFTA as the sole perpetrator in the loss of jobs across the board within the US to foreign firms. Although NAFTA never promised a net total increase in jobs themselves, the fact that overall productivity increased significantly during the years that NAFTA has been in affect provides a clear contradiction to the overarching contention of job loss.
“U.S. employment rose from 112.2 million in December 1993 to 137.2 million in December 2006, an increase of 25 million jobs, or 22 percent. The average unemployment rate was 5.1 percent in the period 1994-2006, compared to 7.1 percent during the period 1981-1993… Growth in real compensation for manufacturing workers improved dramatically. Average real compensation grew at an average annual rate of 1.6 percent from 1993 to 2006, compared to just 0.9 percent annually between 1980 and 1993”[10]
The hidden benefits of an increase in overall productivity translate into cheaper consumer goods that would have been much more expensive if left to inefficient producers within the US. Constituency, instead of fact, seems to be playing a more significant role in swaying the supposed sentiments of both Senators Clinton and Obama (although the leaked memo detailing Obama’s “political positioning” may serve to shed a different light on things)[11]. Senator Clinton, whose reliance on the AFL-CIO has pushed her to a more protectionist stance, differs marginally from Senator Obama, whose support hails from the Teamsters and the Service Employees International Union, both of which benefit from increased trade with other nations.[12] Without a clear agenda from either democratic candidate on what they see as the ills of NAFTA and free trade, it seems as though the stances that each candidate has so far amplified has been done so with more emotion than substance. The three primary contentions that each candidate has regarding NAFTA specifically are addressed already within the agreement or are on their way to being accomplished under the current framework, leaving much to be asked about the actual disagreements each candidate has with not only NAFTA, but with free trade as a progressive paradigm.
[1] The New York Times. Despite NAFTA Attacks, Clinton and Obama Haven’t Been Free Trade Foes. February 28, 2008.
[2] The Wall Street Journal. CAPITAL: Decoding Candidates on Trade. February 21, 2008
[3] The Wall Street Journal. Unilateral Democrats. February 28, 2008
[4] US Department of Commerce. NAFTA-A Success for Trade. October 2007
[5] Todd J. Gillman, Gromer Jeffe. McClatchy - Tribune Business News. Punches Fly over Trade, Rival Tactics as Democrats Debate in Ohio. Washington: Feb 27, 2008.
[6] US Department of the Treasury. Under Secretary of International Affairs David H. McCormick Testimony Before the Joint Economic Committee. February 13, 2008
[7] The Economist. Finance and Economics: An Independent Streak: Decoupling 1. Jan. 26th 2008
[8] Office of the US Trade Representative. NAFTA-The Road Ahead. (2007)
[9] Office of the US Trade Representative. NAFTA Environment Ministers Adopt Trade and Environment Stratgeic Plan. (06/23/2005)
[10] Office of the US Trade Representative. NAFTA Facts: NAFTA Benefits. (October 2007)
[11] Financial Times. Obama under fire over NAFTA Memo. March 3, 2008
[12] Bhagwati, Jagdish (Financial Times). Obama’s free trade credentials top Clintons. March 3, 2008
By Osman Aziz
ITSSD Intern, Blogmaster of the ITSSD Journal on Economic Freedom
Much rhetoric has been exchanged on the campaign trail regarding the status of free trade and the future (or lack thereof) it has in American foreign policy. Both democratic hopefuls Hillary Clinton and Barack Obama have been in a perpetual state of flux over the status of NAFTA (North Atlantic Free Trade Agreement) and the perceived ills that it has accrued for the people of America. However acidic such criticisms of free trade may have appeared on the cameras, questions abound to the actual positions of each candidate on the undeniable progress that trade liberalization has taken in the world. Given the track record, neither Obama nor Clinton actually appear to be enemies of a free trade paradigm, which begs the question as to why such critical stances need to be taken against free trade agreements that, on the whole, have provided greater benefits than damages.
“In the minds of hard-core opponents of free trade, both Mrs. Clinton and Mr. Obama have checkered records in the Senate on trade agreements. Both voted against the Central American Free Trade Agreement but supported a trade pact with Peru last year, citing the inclusion of labor and environmental provisions that were not part of Nafta. Opponents, however, said crucial provisions in Nafta that led to jobs being shipped overseas were also part of the Peru agreement. Mrs. Clinton and Mr. Obama were also among only a dozen Senate Democrats who voted for a trade agreement with Oman in 2006.”[1]
The questions being framed as a position of political pandering is undeniable given the records that both candidates have on trade; but the irrefutable consequences of publicly assailing free trade policies could carry over to other aspects of international trade policy. Recent controversy over the ascendancy of Sovereign Wealth Funds (‘SWFs’) and the apparent lack of “transparency” that they possess has sparked a backlash from Democrats and protectionists alike who point to, without proper knowledge, the inherent “political” interests involved in such funds. Senator Obama’s position on altering the tax code to subsidize businesses that keep jobs in the US also smack of an underlying misunderstanding of economic efficiency and the effect such a position can have on inflating the prices of consumer goods by retaining inefficient employment capacities for higher wages.[2]
The Senators' indirect call for more governmental intervention in the reshaping of NAFTA and the US’ global trade policy seems to reflect a broader ideological agenda. First, it would seem that the candidates are attempting to label ‘trade’ as the cause of what many anticipate will be a US recession. Second, it appears that the Clinton-Obama strategy is to cast more not less governmental intervention in the marketplace as the necessary ‘change’ or ‘solution’ that will bring the US out of its current economic malaise. However, with little to say about the causes and eventual outturn that the current subprime crises harbors with it, protectionism and the scepter of populism may only serve to drive the US economy into further disarray. What appears to underlie these sentiments, are the overlooked benefits that such agreements as NAFTA have really had on the US and the region as a whole.
“While it is politically incorrect to say so, NAFTA has been good for all of North America. By opening the continent to investment and trade, capital has found more efficient uses, with benefits to producers and consumers alike. In NAFTA's first decade after 1993, trade between the U.S. and Mexico multiplied to $232 billion from $81 billion. Trade with Canada has also blossomed, with Canadian exports to the U.S. by surface transport rising 79% in a decade and U.S. exports to Canada increasing 38%. The deal also increased U.S. productivity. U.S. firms found they could be more globally competitive by putting some manufacturing in Mexico or Canada while retaining high-end production in the U.S.” [3]
By virtue of the fact that the same can be said regarding the projected benefits of the US-Peru FTA a year down the road reveals the hidden side that neither Senator is willing to uncover, namely the increase in economic efficiency that is followed by the passing of such free trade agreements. The very fact that increases in real GDP for all three nations member to NAFTA by approximately 50% each is evidence unto itself of the successes it has yielded, adding further distress to either the withdrawal, or the amending of an agreement that has worked so far.[4] Unilateral withdrawal from NAFTA, a trade agreement that has epitomized the inherent benefits of trade liberalization would be a fool hardy move and would send the wrong signal to the rest of the world regarding the US’s stance on international treaties, which up to this point has been maintained by a track record of trust and reciprocity. The fact that much rhetoric over NAFTA was staged in Ohio begs the question as why such sentiments are not being capitalized on in Texas. Given the fact that Ohio suffers from a six percent unemployment rate may help to explain the shifting positions of Senators Clinton and Obama (whether or not job loss can be attributed to NAFTA is a matter discussed later). The fact that such critical stances haven’t been assumed in Texas is evidence of the Democrats’ incessant need to position regarding the matter of free trade.
“As fiercely as they've fought in Ohio over the issue, the rivals haven't focused much on free trade in Texas, which has seen job growth and a huge spike in exports since NAFTA went into effect in 1994. ‘Every trade agreement has winners and losers,’ said Southern Methodist University economist Thomas Osang, who studies free trade. Texas had many of the industries poised to benefit, notably electronics and chemicals, and those industries outweighed losers such as lumber and furniture roughly 2-1.”[5]
Although Senators Clinton and Obama capitalize on protectionist and neo-mercantilist rhetoric in securing the votes necessary for election, the potential policy implications that such talk will have up to this point seems innocuous at best. What should come at greater concern are new up and coming issues such as SWF’s and sparking further regional trade agreements after aggregate bilateral agreements stabilize macroeconomic policy. Hostility to these new issues have already arisen on the campaign trail, and with no definitive voting record to base any judgment off of, speculation becomes a tricky game. The recent move by the Department of the Treasury to increase oversight of SWF’s and the additional pressure being applied to the IMF, although not nearly as caustic as the perspective promoted by Clinton and Obama, smacks of the age old argument surrounding “oversight” and regulation.
“Second, we have proposed that the international community collaborate on the development of a multilateral framework for best practices. The International Monetary Fund, with support from the World Bank, should develop best practices for sovereign wealth funds, building on existing best practices for foreign exchange reserve management. These would provide guidance to new funds on how to structure themselves, reduce any potential systemic risk, and help demonstrate to critics that sovereign wealth funds can be responsible, constructive participants in the international financial system.”[6]
This sort of even-handed approach by US lawmakers and Hillary Clinton is diametrically opposed to the position adopted by Barack Obama. Citing that the largest investment arms are located predominantly in the Middle East, Obama crafted the debate surrounding SWF’s as a matter of the US’s reliance on oil from the region while ignoring wholesale the fact that such investment vehicles as the Abu Dhabi Investment Authority and Kuwait Investment Authority are reacting as developing countries would be expected to act. Although Senator Obama does echo the sentiment regarding oversight and greater transparency that Senator Clinton trail-blazed, it seems as though it is difficult to assess how these two candidates will react when placed in the Oval Office and are tasked with the responsibility to react to new trends originating from developing nations. The apparent dearth of information regarding such emerging trends as decoupling theory and international financial integration on the part of the politicians vying for office so far reflects a more deeper and profound misunderstanding of the macroeconomic policies that will need emerge in the near future to handle such trends. Subsidizing producers in the US that produce consumer goods will only provide for more expensive goods, which coupled with a weakening dollar, will severely affect foreign nations’ economies which rely off of a robust trade with the US.[7] It seems that the only ostensibly legitimate contentions that the Democrats have so far leveled against the existing establishment are issues over labor and environmental policies.
Contentions over NAFTA: Why the Labor Rights/Environmentalist/Job Loss argument carries little to no weight
The contention that NAFTA has provided for a negative paradigm in terms of labor rights and environmental protections reflect yet another disturbing trend, that of misinformation. Although much talk has been thrown about regarding the lack of a sustainable provision for labor rights in NAFTA, the very fact that a supplemental labor stipulation under the North American Agreement on Labor Cooperation (NAALC) is provided for under NAFTA contradicts such claims.[8] The existence of a five year strategic agreement through the Commission of Environmental Cooperation also provides a framework through which environmental policy can be worked out.[9] Both Hillary Clinton and Barack Obama lambaste NAFTA as the sole perpetrator in the loss of jobs across the board within the US to foreign firms. Although NAFTA never promised a net total increase in jobs themselves, the fact that overall productivity increased significantly during the years that NAFTA has been in affect provides a clear contradiction to the overarching contention of job loss.
“U.S. employment rose from 112.2 million in December 1993 to 137.2 million in December 2006, an increase of 25 million jobs, or 22 percent. The average unemployment rate was 5.1 percent in the period 1994-2006, compared to 7.1 percent during the period 1981-1993… Growth in real compensation for manufacturing workers improved dramatically. Average real compensation grew at an average annual rate of 1.6 percent from 1993 to 2006, compared to just 0.9 percent annually between 1980 and 1993”[10]
The hidden benefits of an increase in overall productivity translate into cheaper consumer goods that would have been much more expensive if left to inefficient producers within the US. Constituency, instead of fact, seems to be playing a more significant role in swaying the supposed sentiments of both Senators Clinton and Obama (although the leaked memo detailing Obama’s “political positioning” may serve to shed a different light on things)[11]. Senator Clinton, whose reliance on the AFL-CIO has pushed her to a more protectionist stance, differs marginally from Senator Obama, whose support hails from the Teamsters and the Service Employees International Union, both of which benefit from increased trade with other nations.[12] Without a clear agenda from either democratic candidate on what they see as the ills of NAFTA and free trade, it seems as though the stances that each candidate has so far amplified has been done so with more emotion than substance. The three primary contentions that each candidate has regarding NAFTA specifically are addressed already within the agreement or are on their way to being accomplished under the current framework, leaving much to be asked about the actual disagreements each candidate has with not only NAFTA, but with free trade as a progressive paradigm.
[1] The New York Times. Despite NAFTA Attacks, Clinton and Obama Haven’t Been Free Trade Foes. February 28, 2008.
[2] The Wall Street Journal. CAPITAL: Decoding Candidates on Trade. February 21, 2008
[3] The Wall Street Journal. Unilateral Democrats. February 28, 2008
[4] US Department of Commerce. NAFTA-A Success for Trade. October 2007
[5] Todd J. Gillman, Gromer Jeffe. McClatchy - Tribune Business News. Punches Fly over Trade, Rival Tactics as Democrats Debate in Ohio. Washington: Feb 27, 2008.
[6] US Department of the Treasury. Under Secretary of International Affairs David H. McCormick Testimony Before the Joint Economic Committee. February 13, 2008
[7] The Economist. Finance and Economics: An Independent Streak: Decoupling 1. Jan. 26th 2008
[8] Office of the US Trade Representative. NAFTA-The Road Ahead. (2007)
[9] Office of the US Trade Representative. NAFTA Environment Ministers Adopt Trade and Environment Stratgeic Plan. (06/23/2005)
[10] Office of the US Trade Representative. NAFTA Facts: NAFTA Benefits. (October 2007)
[11] Financial Times. Obama under fire over NAFTA Memo. March 3, 2008
[12] Bhagwati, Jagdish (Financial Times). Obama’s free trade credentials top Clintons. March 3, 2008
Thursday, March 6, 2008
Clinton and Obama Attempt to Deceive US Voters on Trade Stance, Canada Reveals
http://news.yahoo.com/s/afp/20080306/pl_afp/canadausdemocratsvotediplomacy
Both Clinton and Obama reassured Canada on trade
by Michel Comte
US presidential hopeful Hillary Clinton's campaign, while rapping rival Barack Obama for telling US voters he is anti-NAFTA and saying otherwise to Canada, tried to reassure Canada too, local media said Thursday.
A top aide of Canadian Prime Minister Stephen Harper meanwhile was identified as the likely source of an alleged leak that provoked a diplomatic fiasco involving both US Democratic presidential contenders.
Last month, Harper's chief of staff, Ian Brodie, purportedly made impromptu remarks to journalists about Clinton's US presidential bid, said Canadian reports.
The offhand comments apparently sought to downplay the potential impact on Canada of Clinton and Obama's attacks on the North American Free Trade Agreement (NAFTA) during stops in the US state of Ohio.
Brodie told reporters that the Clinton campaign had called the Canadian embassy in Washington to tell officials to take her anti-NAFTA rhetoric "with a grain of salt," said local media.
Around the same time, a news agency reported that a Canadian government memo detailed a meeting between Obama's chief economic advisor Austan Goolsbee and officials from the Canadian consulate in Chicago.
The memo reportedly said Goolsbee noted Obama's attacks on NAFTA should not be taken out of context, citing fiercely protectionist sentiment in Ohio about the pact and political positioning as a motivation.
Thursday, US Ambassador David Wilkins told public broadcaster CBC this amounted to Canadian political interference in the US political process. "It certainly shouldn't have happened; it was interference," he said.
The affair has certainly embarrassed Canada's diplomatic corps and may have cost Obama votes in the crucial Ohio primaries earlier this week.
The 1994 trade pact created the largest trading bloc in the world by eliminating import tariffs on goods circulating among partners Canada, the United States and Mexico.
In a televised debate last month in Ohio, both Obama and Clinton said if the next US president is a Democrat, Mexico and Canada would be pressured to renegotiate NAFTA.
But free trade and NAFTA in particular is a fiercely contentious issue in Ohio, which has been badly hit by the flight of blue collar jobs abroad, and increased global economic competition.
As the scandal unfolded, Clinton accused Obama's campaign of giving the Canadian government "the old wink-wink" while Republican nominee John McCain said it showed Obama was not a straight shooter.
Obama countered: "Nobody reached out to the Canadians to try to assure them of anything."
Goolsbee's meeting with Canadian Consul General Georges Rioux was later confirmed, but Goolsbee said his remarks were misrepresented.
The Clinton camp has not yet commented on the latest allegations, but acknowledged Canada's Obama smudge gave her campaign a "significant" boost during the recent US primaries.
The Canadian prime minister's office has said Brodie "does not recall" making the statements to reporters said to have set off the scandal, and Harper himself denied that Brodie leaked any information.
On Wednesday, Harper announced a probe into the "blatantly unfair" and possibly "illegal" leaking of the government memo assailing Obama.
But Canada's opposition New Democrats urged Harper to fire Brodie for his alleged Clinton slip and called for a federal police
Both Clinton and Obama reassured Canada on trade
by Michel Comte
US presidential hopeful Hillary Clinton's campaign, while rapping rival Barack Obama for telling US voters he is anti-NAFTA and saying otherwise to Canada, tried to reassure Canada too, local media said Thursday.
A top aide of Canadian Prime Minister Stephen Harper meanwhile was identified as the likely source of an alleged leak that provoked a diplomatic fiasco involving both US Democratic presidential contenders.
Last month, Harper's chief of staff, Ian Brodie, purportedly made impromptu remarks to journalists about Clinton's US presidential bid, said Canadian reports.
The offhand comments apparently sought to downplay the potential impact on Canada of Clinton and Obama's attacks on the North American Free Trade Agreement (NAFTA) during stops in the US state of Ohio.
Brodie told reporters that the Clinton campaign had called the Canadian embassy in Washington to tell officials to take her anti-NAFTA rhetoric "with a grain of salt," said local media.
Around the same time, a news agency reported that a Canadian government memo detailed a meeting between Obama's chief economic advisor Austan Goolsbee and officials from the Canadian consulate in Chicago.
The memo reportedly said Goolsbee noted Obama's attacks on NAFTA should not be taken out of context, citing fiercely protectionist sentiment in Ohio about the pact and political positioning as a motivation.
Thursday, US Ambassador David Wilkins told public broadcaster CBC this amounted to Canadian political interference in the US political process. "It certainly shouldn't have happened; it was interference," he said.
The affair has certainly embarrassed Canada's diplomatic corps and may have cost Obama votes in the crucial Ohio primaries earlier this week.
The 1994 trade pact created the largest trading bloc in the world by eliminating import tariffs on goods circulating among partners Canada, the United States and Mexico.
In a televised debate last month in Ohio, both Obama and Clinton said if the next US president is a Democrat, Mexico and Canada would be pressured to renegotiate NAFTA.
But free trade and NAFTA in particular is a fiercely contentious issue in Ohio, which has been badly hit by the flight of blue collar jobs abroad, and increased global economic competition.
As the scandal unfolded, Clinton accused Obama's campaign of giving the Canadian government "the old wink-wink" while Republican nominee John McCain said it showed Obama was not a straight shooter.
Obama countered: "Nobody reached out to the Canadians to try to assure them of anything."
Goolsbee's meeting with Canadian Consul General Georges Rioux was later confirmed, but Goolsbee said his remarks were misrepresented.
The Clinton camp has not yet commented on the latest allegations, but acknowledged Canada's Obama smudge gave her campaign a "significant" boost during the recent US primaries.
The Canadian prime minister's office has said Brodie "does not recall" making the statements to reporters said to have set off the scandal, and Harper himself denied that Brodie leaked any information.
On Wednesday, Harper announced a probe into the "blatantly unfair" and possibly "illegal" leaking of the government memo assailing Obama.
But Canada's opposition New Democrats urged Harper to fire Brodie for his alleged Clinton slip and called for a federal police
Wednesday, March 5, 2008
EU Board Members of World Bank Behind New Study That Modifies Prior World Bank Study Findings: Politics Once Again At Play
http://siteresources.worldbank.org/INTARD/825826-1111055015956/21663468/ARDDiscussionPaper39.pdf
Barrier, Catalyst, or Distraction? Standards,Competitiveness, and Africa’s Groundnut Exports to Europe
By: Luz B. Diaz Rios and Steven Jaffee
Introduction
In recent years, industrialized countries have sought to strengthen their food safety management systems to provide increased protection to consumers against long-standing and emerging risks. Increasingly strict measures are being adopted in the wake of a series of food safety scares or crises, and in the context of expanded trade in higher-value food products, increased scientific knowledge about various food safety hazards, and improved access to modern detection technologies and mitigation methods. In parallel with changes in official standards and regulatory measures, private protocols and other stipulations for food safety within national and international supply chains have proliferated and been strengthened.
Although countries have a legitimate right to protect their consumers, there is concern that increasingly stringent food safety standards would adversely affect the market access and/or competitiveness of developing-country suppliers. This could be because of their comparably weaker administrative, technical, and scientific capacities to comply with the emerging requirements, as well as the fixed and recurrent costs that they incur in the process of compliance. Even when rising standards do not result in absolute barriers to trade, there is the distinct possibility that they amplify underlying competitive (and managerial) strengths and weaknesses, thus working to (further) marginalize the position of smaller producers, industries, or countries. From this perspective, emerging standards are frequently cast as “barriers to trade.”
An alternative, and less pessimistic, view emphasizes the potential opportunities provided by the evolving standards environment and the likelihood that certain developing countries can utilize such opportunities to their competitive advantage. From this perspective, many of the emerging public and private standards are viewed as a necessary bridge between heightened (and demanding) consumer requirements and the participation of distant (and international) suppliers. Many of these standards provide a common language within the supply chain and promote consumer confidence in food product safety. Without that confidence, the market for these products cannot be maintained, let alone increased, in turn jeopardizing international trade.
[THIS CASTING OF THE FACTS REFLECTS A POLITICAL EFFORT BY THE WORLD BANK'S EUROPEAN BOARD MEMBERS TO REWRITE PAST WORLD BANK STUDIES BECAUSE THEY SIMPLY DO NOT LIKE THE NEGATIVE RESULTS FOUND]
From this “standards-as-catalyst” perspective, the challenge inherent in compliance with food safety and agricultural health standards may well provide a powerful incentive for the modernization of developing-country export supply chains, and give greater clarity to the necessary and appropriate management functions of government.
[THIS IS WHAT THEY CALL 'SPIN']
Further, via increased attention to the spread and adoption of “good practices” in agriculture and food manufacture, there may be spillovers into domestic food safety and agricultural health, to the benefit of the local population and domestic producers. Part of the costs of compliance could be considered necessary investments.
[WHY THEN DOESN'T THE EU PRIVATE TRADE CAPACITY BUILDING FUNDING AND TRAINING TO ENSURE THEIR OVERLY STRINGENT STANDARDS PREMISED ON THE PRECAUTIONARY PRINCIPLE CAN BE SATISFIED BY THESE POOR COUNTRIES???]
In addition, an array of benefits, both foreseeable and unforeseeable, might arise from the adoption of different technologies or management systems. Rather than degrading the comparative advantage of developing countries, enhancement of capacity to meet stricter standards could potentially create new forms of competitive advantage. Hence, the process of standards compliance could conceivably provide the basis for a more sustainable and profitable trade over the long term, albeit with some particular winners and losers. (See Jaffee and Henson 2004 and World Bank 2005 for broader evidence and discussion of standards as “barriers” and “catalysts.”)
Among the more widely referenced assessments of the impact of standards on developing-country trade, supporting a trade-barrier perspective, are those by Otsuki et al. In these assessments, the authors employed gravity models to estimate the adverse effects on African trade from the EU’s adoption of Community-wide harmonized standards for mycotoxins. In a first paper, the authors examined the effects on African exports of cereals, dried fruits, and edible nuts (Otsuki et al. 2001a). Their findings suggested that the trade of nine African countries would potentially decline by $400 million under the proposed, stringent new EU standards,1 whereas this trade might have increased by some $670 million had the EU based its new harmonized standards on the guidelines of the Codex Alimentarius. A second study, focusing only on edible groundnut exports from Africa, estimated that the new EU standard for aflatoxin would result in an 11 percent decline in EU imports from Africa, and a trade flow some 63 percent lower than it would have been had the Codex international standards been adopted (Otsuki et al. 2001b). Although Otsuki et al. employed a hypothetical and greatly simplified model, their findings have frequently been referred to as evidence that African countries in fact lost such levels of trade as a result of the EU regulation. This research is frequently cited as a clear example of the negative effects on developing-country trade of regulations adopted by industrialized countries.
[HERE IS WHERE THE EU BOARD MEMBERS AND THEIR ECONOMIST PROXIES SEEK TO DISCREDIT THE PRIOR STUDIES AND THEIR AUTHORS AS EMPLOYING 'SIMPLISTIC' METRICS AND METHODS OF ANALYSIS - THIS IS SIMPLY SCANDALOUS!]
It is empirically quite difficult to determine definitively how one country’s or region’s adoption of new or more stringent standards affects trade, given the multiple repercussions of such measures, the varied responses taken once such measures are adopted, and the multiple other factors affecting trade flows and competitiveness. In general, econometric studies using simplified models and cross-country data have tended to estimate rather large changes in (or adverse impacts on) trade. In contrast, most case studies have tended to find more modest impacts, varied winners and losers, and considerable difficulty in separating the distinct role of standards from the other factors affecting trade flows and performance.
[THIS REFLECTS ANOTHER GOOD ATTEMPT TO 'SPIN' THE NEGATIVE RESULTS OF PRIOR STUDIES]
It has now been more than six years since the EU harmonized aflatoxin regulation was adopted. This paper uses cross-country data, as well as information from individual country (or company) experiences, to revisit the issue of trade and other impacts of the EU’s harmonized aflatoxin standards. The paper examines the challenges of and the responses to the new standards by a range of developing countries, although particular emphasis is given to Agricultural and Rural Development the positions, responses, and predicaments of sub-Saharan Africa’s groundnut industries. This experience is set within the context of the longer-term development (or decline) of developing-country groundnut industries and changing patterns in international groundnut product trade and demand.
The paper highlights the varied edible groundnut export performance patterns of developing (including African) countries both in the years or decades prior to the EU’s enforcement of stringent harmonized aflatoxin standards and in the period following adoption of the new standards. Several African countries once dominated global exports and EU imports of raw groundnuts (shelled and in-shell) and processed products (oil/cake). This dominance, mainly for raw groundnut exports, came to an end in the 1970s, initially due to internal supply-side or macroeconomic factors, and subsequently due to market developments, including the rise of strong competition from Latin America and Asia. Although still of some importance to a few particular countries, Africa’s trade in raw groundnuts was already marginalized prior to the EU’s enforcement of more strict aflatoxin standards, either because of an inability to compete on the bases of cost, reliability, and quality, or because of other factors that undermined the incentives for producers and agribusiness to invest in improved production and quality control.
Arguably, the new standards have exacerbated the underlying competitive weaknesses of these industries.
In contrast, for some groundnut industries, especially in Latin America and China, the stringency of the EU’s aflatoxin standards (and increased member-country enforcement of these standards) has served as a catalyst for production and supply-chain upgrades. Some upgrade strategies have also been undertaken within Africa, although with more mixed results. The good news from the recent experiences is that a considerable amount of research has been done and other efforts made, yielding promising insights on ways to prevent and reduce aflatoxin contamination in groundnut production, storage, and trade—and achieve compliance with very stringent standards. Important challenges still remain in implementation and in achieving a necessary degree of collective action and public–private sector collaboration to ensure the cost-effectiveness of adopted approaches.
[GOOD RATIONALIZATION !!!]
The objective of this paper is to improve understanding of the apparent trade impacts of the EU aflatoxin standards on edible groundnut exports from sub-Saharan Africa (SSA), within a framework that takes into account the multiplicity of factors determining the region’s competitiveness in this trade over recent decades. Insights are also provided on how other developing countries have been affected by and have responded to the EU’s more stringent standards. In some cases, a potential trade barrier has catalyzed technical and administrative changes, apparently resulting in improved competitive advantage. The paper draws upon data and other information from COMTRADE and the EU’s Rapid Alert System for Feed and Food (RASFF). It also draws upon findings from prior global or country-specific studies pertaining to groundnut industry development and trade. Interviews were also conducted with selected industry, regulatory, research, and service provider representatives in several groundnut-exporting countries, as well as with selected groundnut importer/distributors and regulatory authorities in Europe.
[SPIN, REINTERPRET PREVIOUS FINDINGS AND THEN RATIONALIZE YOUR NEW INTERPRETATION]
The paper is divided into four sections. Section 1 provides a brief historical perspective of the decline of SSA’s raw groundnut exports during the 1960s to the mid-1980s and its subsequent marginalized position in the contexts of emerging competition and changing patterns of international product demand and buyer requirements. Section 2 reviews the EU regulatory developments regarding aflatoxin since the late 1990s, with a detailed analysis of the apparent trade effects of these regulatory developments on developing country trade, particularly exports from SSA. Section 3 highlights the strategic approaches implemented by several exporting countries to ensure compliance with EU aflatoxin regulations and to gain competitive advantage. This section also provides an overview of the initiatives undertaken in the SSA region for effective aflatoxin management. Section 4 states conclusions.
Note
The EU levels were set at 2 ppb for aflatoxin B1 and 4 ppb for total aflatoxin in groundnuts for direct human consumption. In the case of groundnuts intended for further processing, the levels were set at 8 ppb for aflatoxin B1 and 15 ppb for total aflatoxin. The Codex established a level, set at 15 ppb, only for total aflatoxins in groundnuts intended for further processing; no level was set for aflatoxin B1.
(pp. 1-4)
Barrier, Catalyst, or Distraction? Standards,Competitiveness, and Africa’s Groundnut Exports to Europe
By: Luz B. Diaz Rios and Steven Jaffee
Introduction
In recent years, industrialized countries have sought to strengthen their food safety management systems to provide increased protection to consumers against long-standing and emerging risks. Increasingly strict measures are being adopted in the wake of a series of food safety scares or crises, and in the context of expanded trade in higher-value food products, increased scientific knowledge about various food safety hazards, and improved access to modern detection technologies and mitigation methods. In parallel with changes in official standards and regulatory measures, private protocols and other stipulations for food safety within national and international supply chains have proliferated and been strengthened.
Although countries have a legitimate right to protect their consumers, there is concern that increasingly stringent food safety standards would adversely affect the market access and/or competitiveness of developing-country suppliers. This could be because of their comparably weaker administrative, technical, and scientific capacities to comply with the emerging requirements, as well as the fixed and recurrent costs that they incur in the process of compliance. Even when rising standards do not result in absolute barriers to trade, there is the distinct possibility that they amplify underlying competitive (and managerial) strengths and weaknesses, thus working to (further) marginalize the position of smaller producers, industries, or countries. From this perspective, emerging standards are frequently cast as “barriers to trade.”
An alternative, and less pessimistic, view emphasizes the potential opportunities provided by the evolving standards environment and the likelihood that certain developing countries can utilize such opportunities to their competitive advantage. From this perspective, many of the emerging public and private standards are viewed as a necessary bridge between heightened (and demanding) consumer requirements and the participation of distant (and international) suppliers. Many of these standards provide a common language within the supply chain and promote consumer confidence in food product safety. Without that confidence, the market for these products cannot be maintained, let alone increased, in turn jeopardizing international trade.
[THIS CASTING OF THE FACTS REFLECTS A POLITICAL EFFORT BY THE WORLD BANK'S EUROPEAN BOARD MEMBERS TO REWRITE PAST WORLD BANK STUDIES BECAUSE THEY SIMPLY DO NOT LIKE THE NEGATIVE RESULTS FOUND]
From this “standards-as-catalyst” perspective, the challenge inherent in compliance with food safety and agricultural health standards may well provide a powerful incentive for the modernization of developing-country export supply chains, and give greater clarity to the necessary and appropriate management functions of government.
[THIS IS WHAT THEY CALL 'SPIN']
Further, via increased attention to the spread and adoption of “good practices” in agriculture and food manufacture, there may be spillovers into domestic food safety and agricultural health, to the benefit of the local population and domestic producers. Part of the costs of compliance could be considered necessary investments.
[WHY THEN DOESN'T THE EU PRIVATE TRADE CAPACITY BUILDING FUNDING AND TRAINING TO ENSURE THEIR OVERLY STRINGENT STANDARDS PREMISED ON THE PRECAUTIONARY PRINCIPLE CAN BE SATISFIED BY THESE POOR COUNTRIES???]
In addition, an array of benefits, both foreseeable and unforeseeable, might arise from the adoption of different technologies or management systems. Rather than degrading the comparative advantage of developing countries, enhancement of capacity to meet stricter standards could potentially create new forms of competitive advantage. Hence, the process of standards compliance could conceivably provide the basis for a more sustainable and profitable trade over the long term, albeit with some particular winners and losers. (See Jaffee and Henson 2004 and World Bank 2005 for broader evidence and discussion of standards as “barriers” and “catalysts.”)
Among the more widely referenced assessments of the impact of standards on developing-country trade, supporting a trade-barrier perspective, are those by Otsuki et al. In these assessments, the authors employed gravity models to estimate the adverse effects on African trade from the EU’s adoption of Community-wide harmonized standards for mycotoxins. In a first paper, the authors examined the effects on African exports of cereals, dried fruits, and edible nuts (Otsuki et al. 2001a). Their findings suggested that the trade of nine African countries would potentially decline by $400 million under the proposed, stringent new EU standards,1 whereas this trade might have increased by some $670 million had the EU based its new harmonized standards on the guidelines of the Codex Alimentarius. A second study, focusing only on edible groundnut exports from Africa, estimated that the new EU standard for aflatoxin would result in an 11 percent decline in EU imports from Africa, and a trade flow some 63 percent lower than it would have been had the Codex international standards been adopted (Otsuki et al. 2001b). Although Otsuki et al. employed a hypothetical and greatly simplified model, their findings have frequently been referred to as evidence that African countries in fact lost such levels of trade as a result of the EU regulation. This research is frequently cited as a clear example of the negative effects on developing-country trade of regulations adopted by industrialized countries.
[HERE IS WHERE THE EU BOARD MEMBERS AND THEIR ECONOMIST PROXIES SEEK TO DISCREDIT THE PRIOR STUDIES AND THEIR AUTHORS AS EMPLOYING 'SIMPLISTIC' METRICS AND METHODS OF ANALYSIS - THIS IS SIMPLY SCANDALOUS!]
It is empirically quite difficult to determine definitively how one country’s or region’s adoption of new or more stringent standards affects trade, given the multiple repercussions of such measures, the varied responses taken once such measures are adopted, and the multiple other factors affecting trade flows and competitiveness. In general, econometric studies using simplified models and cross-country data have tended to estimate rather large changes in (or adverse impacts on) trade. In contrast, most case studies have tended to find more modest impacts, varied winners and losers, and considerable difficulty in separating the distinct role of standards from the other factors affecting trade flows and performance.
[THIS REFLECTS ANOTHER GOOD ATTEMPT TO 'SPIN' THE NEGATIVE RESULTS OF PRIOR STUDIES]
It has now been more than six years since the EU harmonized aflatoxin regulation was adopted. This paper uses cross-country data, as well as information from individual country (or company) experiences, to revisit the issue of trade and other impacts of the EU’s harmonized aflatoxin standards. The paper examines the challenges of and the responses to the new standards by a range of developing countries, although particular emphasis is given to Agricultural and Rural Development the positions, responses, and predicaments of sub-Saharan Africa’s groundnut industries. This experience is set within the context of the longer-term development (or decline) of developing-country groundnut industries and changing patterns in international groundnut product trade and demand.
The paper highlights the varied edible groundnut export performance patterns of developing (including African) countries both in the years or decades prior to the EU’s enforcement of stringent harmonized aflatoxin standards and in the period following adoption of the new standards. Several African countries once dominated global exports and EU imports of raw groundnuts (shelled and in-shell) and processed products (oil/cake). This dominance, mainly for raw groundnut exports, came to an end in the 1970s, initially due to internal supply-side or macroeconomic factors, and subsequently due to market developments, including the rise of strong competition from Latin America and Asia. Although still of some importance to a few particular countries, Africa’s trade in raw groundnuts was already marginalized prior to the EU’s enforcement of more strict aflatoxin standards, either because of an inability to compete on the bases of cost, reliability, and quality, or because of other factors that undermined the incentives for producers and agribusiness to invest in improved production and quality control.
Arguably, the new standards have exacerbated the underlying competitive weaknesses of these industries.
In contrast, for some groundnut industries, especially in Latin America and China, the stringency of the EU’s aflatoxin standards (and increased member-country enforcement of these standards) has served as a catalyst for production and supply-chain upgrades. Some upgrade strategies have also been undertaken within Africa, although with more mixed results. The good news from the recent experiences is that a considerable amount of research has been done and other efforts made, yielding promising insights on ways to prevent and reduce aflatoxin contamination in groundnut production, storage, and trade—and achieve compliance with very stringent standards. Important challenges still remain in implementation and in achieving a necessary degree of collective action and public–private sector collaboration to ensure the cost-effectiveness of adopted approaches.
[GOOD RATIONALIZATION !!!]
The objective of this paper is to improve understanding of the apparent trade impacts of the EU aflatoxin standards on edible groundnut exports from sub-Saharan Africa (SSA), within a framework that takes into account the multiplicity of factors determining the region’s competitiveness in this trade over recent decades. Insights are also provided on how other developing countries have been affected by and have responded to the EU’s more stringent standards. In some cases, a potential trade barrier has catalyzed technical and administrative changes, apparently resulting in improved competitive advantage. The paper draws upon data and other information from COMTRADE and the EU’s Rapid Alert System for Feed and Food (RASFF). It also draws upon findings from prior global or country-specific studies pertaining to groundnut industry development and trade. Interviews were also conducted with selected industry, regulatory, research, and service provider representatives in several groundnut-exporting countries, as well as with selected groundnut importer/distributors and regulatory authorities in Europe.
[SPIN, REINTERPRET PREVIOUS FINDINGS AND THEN RATIONALIZE YOUR NEW INTERPRETATION]
The paper is divided into four sections. Section 1 provides a brief historical perspective of the decline of SSA’s raw groundnut exports during the 1960s to the mid-1980s and its subsequent marginalized position in the contexts of emerging competition and changing patterns of international product demand and buyer requirements. Section 2 reviews the EU regulatory developments regarding aflatoxin since the late 1990s, with a detailed analysis of the apparent trade effects of these regulatory developments on developing country trade, particularly exports from SSA. Section 3 highlights the strategic approaches implemented by several exporting countries to ensure compliance with EU aflatoxin regulations and to gain competitive advantage. This section also provides an overview of the initiatives undertaken in the SSA region for effective aflatoxin management. Section 4 states conclusions.
Note
The EU levels were set at 2 ppb for aflatoxin B1 and 4 ppb for total aflatoxin in groundnuts for direct human consumption. In the case of groundnuts intended for further processing, the levels were set at 8 ppb for aflatoxin B1 and 15 ppb for total aflatoxin. The Codex established a level, set at 15 ppb, only for total aflatoxins in groundnuts intended for further processing; no level was set for aflatoxin B1.
(pp. 1-4)
EU Has Long Held Developing World Hostage to Non-Scienced-Based Health & Environmental Standards Deemed Economically & Socially Harmful
http://www.itssd.org/Res%20Ipsa%20Loquitor/Res%20Ipsa%20Loquitor%20-%20Studies%20showing%20impact%20of%20overly%20stringent%20stds%20on%20developing%20countries.pdf
ITSSD Main Website Issues - Studies Evaluating Negative Impacts of Overly Stringent EU Standards on Developing Countries
I. Generally
II. World Bank and Other Studies Quantifying the Impacts of Technical Barriers to Trade
III. World Bank and Other Studies Examining EU Standards Relating to Aflatoxins, in Nuts, Dried Fruits and Cereals
IV. World Bank Study Evaluating EU Maximum Residue Level (MRL) Standards Relating to Tetracyline Use in Beef
V. World Bank Study Evaluating EU MRL Standards For Bananas
VI. World Bank Study Evaluating Impact of Trade on Air Pollution Standards in Developing Countries
VII. World Bank Study Evaluating How Environmental Standards Affect Developing Country Export Competition
VIII. World Bank Study Quantifying the Trade Impact of Sanitary and Phytosanitary (SPS) Standards on Sub-Saharan Africa
ITSSD Main Website Issues - Studies Evaluating Negative Impacts of Overly Stringent EU Standards on Developing Countries
I. Generally
II. World Bank and Other Studies Quantifying the Impacts of Technical Barriers to Trade
III. World Bank and Other Studies Examining EU Standards Relating to Aflatoxins, in Nuts, Dried Fruits and Cereals
IV. World Bank Study Evaluating EU Maximum Residue Level (MRL) Standards Relating to Tetracyline Use in Beef
V. World Bank Study Evaluating EU MRL Standards For Bananas
VI. World Bank Study Evaluating Impact of Trade on Air Pollution Standards in Developing Countries
VII. World Bank Study Evaluating How Environmental Standards Affect Developing Country Export Competition
VIII. World Bank Study Quantifying the Trade Impact of Sanitary and Phytosanitary (SPS) Standards on Sub-Saharan Africa
Overly Strict EU Environmental and Health Regulations Have Long Served as Protectionist Trade Barriers That Harm Developing Country Advancement
http://www.itssd.org/Res%20Ipsa%20Loquitor/Res%20Ipsa%20Loquitor%20-%20Developing%20Countries%20Trade%20Barriers%20Sust%20Dev.pdf
ITSSD Main Website Issues - Developing Countries, EU Regulatory Trade Barriers and 'Negative' Sustainable Development
I. Generally
II. DDT , Malarian and UN POPs Treaty
III. UN Basel Convention and the Waste and Recyling Trade in Asia
IV. The Developing World Response to the EU's Proposed (now Final) REACH Chemicals Regulation
V. Africa's Response to Europe's GM Moratorium
ITSSD Main Website Issues - Developing Countries, EU Regulatory Trade Barriers and 'Negative' Sustainable Development
I. Generally
II. DDT , Malarian and UN POPs Treaty
III. UN Basel Convention and the Waste and Recyling Trade in Asia
IV. The Developing World Response to the EU's Proposed (now Final) REACH Chemicals Regulation
V. Africa's Response to Europe's GM Moratorium
Tuesday, March 4, 2008
Clinton & Obama Protectionist Trade Rhetoric Will Harm Developing Country Economic Growth Prospects and America's Image Abroad
http://www.newsweek.com/id/117841?from=rss
What the World Is Hearing
A senior Latin American diplomat says, 'We might find ourselves nostalgic for Bush, who is brave on trade.'
By Fareed Zakaria
NEWSWEEK
Updated: 1:01 PM ET Mar 1, 2008
Despite their spirited squabbling, the two Democratic candidates are united in the view that one of the big benefits of electing either of them would be an improvement in America's reputation and relations with the world. Hillary Clinton promises to send special envoys to foreign capitals the day after she's elected. Barack Obama offers to reach out to America's foes as well as friends. Unfortunately none of this will matter if they continue to spout dangerous and ill-informed rhetoric about trade.
For the rest of the world—particularly poorer countries—nice speeches about multilateralism are well and good. But what they really want is for the United States to continue its historic role in opening up the world economy. For a struggling farmer in Kenya, access to world markets is far more important than foreign aid or U.N. programs. If the candidates think they will charm the world while adopting protectionist policies, they are in for a surprise.
Already the mood is shifting abroad. Listening to the Democrats on trade "is enough to send jitters down the spine of most in India," says the Times Now TV channel in New Delhi. The Canadian press has shared in the global swoon for Obama, but is now beginning to ask questions. "What he is actually saying—and how it might affect Canada—may come as a surprise to otherwise devout Barack boosters," writes Greg Weston in the Edmonton Sun. The African press has been reporting on George W. Bush's visit there with affection and, in some cases, by contrasting his views on trade with the Democratic candidates'. The Bangkok Post has compared the Democrats unfavorably with John McCain and his vision of an East Asia bound together, and to the United States, by expanding trade ties.
For Obama, the backlash could be greatest because he's raised the highest hopes. A senior Latin American diplomat, who asked to remain unnamed because of the sensitivity of the topic, says, "Look, we're all watching Obama with bated breath and hoping [his election] will be a transforming moment for the world. But now that we're listening to him on trade—the issue that affects us so deeply—we realize that maybe he doesn't wish us well. In fact, we might find ourselves nostalgic for Bush, who is brave and courageous on trade and immigration."
The facts about trade have been too well rehearsed to go into them in any great detail, but let me point out that NAFTA has been pivotal in transforming Mexico into a stable democracy with a growing economy. And, in Lawrence Summers's words, "[it] didn't cost the United States a penny. It contributed to the strength of our economy because of more exports and because imports helped to reduce inflation." Trade between the NAFTA countries has boomed since 1993, growing by about $700 billion.
There are no serious economists or experts who believe that low wages in Mexico or China or India is the fundamental reason that American factories close down. And labor and environmental standards would do very little to change the reality of huge wage differentials between poor and rich countries' workers.
An argument one often hears from the candidates' supporters is that they don't really mean what they say, that their actual proposals on trade agreements involve only minor tinkering. It is an odd defense of candidates promising change, honesty and a new approach to politics to say that they are being cynical and hypocritical. Besides, both candidates are proposing to renegotiate NAFTA, which is a terrible idea. (And one that has prompted the Canadian prime minister to retort that if that happens, his country, too, would like to get more concessions from the United States.) Hillary Clinton has proposed that free-trade deals be re-evaluated every five years, which is absurd. The benefits of trade deals rest on the fact that they are permanent.
But both candidates surely know that no one is really paying attention to their policy papers on the topic. It is their general attitude and rhetoric that matter. And on this crucial topic they are pandering to the worst instincts of Americans, encouraging a form of xenophobia and chauvinism and validating the utterly self-defeating idea of protectionism.
I know, I know. This is all about the Democratic primaries in states like Ohio and the support of unions. But you can't target these messages so easily anymore. What is said in Ohio is heard in Ghana and Bangladesh and Colombia as well. And isn't the point of leadership to educate and elevate people, not to pander and drag them into the swamp of ignorance and fear? There is a way to speak about the pain of globalization—and about the need for investments in retraining, education, health care and infrastructure—so that we can both compete but also absorb the shocks of a changing global economy. Unfortunately that is not what the Democratic candidates are talking about.
I'm not even sure that protectionist rhetoric works that well in a general election. Americans like optimists. They want leaders who look out at the world and see broad, sunlit uplands. Railing against Mexicans, Chinese and Indians for stealing American jobs smacks of anger, paranoia and fear of the future. Americans want hope, as Obama says, "hope in the face of difficulty, hope in the face of uncertainty, the audacity of hope." Where is that courage now?
URL: http://www.newsweek.com/id/117841
http://news.yahoo.com/s/mcclatchy/20080303/wl_mcclatchy/2867869
Mexicans say changing NAFTA may force them to move to U.S.
By Franco Ordonez, McClatchy Newspapers
Mon Mar 3, 6:17 PM ET
MEXICO CITY — Jesus Velasquez doesn't want to move to the United States. He fears, however, that he may have to if he loses his job selling avocados. Velasquez, 36, says he and his family have benefited from the North American Free Trade Agreement. For him, the alternative is to immigrate to the United States.
"The trade act is good because we have jobs," he said Sunday, speaking loudly over the clamor of hundreds of workers hauling fruits and vegetables off rumbling trucks. "If there are no jobs, more people are going to go to the U.S. I have so many friends who can't find jobs and leave."
As voters in Ohio , Texas , Rhode Island and Vermont prepare to go to the polls Tuesday, some workers and distributors at this 800-acre food market, one of the biggest in the world, are expressing concern about presidential candidates Hillary Clinton's and Barack Obama's threats to pull out of NAFTA unless it's renegotiated.
NAFTA is unpopular in Ohio, a key battleground state for Clinton and Obama, where thousands of manufacturing workers have lost jobs.
Several vendors at the Central de Abasto food market said NAFTA isn't perfect. Prices on many products have risen, and many corn farmers said they've been run out of business because of the influx of cheaper American grown corn. But overall, they say, NAFTA has been good for the country, and they worry what changes the U.S. would seek should it return to the negotiating table with Mexico and Canada.
"People are worried," said Gerardo Peralta, 55, who sells rice, nuts and condiments. "If the U.S. tries to renegotiate, they are going to do what's best for them. That could be bad for Mexico."
Some Mexican leaders sought to downplay the candidates' statements as political rhetoric and "campaign talk."
Sen. Ricardo Garcia Cervantes said that any renegotiation of NAFTA would be based on the issues and not on the "heated statements" made by the American political candidates in hopes of gaining their party's nomination.
"In this electoral environment, one that we have to be very attentive to, we also have to be aware that many of these declarations by the Democratic candidates and Republicans are made for gaining votes," Garcia Cervantes , chairman of the Mexican Foreign Relations Commission for North America , said in a statement.
Mexico has gained because of NAFTA, according to Mexican Economy Secretary Eduardo Soto. He told a gathering last week of U.S., Canadian, and Mexican representatives that the Mexican economy has grown 51 percent because of NAFTA, that nearly 5 million jobs have been generated and that exports to the U.S. and Canada have multiplied five times.
"As representatives of the Mexican government, we do not want to insert ourselves into the U.S. political campaigns," he said. "However, we are convinced that what North America needs is more integration and not less integration. North America needs to look to the future and not return to the past."
Avocados have flourished under NAFTA, but not everyone is in favor of the trade agreement. Last month, hundreds of thousands of farmers clogged Mexico City streets with tractors to protest lifting corn tariffs under the free-trade agreement.
Corn farmers said the entry of cheap imported corn has undermined their profits, and towns are emptying because thousands of small farms have gone out of business. Many head to the U.S. illegally looking for better pay.
"It's not that we're against free trade," said Victor Suarez, the executive director of ANEC, a farmers' coalition, who helped organize the Mexico City rally. "We're in favor of free trade that is balanced— not one that is for corporations and monopolies. We want free trade that is fair for all parties involved."
(Ordonez reports for The Charlotte Observer.)
What the World Is Hearing
A senior Latin American diplomat says, 'We might find ourselves nostalgic for Bush, who is brave on trade.'
By Fareed Zakaria
NEWSWEEK
Updated: 1:01 PM ET Mar 1, 2008
Despite their spirited squabbling, the two Democratic candidates are united in the view that one of the big benefits of electing either of them would be an improvement in America's reputation and relations with the world. Hillary Clinton promises to send special envoys to foreign capitals the day after she's elected. Barack Obama offers to reach out to America's foes as well as friends. Unfortunately none of this will matter if they continue to spout dangerous and ill-informed rhetoric about trade.
For the rest of the world—particularly poorer countries—nice speeches about multilateralism are well and good. But what they really want is for the United States to continue its historic role in opening up the world economy. For a struggling farmer in Kenya, access to world markets is far more important than foreign aid or U.N. programs. If the candidates think they will charm the world while adopting protectionist policies, they are in for a surprise.
Already the mood is shifting abroad. Listening to the Democrats on trade "is enough to send jitters down the spine of most in India," says the Times Now TV channel in New Delhi. The Canadian press has shared in the global swoon for Obama, but is now beginning to ask questions. "What he is actually saying—and how it might affect Canada—may come as a surprise to otherwise devout Barack boosters," writes Greg Weston in the Edmonton Sun. The African press has been reporting on George W. Bush's visit there with affection and, in some cases, by contrasting his views on trade with the Democratic candidates'. The Bangkok Post has compared the Democrats unfavorably with John McCain and his vision of an East Asia bound together, and to the United States, by expanding trade ties.
For Obama, the backlash could be greatest because he's raised the highest hopes. A senior Latin American diplomat, who asked to remain unnamed because of the sensitivity of the topic, says, "Look, we're all watching Obama with bated breath and hoping [his election] will be a transforming moment for the world. But now that we're listening to him on trade—the issue that affects us so deeply—we realize that maybe he doesn't wish us well. In fact, we might find ourselves nostalgic for Bush, who is brave and courageous on trade and immigration."
The facts about trade have been too well rehearsed to go into them in any great detail, but let me point out that NAFTA has been pivotal in transforming Mexico into a stable democracy with a growing economy. And, in Lawrence Summers's words, "[it] didn't cost the United States a penny. It contributed to the strength of our economy because of more exports and because imports helped to reduce inflation." Trade between the NAFTA countries has boomed since 1993, growing by about $700 billion.
There are no serious economists or experts who believe that low wages in Mexico or China or India is the fundamental reason that American factories close down. And labor and environmental standards would do very little to change the reality of huge wage differentials between poor and rich countries' workers.
An argument one often hears from the candidates' supporters is that they don't really mean what they say, that their actual proposals on trade agreements involve only minor tinkering. It is an odd defense of candidates promising change, honesty and a new approach to politics to say that they are being cynical and hypocritical. Besides, both candidates are proposing to renegotiate NAFTA, which is a terrible idea. (And one that has prompted the Canadian prime minister to retort that if that happens, his country, too, would like to get more concessions from the United States.) Hillary Clinton has proposed that free-trade deals be re-evaluated every five years, which is absurd. The benefits of trade deals rest on the fact that they are permanent.
But both candidates surely know that no one is really paying attention to their policy papers on the topic. It is their general attitude and rhetoric that matter. And on this crucial topic they are pandering to the worst instincts of Americans, encouraging a form of xenophobia and chauvinism and validating the utterly self-defeating idea of protectionism.
I know, I know. This is all about the Democratic primaries in states like Ohio and the support of unions. But you can't target these messages so easily anymore. What is said in Ohio is heard in Ghana and Bangladesh and Colombia as well. And isn't the point of leadership to educate and elevate people, not to pander and drag them into the swamp of ignorance and fear? There is a way to speak about the pain of globalization—and about the need for investments in retraining, education, health care and infrastructure—so that we can both compete but also absorb the shocks of a changing global economy. Unfortunately that is not what the Democratic candidates are talking about.
I'm not even sure that protectionist rhetoric works that well in a general election. Americans like optimists. They want leaders who look out at the world and see broad, sunlit uplands. Railing against Mexicans, Chinese and Indians for stealing American jobs smacks of anger, paranoia and fear of the future. Americans want hope, as Obama says, "hope in the face of difficulty, hope in the face of uncertainty, the audacity of hope." Where is that courage now?
URL: http://www.newsweek.com/id/117841
http://news.yahoo.com/s/mcclatchy/20080303/wl_mcclatchy/2867869
Mexicans say changing NAFTA may force them to move to U.S.
By Franco Ordonez, McClatchy Newspapers
Mon Mar 3, 6:17 PM ET
MEXICO CITY — Jesus Velasquez doesn't want to move to the United States. He fears, however, that he may have to if he loses his job selling avocados. Velasquez, 36, says he and his family have benefited from the North American Free Trade Agreement. For him, the alternative is to immigrate to the United States.
"The trade act is good because we have jobs," he said Sunday, speaking loudly over the clamor of hundreds of workers hauling fruits and vegetables off rumbling trucks. "If there are no jobs, more people are going to go to the U.S. I have so many friends who can't find jobs and leave."
As voters in Ohio , Texas , Rhode Island and Vermont prepare to go to the polls Tuesday, some workers and distributors at this 800-acre food market, one of the biggest in the world, are expressing concern about presidential candidates Hillary Clinton's and Barack Obama's threats to pull out of NAFTA unless it's renegotiated.
NAFTA is unpopular in Ohio, a key battleground state for Clinton and Obama, where thousands of manufacturing workers have lost jobs.
Several vendors at the Central de Abasto food market said NAFTA isn't perfect. Prices on many products have risen, and many corn farmers said they've been run out of business because of the influx of cheaper American grown corn. But overall, they say, NAFTA has been good for the country, and they worry what changes the U.S. would seek should it return to the negotiating table with Mexico and Canada.
"People are worried," said Gerardo Peralta, 55, who sells rice, nuts and condiments. "If the U.S. tries to renegotiate, they are going to do what's best for them. That could be bad for Mexico."
Some Mexican leaders sought to downplay the candidates' statements as political rhetoric and "campaign talk."
Sen. Ricardo Garcia Cervantes said that any renegotiation of NAFTA would be based on the issues and not on the "heated statements" made by the American political candidates in hopes of gaining their party's nomination.
"In this electoral environment, one that we have to be very attentive to, we also have to be aware that many of these declarations by the Democratic candidates and Republicans are made for gaining votes," Garcia Cervantes , chairman of the Mexican Foreign Relations Commission for North America , said in a statement.
Mexico has gained because of NAFTA, according to Mexican Economy Secretary Eduardo Soto. He told a gathering last week of U.S., Canadian, and Mexican representatives that the Mexican economy has grown 51 percent because of NAFTA, that nearly 5 million jobs have been generated and that exports to the U.S. and Canada have multiplied five times.
"As representatives of the Mexican government, we do not want to insert ourselves into the U.S. political campaigns," he said. "However, we are convinced that what North America needs is more integration and not less integration. North America needs to look to the future and not return to the past."
Avocados have flourished under NAFTA, but not everyone is in favor of the trade agreement. Last month, hundreds of thousands of farmers clogged Mexico City streets with tractors to protest lifting corn tariffs under the free-trade agreement.
Corn farmers said the entry of cheap imported corn has undermined their profits, and towns are emptying because thousands of small farms have gone out of business. Many head to the U.S. illegally looking for better pay.
"It's not that we're against free trade," said Victor Suarez, the executive director of ANEC, a farmers' coalition, who helped organize the Mexico City rally. "We're in favor of free trade that is balanced— not one that is for corporations and monopolies. We want free trade that is fair for all parties involved."
(Ordonez reports for The Charlotte Observer.)
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