http://www.gfmag.com/index.php?idPage=777
NEIGHBORHOOD UNREST - MEXICO
Mexico’s recent economic progress could be derailed by turmoil in the US economy and the outcome of the US presidential election.
Global Finance Magazine
By Antonio Guerrero
March 2008
The last time the US economy posted a slowdown, after the 2001 terrorist attacks, the Mexican economy contracted by 0.2%, nearly crushing its industrial sector. With the threat of a US recession looming large and uncertainties over what US-Mexican relations will look like once a new occupant moves into the White House next year, the outlook is beginning to look gloomy south of the border. However, Mexican government officials say the country is better prepared this time around to meet the challenge.
Mexico’s finance ministry estimates assume the US economy will grow by a meager 1.8% this year, prompting officials to reduce their own 2008 GDP forecast in February to 2.8% from the 3.7% forecast the ministry included in the federal budget last September. This would be Mexico’s slowest expansion in three years, after posting 3.2% GDP growth last year. Local banks had already adjusted their forecasts ahead of the government. Banamex, Citi’s Mexican subsidiary, cut its 2008 growth outlook to 2.9% from a previous 3.6%, while BBVA Bancomer slashed its prediction to 2.7% from 3.4%.
With 80% of Mexican exports going to the United States and domestic capital markets moving nearly in tandem with their counterparts in New York, a US recession would have a swift impact on Mexico—and perhaps test many of the structural reforms implemented by the Felipe Calderón administration that have helped to at least partly decouple the two economies. Calderón has tried to ease Mexicans’ fears about a potential US slowdown, saying, “We will seek growth opportunities from within ourselves, in our internal market, in the strong productive apparatus and in the country’s competitiveness.”
Calderón’s reform package includes a fiscal overhaul launched last September that should boost federal revenues by 1.5% of GDP this year, as well as labor reform to introduce greater flexibility. The next hurdle is energy reform, which legislators say should be ready by April. The controversial plan would open the Pemex state-owned oil monopoly to partnerships with private investors to inject capital into a company struggling with rising debt and dwindling oil reserves. Oil accounts for 40% of federal revenues, and, with its output of 1.3 million barrels a day, Pemex is the United States’ third-largest oil supplier.
The Mexican government’s 2008 budget will boost investment by 45%, the biggest increase in 45 years, with most additional spending earmarked for infrastructure projects that will boost competitiveness and create jobs. The aim is to spark 5% annual GDP growth by 2012, falling short of the 6% growth that analysts say is needed to generate the 1.3 million new jobs Mexico requires each year to absorb workers entering the job market. But the Calderón administration counters that its $295 billion public-private infrastructure investment program approved last year should alone create 800,000 jobs.
According to a Merrill Lynch report, “A positive political agenda should create three positive effects in the medium-term: (1) reduce the country’s growth dependence on US activity and oil prices; (2) reinforce domestic engines for growth: credit, domestic consumption and productivity gains; and (3) promote GDP per capita growth, also addressing Mexico’s social agenda: improve social services and decrease poverty.” Merrill Lynch expects economic growth will be supported by 22% credit growth this year, along with a 4.1% expansion in domestic consumption.
US Election Raises Tension
While Mexico is hoping to shield itself from a US recession, it may be harder for it to stay out of the US presidential election as Republican and Democratic candidates alike tackle the issues of immigration, drug trafficking and free trade. Calderón recently asked US presidential candidates to tone down the anti-immigrant and anti-Mexican rhetoric in their campaigns. But candidates may be responding to genuine concerns, as a recent Zogby poll in the US shows more than 76% of respondents said a candidate’s position on immigration will be a “very important” or “somewhat important” factor in deciding whom to vote for this year. Another 36% said “job creation to stem migration” is the most important foreign policy measure the US should take toward Latin America.
The fight against drug trafficking, likely to be a key concern for the next US president, is already being tackled by the Mexican government, with the Calderón administration deploying more than 24,000 troops to regions with high drug production and trafficking activity, as well as extraditing drug lords to the US and seizing large amounts of illicit drugs. The moves have been well received in Washington, where the White House last October announced a $1.4 billion military and security package designed to help Mexico and Central America tackle drug cartels.“
Given the dimensions of the problem, cooperation with the government of the United States is indispensable,” Mexico’s foreign minister Patricia Espinosa told the press. The US aid package is made more politically palatable to Mexican authorities by, unlike the controversial Plan Colombia, not involving any deployment of US military personnel to Mexico.
Both governments may find themselves embroiled in a less congenial dialogue this year over the future of trade between the two nations. In January the last remaining exceptions to the North American Free Trade Agreement (Nafta) were lifted, allowing US corn, sugar, beans and milk to enter Mexico under the pact. While the measure could help lower food prices, Mexican farmers are less than thrilled and not only have unleashed street protests but have called on their government to renegotiate the treaty, which went into effect in 1994.
According to Lawrence Kogan, president and CEO of the Institute for Trade, Standards and Sustainable Development (ITSSD) in Princeton, New Jersey, the controversy may lead to “managed” trade, which he feels is a euphemism for quota-like restrictions on trade in selected agricultural products. “Mexican farmers may end up receiving the short end of the stick here,” says Kogan. “We must wait and see what is ultimately agreed to and then wait to see how it is actually applied in practice.”
Kogan, also a professor of International Trade Law and Policy at Seton Hall University, says the impact on Mexican exports to the US could be determined by who wins the presidency. “A Democratic Congress would likely become emboldened if a Democrat were in the White House. Assuming the Republicans fail to retake Congress, Congress would be more inclined to impose new environmental, health and safety, and labor standards through Nafta and the WTO to raise the cost of Mexican goods and services so that they no longer could compete effectively with US products,” he says.
Meanwhile, capital market investors remain cautiously bullish on Mexico. Merrill Lynch predicts a 23% total return on Mexican equities this year, below the 26% Latin American average and 28% for Brazil, but higher than Chile’s 22% and Argentina’s 19%—adding that the appreciation will be driven by 16% earnings growth (in US dollars) in 2008 and 11% in 2009. Citi upgraded Mexican shares to overweight, arguing that a US recession has been nearly fully priced into Mexican stocks. The sovereign also set a new fixed-income benchmark in January that extended its yield curve to 2040 and saw the order book soar to $3 billion for a $1.5 billion issue that had been upped from an initial $1 billion.
Mexico’s central bank governor Guillermo Ortiz remains more cautious, saying at the World Economic Forum in Davos that Mexico has not yet felt the full impact of the global economic crisis, and there could be more pain ahead. “We’re in round one or two,” he said, “but this is a 15-round fight.”
Showing posts with label protectionist pressures. Show all posts
Showing posts with label protectionist pressures. Show all posts
Tuesday, April 1, 2008
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.)
Thursday, February 28, 2008
Competition Not Protection For U.S. Automakers in Canada
Competition not protection for Automakers
http://www.thestar.com/printArticle/303443
Try harder to sell cars overseas: Emerson
TheStar.com - Business
Trade minister rejects Hargrove's demand for restrictions on imports
February 14, 2008
Richard Brennan
OTTAWA BUREAU
OTTAWA–The Big Three automakers should try harder to sell their vehicles to other countries rather than expect the federal government to put up protectionist trade barriers, International Trade Minister David Emerson says.
"But the reality is the industry has not focused on non-North American markets, whether it's Korea or any other non-North American market," Emerson said yesterday, reacting to suggestions from Canadian Auto Workers president Buzz Hargrove that Ottawa put trade restrictions on imported vehicles.
"Buzz always kind of speaks the rhetoric of free trade but when it comes right down to it, I'm not convinced he's a true free trader," Emerson told reporters.
Hargrove told a news conference on Tuesday that if reciprocal trade measures are not introduced soon, General Motors Corp. and Ford Motor Co. Ltd., particularly, could go belly up within a decade.
"What he is saying is that he wants us to negotiate access into the Korean and Japanese market for vehicles and parts and obviously that's what a free-trade negotiation is about," Emerson said. "And yet they seem to want us to walk away from the free-trade negotiations. So I'm a little puzzled by it.
"I don't think modern trade negotiations are about those kinds of deals. I don't think major economies like Japan and Korea would be interested in that kind of a deal."
Canada and the United States signed in 1965 the Automotive Products Trade Agreement, which kept Canada's auto industry healthy for 35 years. But the World Trade Organization determined in February 2000 that the Auto Pact violated international trading rules and the agreement formally came to an end in February 2001.
While Hargrove still talks about the days of the North American Auto Pact, Emerson said those days are gone.
"The Auto Pact was a very tender small step, a careful step toward North American free trade and it had built into it all kinds of production safeguards that kept it from actually being a free-trade agreement," Emerson said.
"We eventually went to free trade but that was after many, many years of people reducing their nervousness about our ability to compete in a North American market."
Emerson said North American industry exports only about one-third of 1 per cent of production, but Hargrove said that's because there is no political pressure on countries like Korea and Japan to buy vehicles made by GM, Ford and Chrysler.
"They're not exporting to any significant markets outside of North America. The Canadian auto industry is fundamentally focused on the North American market," he said.
http://www.thestar.com/printArticle/303443
Try harder to sell cars overseas: Emerson
TheStar.com - Business
Trade minister rejects Hargrove's demand for restrictions on imports
February 14, 2008
Richard Brennan
OTTAWA BUREAU
OTTAWA–The Big Three automakers should try harder to sell their vehicles to other countries rather than expect the federal government to put up protectionist trade barriers, International Trade Minister David Emerson says.
"But the reality is the industry has not focused on non-North American markets, whether it's Korea or any other non-North American market," Emerson said yesterday, reacting to suggestions from Canadian Auto Workers president Buzz Hargrove that Ottawa put trade restrictions on imported vehicles.
"Buzz always kind of speaks the rhetoric of free trade but when it comes right down to it, I'm not convinced he's a true free trader," Emerson told reporters.
Hargrove told a news conference on Tuesday that if reciprocal trade measures are not introduced soon, General Motors Corp. and Ford Motor Co. Ltd., particularly, could go belly up within a decade.
"What he is saying is that he wants us to negotiate access into the Korean and Japanese market for vehicles and parts and obviously that's what a free-trade negotiation is about," Emerson said. "And yet they seem to want us to walk away from the free-trade negotiations. So I'm a little puzzled by it.
"I don't think modern trade negotiations are about those kinds of deals. I don't think major economies like Japan and Korea would be interested in that kind of a deal."
Canada and the United States signed in 1965 the Automotive Products Trade Agreement, which kept Canada's auto industry healthy for 35 years. But the World Trade Organization determined in February 2000 that the Auto Pact violated international trading rules and the agreement formally came to an end in February 2001.
While Hargrove still talks about the days of the North American Auto Pact, Emerson said those days are gone.
"The Auto Pact was a very tender small step, a careful step toward North American free trade and it had built into it all kinds of production safeguards that kept it from actually being a free-trade agreement," Emerson said.
"We eventually went to free trade but that was after many, many years of people reducing their nervousness about our ability to compete in a North American market."
Emerson said North American industry exports only about one-third of 1 per cent of production, but Hargrove said that's because there is no political pressure on countries like Korea and Japan to buy vehicles made by GM, Ford and Chrysler.
"They're not exporting to any significant markets outside of North America. The Canadian auto industry is fundamentally focused on the North American market," he said.
Candidates Convey Confusion Over Trade: There are No Silver Bullets
Decoding Candidates on Trade
Both voted to whack China for keeping its currency weak. Both back 2004 Democratic nominee John Kerry's plan to use the tax code to reward companies for keeping jobs in the U.S., though Mr. Obama does so more loudly.
Lately, the two have been maneuvering to see who can be nastier about Nafta. In the end, though, neither would abrogate the treaty. She would "review...and work with our trading partners to make necessary adjustments." He would "work to amend."
DISCUSS
What sort of trade policy do you think a President McCain or President Clinton or President Obama would -- or should -- pursue?
Veterans of the Bill Clinton White House say Mrs. Clinton was a loyal soldier, but often unenthusiastic, at best, about her husband's embrace of globalization. Pro-globalization Democrats long have been uneasy about her for that reason.
Until his campaign reached the Midwest, Mr. Obama sounded like the former president. "Like [Clinton Treasury Secretary] Bob Rubin, I am optimistic about...the ability of U.S. workers to compete in a free trade environment -- but only if we distribute the costs and benefits of globalization more fairly across the population," he wrote in his 2006 book. The big-company chief executives who belong to the Business Roundtable say almost the same thing.
But if Bill Clinton were running again, he'd probably put some distance between his campaign and his eight-year presidency. It's the voters, stupid.
In December, a Wall Street Journal/NBC News poll asked Americans whether the increasingly global nature of the U.S. economy was good ("because it has opened up new markets and resulted in more jobs") or bad ("because it has subjected American companies and employees to unfair competition and cheap labor.") By 58% to 28%, the respondents said it was bad.
MORE
By DAVID WESSEL
http://online.wsj.com/article/SB120354791005181195.html?mod=googlenews_wsj
The virtues of international trade and the pressures globalization is putting on American workers are becoming more prominent issues in the presidential campaign, even though the candidates most hostile to trade got trounced.
Sen. John McCain, the Republican, is the free trader in the race. "We need to continue to lower barriers to trade because 95% of the world's customers live outside the United States," Mr. McCain said recently in Michigan, where the jobless rate is 7.6%, the highest in the nation. "We need to have competitive manufacturing through lower health-care costs, lower taxes and opening new markets."
Mr. McCain has been a steady supporter of free trade in the Senate -- from the North American Free Trade Agreement to the pending U.S. trade pact with South Korea, which even some trade lovers find flawed.
By contrast, Democratic Sens. Hillary Clinton and Barack Obama are vying to be the bigger trade skeptic. As they fight for Ohio (jobless rate 6%), neither wants the mantle of former President Clinton, who shucked the populist strains of his 1992 campaign and became a champion of Nafta and China's entry into the World Trade Organization.
Both voted to whack China for keeping its currency weak. Both back 2004 Democratic nominee John Kerry's plan to use the tax code to reward companies for keeping jobs in the U.S., though Mr. Obama does so more loudly.
Lately, the two have been maneuvering to see who can be nastier about Nafta. In the end, though, neither would abrogate the treaty. She would "review...and work with our trading partners to make necessary adjustments." He would "work to amend."
DISCUSS
What sort of trade policy do you think a President McCain or President Clinton or President Obama would -- or should -- pursue?
Veterans of the Bill Clinton White House say Mrs. Clinton was a loyal soldier, but often unenthusiastic, at best, about her husband's embrace of globalization. Pro-globalization Democrats long have been uneasy about her for that reason.
Until his campaign reached the Midwest, Mr. Obama sounded like the former president. "Like [Clinton Treasury Secretary] Bob Rubin, I am optimistic about...the ability of U.S. workers to compete in a free trade environment -- but only if we distribute the costs and benefits of globalization more fairly across the population," he wrote in his 2006 book. The big-company chief executives who belong to the Business Roundtable say almost the same thing.
But if Bill Clinton were running again, he'd probably put some distance between his campaign and his eight-year presidency. It's the voters, stupid.
In December, a Wall Street Journal/NBC News poll asked Americans whether the increasingly global nature of the U.S. economy was good ("because it has opened up new markets and resulted in more jobs") or bad ("because it has subjected American companies and employees to unfair competition and cheap labor.") By 58% to 28%, the respondents said it was bad.
MORE
• Comparison of where candidates stand on trade (PDF)
From The Wall Street Journal/NBC News Poll:
"Do you think the fact that the American economy has become increasingly global is good because it has opened up new markets for American progress and resulted in more jobs, or bad because it has subjected American companies and employees to unfair competition and cheap labor?"
Dec. 2007 June 1997
Good 28% 42%
Bad 58% 48%
Equally Good & Bad 11% 7%
Not Sure 3% 3%
From the December 2007 poll:
Good Bad Equal/Not Sure
Professionals 37% 50% 13%
White collar 27% 58% 15%
Blue collar 15% 72% 13%
Retirees 23% 62% 15%
* * * * * * * * *
Democrats 25% 63% 12%
Republicans 32% 55% 13%
By contrast, in August 2007, the question drew a much less-hostile response: 48% bad to 42% good. (The rest weren't sure or deemed globalization equally good and bad.) President Bush has done little to ease Americans' anxiety; even some of his own appointees won't defend the administration's rejection of Democratic overtures on shoring up assistance to workers hurt by trade.
So what happens after Inauguration Day? Even Mr. McCain, if eager to press Mr. Bush's trade-pact agenda, would be likely to face a Democratic Congress elected by voters who, though they may shop for imported underwear at Wal-Mart, believe globalization is holding down their wages.
Neither Mrs. Clinton nor Mr. Obama is likely to be able to do much about trade deals already in effect, despite their campaign rhetoric. Neither, even in the heat of the Midwestern spotlight, is talking about new barriers to trade. The Depression-era Smoot-Hawley tariffs aren't coming back. And the Democrats' trade hard-liner, former Sen. John Edwards, has dropped out of the race.
The issue really is about what happens going forward. And the most likely answer on trade is not much. Barring an unlikely breakthrough in the Doha Round of world trade talks, neither Democrat is likely to make trade deals -- even renegotiated to incorporate labor and environmental standards -- a top priority.
The fate of the deal with South Korea will be the most important early test case: It's a big economy, far more significant than Peru or Panama. The new Korean government might be willing to reopen the agreement to save the pact from a Democratic president pledged to oppose it. But even if Mr. Obama wins, the "timeout" on trade deals that Mrs. Clinton proposes is the most likely outcome. And that could turn out to be a route to maintaining good parts of globalization, which would lose an up-or-down vote right now.
The anxiety about globalization among a huge swath of the electorate reflects widespread economic insecurity and a sense that the U.S. economy isn't delivering the goods for many. Tweaking trade deals or adding another program for workers hurt by imports won't salve those fears.
A "timeout" to try to fix flaws in the American health-care system and to streamline and expand worker-assistance programs so they help workers cope both with technology and trade could be the key to preserving the benefits of globalization in the long run.
Monday, February 4, 2008
The Future of Doha...
The Future of Doha: Can the Doha Trade Round Be Saved?
http://www.businessweek.com/globalbiz/content/jan2008/gb20080128_519854.htm?campaign_id=rss_daily
January 28, 2008
by Sean O'Grady
BusinessWeek
Peter Mandelson, the European Union trade commissioner, has warned about the consequences if the Doha round of world trade talks were to fail this year.
Mr Mandelson pointed to the approaching US elections as the effective deadline for the consummation of the negotiations, after which the delays associated with the new American administration would effectively kill the process.
A new president would inevitably need to review the negotiations, and Mr Mandelson thought that the Doha round was unlikely to be at the top of their in-tray. The process of appointing, nominating and gaining congressional approval for new trade officials could also take many months.
At the World Economic Forum in Davos, Mr Mandelson said that while 2007 had been called a "year of opportunity", 2008 would be "the year of necessity". He added that he had been struck by business figures who had felt "frustrated" by the length of time taken (the Doha round was launched in 2001), and who perceived that "the level of ambition has fallen". He said that they had urged him not to give up, but also not to allow the negotiations to "linger on" and to give them a "decent burial".
Mr Mandelson suggested that if the Doha round were to be abandoned, economically valuable elements already agreed could be extracted from it, such as a package of development aid. Even so, he was sceptical about the extent to which such "cherry-picking" might be possible.
Mr Mandelson said that "the caravans would move on" if an agreement were not reached in 2008, with countries and trading blocs moving to a series of bilateral treaties in place of the Doha round. These, he conceded, would be beneficial, but still be "no substitute" for a comprehensive multilateral arrangement which would more firmly build in the gains for free trade that have been made in the past few decades.
Since the onset of the credit crisis and the general slowdown in world economic growth, political pressures for protection have been growing, particularly in parts of Europe and the United States. Opposition to sovereign wealth funds and calls for tighter regulation of financial markets are two examples of how recent economic events have fuelled resistance to trade liberalisation.
Last month, Mr Mandelson attacked Hillary Clinton, the US presidential candidate, over her attitude to free trade. He described Mrs Clinton's views on global trade as "disappointing", "misplaced" and symptomatic of a new trend towards protectionism in the West.
In recent days sources close to Mr Mandelson have suggested that more progress was being made than the public realised, and expressed hope that the certainty of a change of incumbent in the White House would force the pace of change.
For her part, the US trade envoy, Susan Schwab, reiterated the commitment of the Bush administration to the success of the talks. The Indian Minister for Trade and Commerce, Kamal Nath, said that he was prepared to negotiate on commerce, but would not do so in matters of "livelihood and security".
Arguments about the level of agricultural subsidies in the West and the willingness of developing nations to open up their markets in services have bedevilled the talks for some time, despite evident goodwill on the part of most of the participants. Informal meetings of 25 trade ministers plus the World Trade Organisation chief, Pascal Lamy, and Mr Mandelson over the weekend do not appear to have resulted in a breakthrough.
http://www.businessweek.com/globalbiz/content/jan2008/gb20080128_519854.htm?campaign_id=rss_daily
January 28, 2008
by Sean O'Grady
BusinessWeek
Peter Mandelson, the European Union trade commissioner, has warned about the consequences if the Doha round of world trade talks were to fail this year.
Mr Mandelson pointed to the approaching US elections as the effective deadline for the consummation of the negotiations, after which the delays associated with the new American administration would effectively kill the process.
A new president would inevitably need to review the negotiations, and Mr Mandelson thought that the Doha round was unlikely to be at the top of their in-tray. The process of appointing, nominating and gaining congressional approval for new trade officials could also take many months.
At the World Economic Forum in Davos, Mr Mandelson said that while 2007 had been called a "year of opportunity", 2008 would be "the year of necessity". He added that he had been struck by business figures who had felt "frustrated" by the length of time taken (the Doha round was launched in 2001), and who perceived that "the level of ambition has fallen". He said that they had urged him not to give up, but also not to allow the negotiations to "linger on" and to give them a "decent burial".
Mr Mandelson suggested that if the Doha round were to be abandoned, economically valuable elements already agreed could be extracted from it, such as a package of development aid. Even so, he was sceptical about the extent to which such "cherry-picking" might be possible.
Mr Mandelson said that "the caravans would move on" if an agreement were not reached in 2008, with countries and trading blocs moving to a series of bilateral treaties in place of the Doha round. These, he conceded, would be beneficial, but still be "no substitute" for a comprehensive multilateral arrangement which would more firmly build in the gains for free trade that have been made in the past few decades.
Since the onset of the credit crisis and the general slowdown in world economic growth, political pressures for protection have been growing, particularly in parts of Europe and the United States. Opposition to sovereign wealth funds and calls for tighter regulation of financial markets are two examples of how recent economic events have fuelled resistance to trade liberalisation.
Last month, Mr Mandelson attacked Hillary Clinton, the US presidential candidate, over her attitude to free trade. He described Mrs Clinton's views on global trade as "disappointing", "misplaced" and symptomatic of a new trend towards protectionism in the West.
In recent days sources close to Mr Mandelson have suggested that more progress was being made than the public realised, and expressed hope that the certainty of a change of incumbent in the White House would force the pace of change.
For her part, the US trade envoy, Susan Schwab, reiterated the commitment of the Bush administration to the success of the talks. The Indian Minister for Trade and Commerce, Kamal Nath, said that he was prepared to negotiate on commerce, but would not do so in matters of "livelihood and security".
Arguments about the level of agricultural subsidies in the West and the willingness of developing nations to open up their markets in services have bedevilled the talks for some time, despite evident goodwill on the part of most of the participants. Informal meetings of 25 trade ministers plus the World Trade Organisation chief, Pascal Lamy, and Mr Mandelson over the weekend do not appear to have resulted in a breakthrough.
2008: Trade Barriers or Trade Liberalization??
2008: Trade Barriers or Trade Liberalization??
Trade Disputes Will Mark 2008
http://www.forbes.com/opinions/2008/01/28/doha-trade-talks-oped-cx_ccp_0129doha.html
FORBES
C. Christopher Parlin
January 28, 2008
Washington, D.C. -
The trade policy outlook for this year is grim, though a concerted effort and a change in approach by many businesspeople could stem backsliding into protectionism.
In the U.S., worsening economic news coupled with the upcoming elections guarantee slow, if any, progress in reducing worldwide trade barriers and increasing market access for U.S. companies. Around the world, these negatives are reinforced by fear of ever-expanding Chinese exports, lack of political will in the World Trade Organization's (WTO) Doha negotiators, and reluctance by trading partners to make concessions to the U.S. in the absence of the president's fast track negotiating authority (aka trade promotion authority).
There will be tensions this year because of the economic and political climate and the lack of breakthroughs in the Doha negotiations. There will be disagreements regarding actions taken (and not taken) as a result of this tension. The question is how these disagreements will be managed and whether they will lead to trade disputes.
The default option is a significant increase in disputes, as the focus of the U.S. and its trading partners leads to protectionist and discriminatory policies. Most will lose in the long run if this happens. The challenge now is to analyze the difficulties that the multilateral trading system will face and develop strategies to limit the resulting harm and serve as stepping stones for resumed progress when the worldwide economic and political climate improves.
Historically, trade liberalization efforts have succeeded only in a healthy worldwide economic climate (the Uruguay Round negotiations creating the WTO in the early 1990s) or after an economic cataclysm (the General Agreement on Tariffs and Trade, or GATT, after World War II). At such times, governments and businesses focus on the horse trading necessary to achieve greater worldwide liberalization. The concept of giving in order to get--of reducing some of your trade barriers to secure reductions from others in areas of greater interest to you--is recognized and acted on. Those losing protection don't like it, but the pro-liberalization forces are stronger.
By contrast, in problematic economic climates, fear of giving predominates. Politicians hear more from constituents condemning adverse effects of imports (and now globalization) on income and jobs than they do from those seeking to give or receive expanded market access. In the U.S., this shift was apparent in the 2006 congressional elections. And it becomes more evident every day as signs of an economic slowdown grow. Bipartisan efforts to enact a stimulus package are welcome, but they are extremely unlikely to improve the trade policy picture.
At the same time, the prospects for a pro-trade congressional majority are nil, and, although much of the protectionist rhetoric of U.S. presidential candidates is just talk, the prospects for a trade-friendly administration are uncertain, at best. The systemic concern caused by a weakening economy is bolstered by particularized fear of a continued Chinese economic juggernaut. No amount of learned discourse, or administration exhortation about the economic benefits of further trade liberalization for the country as a whole, can counteract the present fearful mood in the U.S.
Since the end of the Second World War, the U.S. has been described as the locomotive of world trade liberalization. A very solid argument can be made that GATT was created and the WTO evolved from it as a result of U.S. willingness to make the market-opening concessions necessary to drive other countries to agree to ever greater reductions of trade barriers and increases in market access opportunities.
Despite valiant efforts by the U.S. trade representative, Susan C. Schwab, the country now is stopped on a siding. The public does not accept pro-trade rhetoric, and the administration is unable to credibly promise trading partners that Congress will enact trade-liberalizing measures such as reducing agricultural support (enhancing the competitiveness of other agricultural exporters) or changing certain U.S. anti-dumping rules that most of our trading partners view as blatantly protectionist.
A replacement locomotive is needed, but none has appeared. Neither the European Union, Japan nor any collection of countries has stepped forward to provide leadership in the WTO's Doha negotiations. Instead, the goal seems to be to ensure that blame for failure is attributed to someone else. This is intensified by the inability of the administration to secure renewal of trade promotion authority (under which Congress agrees to an up or down vote on trade agreements, ceding its normal ability to condition ratification on amendments to the negotiated text). Not surprisingly, many of our trading partners will use the absence of fast track as an excuse for not making concessions sought by the U.S., asserting that Congress would demand additional concessions beyond those ultimately negotiated by the administration.
What is to be done? One possibility is to hunker down and wait for better times. That would ensure at best a standstill, but more likely a worldwide increase in protectionism throughout 2008. There is a better option, though. This could be a bad year for forward-looking trade policy, but it need not be a disaster. Rather than ceding the field to those advocating policies of increased protection and unilateralism, the proponents of multilateral liberalization could seek to preserve the positive aspects of the Doha negotiations. Even though significant breakthroughs leading to a successful conclusion will not occur in 2008, the negotiations need not collapse.
Experience during the Uruguay Round is instructive. There was a three-year period when none of the major negotiating parties was able to move on politically sensitive issues such as agriculture, services and textiles. Despite this high-level paralysis, all of the 15 subject matter negotiating groups continued to plug away. As a result, when worldwide political will re-emerged in mid-1993, most of the technical underbrush had been cleared away. A similar scenario could occur this year. The negotiating gains achieved to date could be preserved and steps taken to make technical progress where possible.
On the domestic front, too, 2008 need not be a disaster. Here, the keys will be education and understanding.
To avoid significant backsliding, those supporting multilateral liberalization must emerge from their foxholes and engage more actively and effectively in the globalization debate, educating politicians and opinion makers about the benefits of additional liberalization. At the same time, they must not ignore the dark side of globalization: It has not benefited all Americans. Many have legitimate concerns about their income and jobs.
Economics 101 lectures about the overall benefits of free trade may be sound economically, but will not be politically successful, especially given the worsening economic climate. To strengthen their presentation, advocates of trade liberalization must work to reformulate, advocate and implement policies that will assist those whose lives are negatively affected by globalization. The choice is theoretical purity and political defeat, or creative solutions that recognize the political climate.
Effectively, the course of trade policy today is dependent on what is done by those supporting increased trade liberalization. If they do nothing, the year will see significantly increased international economic tensions, disagreements and disputes. The challenge is to develop a new model in support of liberalization, one that accepts reality and proposes solutions for those who are harmed by globalization. By doing so, we may limit protectionist backsliding so progress can resume when the worldwide economic and political climate improves.
Trade Disputes Will Mark 2008
http://www.forbes.com/opinions/2008/01/28/doha-trade-talks-oped-cx_ccp_0129doha.html
FORBES
C. Christopher Parlin
January 28, 2008
Washington, D.C. -
The trade policy outlook for this year is grim, though a concerted effort and a change in approach by many businesspeople could stem backsliding into protectionism.
In the U.S., worsening economic news coupled with the upcoming elections guarantee slow, if any, progress in reducing worldwide trade barriers and increasing market access for U.S. companies. Around the world, these negatives are reinforced by fear of ever-expanding Chinese exports, lack of political will in the World Trade Organization's (WTO) Doha negotiators, and reluctance by trading partners to make concessions to the U.S. in the absence of the president's fast track negotiating authority (aka trade promotion authority).
There will be tensions this year because of the economic and political climate and the lack of breakthroughs in the Doha negotiations. There will be disagreements regarding actions taken (and not taken) as a result of this tension. The question is how these disagreements will be managed and whether they will lead to trade disputes.
The default option is a significant increase in disputes, as the focus of the U.S. and its trading partners leads to protectionist and discriminatory policies. Most will lose in the long run if this happens. The challenge now is to analyze the difficulties that the multilateral trading system will face and develop strategies to limit the resulting harm and serve as stepping stones for resumed progress when the worldwide economic and political climate improves.
Historically, trade liberalization efforts have succeeded only in a healthy worldwide economic climate (the Uruguay Round negotiations creating the WTO in the early 1990s) or after an economic cataclysm (the General Agreement on Tariffs and Trade, or GATT, after World War II). At such times, governments and businesses focus on the horse trading necessary to achieve greater worldwide liberalization. The concept of giving in order to get--of reducing some of your trade barriers to secure reductions from others in areas of greater interest to you--is recognized and acted on. Those losing protection don't like it, but the pro-liberalization forces are stronger.
By contrast, in problematic economic climates, fear of giving predominates. Politicians hear more from constituents condemning adverse effects of imports (and now globalization) on income and jobs than they do from those seeking to give or receive expanded market access. In the U.S., this shift was apparent in the 2006 congressional elections. And it becomes more evident every day as signs of an economic slowdown grow. Bipartisan efforts to enact a stimulus package are welcome, but they are extremely unlikely to improve the trade policy picture.
At the same time, the prospects for a pro-trade congressional majority are nil, and, although much of the protectionist rhetoric of U.S. presidential candidates is just talk, the prospects for a trade-friendly administration are uncertain, at best. The systemic concern caused by a weakening economy is bolstered by particularized fear of a continued Chinese economic juggernaut. No amount of learned discourse, or administration exhortation about the economic benefits of further trade liberalization for the country as a whole, can counteract the present fearful mood in the U.S.
Since the end of the Second World War, the U.S. has been described as the locomotive of world trade liberalization. A very solid argument can be made that GATT was created and the WTO evolved from it as a result of U.S. willingness to make the market-opening concessions necessary to drive other countries to agree to ever greater reductions of trade barriers and increases in market access opportunities.
Despite valiant efforts by the U.S. trade representative, Susan C. Schwab, the country now is stopped on a siding. The public does not accept pro-trade rhetoric, and the administration is unable to credibly promise trading partners that Congress will enact trade-liberalizing measures such as reducing agricultural support (enhancing the competitiveness of other agricultural exporters) or changing certain U.S. anti-dumping rules that most of our trading partners view as blatantly protectionist.
A replacement locomotive is needed, but none has appeared. Neither the European Union, Japan nor any collection of countries has stepped forward to provide leadership in the WTO's Doha negotiations. Instead, the goal seems to be to ensure that blame for failure is attributed to someone else. This is intensified by the inability of the administration to secure renewal of trade promotion authority (under which Congress agrees to an up or down vote on trade agreements, ceding its normal ability to condition ratification on amendments to the negotiated text). Not surprisingly, many of our trading partners will use the absence of fast track as an excuse for not making concessions sought by the U.S., asserting that Congress would demand additional concessions beyond those ultimately negotiated by the administration.
What is to be done? One possibility is to hunker down and wait for better times. That would ensure at best a standstill, but more likely a worldwide increase in protectionism throughout 2008. There is a better option, though. This could be a bad year for forward-looking trade policy, but it need not be a disaster. Rather than ceding the field to those advocating policies of increased protection and unilateralism, the proponents of multilateral liberalization could seek to preserve the positive aspects of the Doha negotiations. Even though significant breakthroughs leading to a successful conclusion will not occur in 2008, the negotiations need not collapse.
Experience during the Uruguay Round is instructive. There was a three-year period when none of the major negotiating parties was able to move on politically sensitive issues such as agriculture, services and textiles. Despite this high-level paralysis, all of the 15 subject matter negotiating groups continued to plug away. As a result, when worldwide political will re-emerged in mid-1993, most of the technical underbrush had been cleared away. A similar scenario could occur this year. The negotiating gains achieved to date could be preserved and steps taken to make technical progress where possible.
On the domestic front, too, 2008 need not be a disaster. Here, the keys will be education and understanding.
To avoid significant backsliding, those supporting multilateral liberalization must emerge from their foxholes and engage more actively and effectively in the globalization debate, educating politicians and opinion makers about the benefits of additional liberalization. At the same time, they must not ignore the dark side of globalization: It has not benefited all Americans. Many have legitimate concerns about their income and jobs.
Economics 101 lectures about the overall benefits of free trade may be sound economically, but will not be politically successful, especially given the worsening economic climate. To strengthen their presentation, advocates of trade liberalization must work to reformulate, advocate and implement policies that will assist those whose lives are negatively affected by globalization. The choice is theoretical purity and political defeat, or creative solutions that recognize the political climate.
Effectively, the course of trade policy today is dependent on what is done by those supporting increased trade liberalization. If they do nothing, the year will see significantly increased international economic tensions, disagreements and disputes. The challenge is to develop a new model in support of liberalization, one that accepts reality and proposes solutions for those who are harmed by globalization. By doing so, we may limit protectionist backsliding so progress can resume when the worldwide economic and political climate improves.
“Zeroing” In: The Future of a Questionable Anti-Dumping Methodology
“Zeroing” In: The future of a questionable Anti-Dumping methodology
Just last month, a WTO Panel ruled in favor of the US in a zeroing dispute case with Mexico (Link to Article). This is a fairly significant step for the US. Since the US began to impose its zeroing methodology, many WTO countries have rallied staunchly in opposition questioning the legality and fairness of this practice. So the question remains: how will zeroing be treated in the ensuing Doha Round negotiations?
Anti-dumping row roils WTO, isolates U.S.
http://www.reuters.com/article/reutersEdge/idUSL1044224620080110?sp=true
Jan 10, 2008
By Jonathan Lynn - Analysis
GENEVA (Reuters) - An arcane row at the World Trade Organization (WTO) pitting the United States against the rest of the group's members on how to deal with unfairly priced imports has raised temperatures like few other issues there.
The tussle has unnerved U.S. consumer and retail bodies, seen a WTO dispute panel ignore rulings by the body's top court and created another big hurdle in the WTO's long-running Doha round to open up world trade.
Trade experts said it was difficult to imagine the United States succeeding in embedding its controversial practice of "zeroing" in WTO rules.
The term refers to the practice of only taking into account imports priced at a lower level than in their home markets (dumped goods) and ignoring or "zeroing" any offset from imports which are priced higher than in their home markets.
Some trade experts believe the row can be defused as countries realize that in a changing economy they can equally be the target as well as the initiator of anti-dumping measures.
"Zeroing has been on the ropes for a long time because there have been multiple rulings against the U.S.," said Brendan McGivern, an expert in international trade disputes and a partner in the Geneva office of lawyers White & Case.
"It's wildly optimistic of the U.S. to think they'll get this back through negotiations," he told Reuters.
HEART OF THE SYSTEM
The dispute goes to the very heart of the global trading system umpired by the WTO to ensure that trade is fair for all.
It turns on the methodology for calculating the duties that countries are allowed to impose on imports that are sold at unfairly cheap prices in their markets.
Zeroing, now mainly used by the United States, leads to excessively high compensatory duties, other countries say.
The United States has now lost a dozen WTO disputes over zeroing, rulings strengthened on appeal in some cases by the WTO's top court, the Appellate Body.
Last month a key group of countries issued a statement denouncing zeroing for undermining the central goal of the Doha round -- trade liberalization.
Washington will therefore find it difficult to find supporters in the WTO, which operates by consensus, who will spell out a role for zeroing in a new deal when it has been ruled out of court in litigation, said McGivern, former head of dispute settlement in Canada's WTO mission.
Another case is brewing, with Japan unhappy that the U.S. has not dropped zeroing in line with an Appellate Body ruling last January.
As a result the United States has now abandoned zeroing in some cases. But it insists zeroing is allowed under WTO rules.
The head of the U.S. WTO mission, Peter Allgeier, denounced last month the "severely flawed legal reasoning" of the Appellate Body and told WTO members that a new trade deal would not get through the U.S. Congress without zeroing.
ENCOURAGED
The Americans have been encouraged by two things.
Firstly, the chairman of the Doha round talks on rules, which include anti-dumping, Guillermo Valles Galmes, issued a draft negotiating text at the end of November that allowed zeroing in certain circumstances.
Secondly, in the latest zeroing dispute at the WTO, a Mexican complaint about U.S. anti-dumping duties on stainless steel, the dispute panel last month ignored previous rulings from the Appellate Body and allowed zeroing in some cases.
Valles, who is Uruguay's WTO ambassador, saw his proposals on zeroing slammed by a range of countries from the European Union to India and Japan.
He is holding another round of negotiations in the week of January 21 where he expects key countries to propose the balance they say is missing from his paper.
Valles's proposals also upset the United States by retaining some bans on zeroing, introducing a limit of 10 years on anti-dumping measures instead of allowing them to run indefinitely, and calling for consumers as well as affected competitors to be consulted on the measures.
Valles points out that the negotiations on rules are different to the rest of the Doha Round. Whereas the long-term aim is to reduce tariffs and subsidies to zero, rules will always be there, evolving to meet changing circumstances.
"The challenge is for countries to imagine where they will be in 15 or 20 years," he told Reuters. "The object is that rules are used in a transparent and predictable way, with no country just a user or a target."
Indeed, some U.S. business lobbies are already calling on Washington to ensure that WTO rules such as zeroing cannot be abused to put up barriers against U.S. exports.
The National Retail Federation noted in November that the U.S. is now the third biggest target of anti-dumping actions.
And frequent targets China and India are increasingly bringing actions against other countries.
(Editing by Matthew Jones)
Just last month, a WTO Panel ruled in favor of the US in a zeroing dispute case with Mexico (Link to Article). This is a fairly significant step for the US. Since the US began to impose its zeroing methodology, many WTO countries have rallied staunchly in opposition questioning the legality and fairness of this practice. So the question remains: how will zeroing be treated in the ensuing Doha Round negotiations?
Anti-dumping row roils WTO, isolates U.S.
http://www.reuters.com/article/reutersEdge/idUSL1044224620080110?sp=true
Jan 10, 2008
By Jonathan Lynn - Analysis
GENEVA (Reuters) - An arcane row at the World Trade Organization (WTO) pitting the United States against the rest of the group's members on how to deal with unfairly priced imports has raised temperatures like few other issues there.
The tussle has unnerved U.S. consumer and retail bodies, seen a WTO dispute panel ignore rulings by the body's top court and created another big hurdle in the WTO's long-running Doha round to open up world trade.
Trade experts said it was difficult to imagine the United States succeeding in embedding its controversial practice of "zeroing" in WTO rules.
The term refers to the practice of only taking into account imports priced at a lower level than in their home markets (dumped goods) and ignoring or "zeroing" any offset from imports which are priced higher than in their home markets.
Some trade experts believe the row can be defused as countries realize that in a changing economy they can equally be the target as well as the initiator of anti-dumping measures.
"Zeroing has been on the ropes for a long time because there have been multiple rulings against the U.S.," said Brendan McGivern, an expert in international trade disputes and a partner in the Geneva office of lawyers White & Case.
"It's wildly optimistic of the U.S. to think they'll get this back through negotiations," he told Reuters.
HEART OF THE SYSTEM
The dispute goes to the very heart of the global trading system umpired by the WTO to ensure that trade is fair for all.
It turns on the methodology for calculating the duties that countries are allowed to impose on imports that are sold at unfairly cheap prices in their markets.
Zeroing, now mainly used by the United States, leads to excessively high compensatory duties, other countries say.
The United States has now lost a dozen WTO disputes over zeroing, rulings strengthened on appeal in some cases by the WTO's top court, the Appellate Body.
Last month a key group of countries issued a statement denouncing zeroing for undermining the central goal of the Doha round -- trade liberalization.
Washington will therefore find it difficult to find supporters in the WTO, which operates by consensus, who will spell out a role for zeroing in a new deal when it has been ruled out of court in litigation, said McGivern, former head of dispute settlement in Canada's WTO mission.
Another case is brewing, with Japan unhappy that the U.S. has not dropped zeroing in line with an Appellate Body ruling last January.
As a result the United States has now abandoned zeroing in some cases. But it insists zeroing is allowed under WTO rules.
The head of the U.S. WTO mission, Peter Allgeier, denounced last month the "severely flawed legal reasoning" of the Appellate Body and told WTO members that a new trade deal would not get through the U.S. Congress without zeroing.
ENCOURAGED
The Americans have been encouraged by two things.
Firstly, the chairman of the Doha round talks on rules, which include anti-dumping, Guillermo Valles Galmes, issued a draft negotiating text at the end of November that allowed zeroing in certain circumstances.
Secondly, in the latest zeroing dispute at the WTO, a Mexican complaint about U.S. anti-dumping duties on stainless steel, the dispute panel last month ignored previous rulings from the Appellate Body and allowed zeroing in some cases.
Valles, who is Uruguay's WTO ambassador, saw his proposals on zeroing slammed by a range of countries from the European Union to India and Japan.
He is holding another round of negotiations in the week of January 21 where he expects key countries to propose the balance they say is missing from his paper.
Valles's proposals also upset the United States by retaining some bans on zeroing, introducing a limit of 10 years on anti-dumping measures instead of allowing them to run indefinitely, and calling for consumers as well as affected competitors to be consulted on the measures.
Valles points out that the negotiations on rules are different to the rest of the Doha Round. Whereas the long-term aim is to reduce tariffs and subsidies to zero, rules will always be there, evolving to meet changing circumstances.
"The challenge is for countries to imagine where they will be in 15 or 20 years," he told Reuters. "The object is that rules are used in a transparent and predictable way, with no country just a user or a target."
Indeed, some U.S. business lobbies are already calling on Washington to ensure that WTO rules such as zeroing cannot be abused to put up barriers against U.S. exports.
The National Retail Federation noted in November that the U.S. is now the third biggest target of anti-dumping actions.
And frequent targets China and India are increasingly bringing actions against other countries.
(Editing by Matthew Jones)
Monday, January 28, 2008
The French Protection: The Resurgence of Colbertian Statist Economics
http://www.pinr.com/report.php?ac=view_report&report_id=367
Economic Brief: French Protectionism
Report Drafted By:
Erich Marquardt, Dr. Federico Bordonaro
15 September 2005
On August 31, France announced that it would protect from buyouts by foreign companies domestic industries it considers as strategic. French Finance Minister Thierry Breton stated that the country's "very sensitive sectors" would be shielded from foreign bids. While the complete list of protected industries has not been made public yet, some of the protected industries were leaked to the media. As reported by Les Echos, the protected industries include defense, biotechnology, space technology, telecommunication companies, casinos, encryption, IT security, and antidote production.
France's turn toward protectionism follows a global pattern where states with advanced economies are shielding their domestic industries from foreign competition and from potential state rivals.
French Protectionism Returns
For many observers, the ongoing wave of "economic patriotism" advocated by French Prime Minister Dominique de Villepin is nothing else but the renewal of French-style protectionism marked by the Colbertian tradition of statist direction of the national economy.
After rumors circulated in the summer of 2005 about a possible bid from U.S. drinks giant PepsiCo Inc. for French food giant Danone, and a Wal-Mart bid on supermarket chain Carrefour, many in the French political landscape called for an immediate reaction by the current administration so that France's industrial gems could be saved from American takeover. Therefore, on July 27, de Villepin announced that he would gather all available forces to launch a new economic patriotism.
Additionally, France bailed out its major engineering company Alstom in order to promote the French idea of creating "national champions," and avoided Switzerland's Novartis from buying out the French and German pharmaceutical company Aventis by backing Sanofi's merger with Aventis to create Sanofi-Aventis.
E.U. Concern
Protectionist acts from one of the leading states of the European Union have caused justifiable concern in Brussels. Gregor Kreuzhuber, spokesman for the E.U. Commission, told the press that the E.U. does not "want to see any disguised protectionism" and that the E.U. would review France's proposed economic policy.
Paris, predicting the concern in Brussels, quickly argued that its actions would comply with E.U. economic laws. French Budget Minister Jean-Francois Cope explained to the press, "Our move is completely consistent with community law. … Each country is allowed to define 'strategic' sectors in accordance with national interests -- for example in the defense or sensitive technology sectors." Cope further stated, "It's strictly within this framework that the government is considering measures which would be comparable to those in other European Union countries."
While it is obvious that France will try to argue that its protectionist measures abide by E.U. rules and regulations, there is concern that Paris' actions could set an example for other E.U. states to take similar protectionist measures. The fact that the French have casinos listed as one of their strategic industries -- under the notion that casinos could be used for money laundering -- exemplifies E.U. concern that France's actions are "disguised protectionism."
In its attempt to avoid the E.U. from blocking the passage of the new legislation, France will no doubt try to protect only its most vital industries so as to not draw the scorn of Brussels, but also to protect enough industries so as to appeal to domestic interests at home.
Why Protectionism?
French protectionism partly emanates from Paris' concern with foreign companies purchasing major firms in strategic or pivotal industries. Similar to the way that the U.S. Congress reacted to China National Offshore Oil Corporation's attempted purchase of the U.S. energy company Unocal, Paris does not want to see vital industries owned by outside companies tied to the governments of foreign states.
Additionally, however, Paris also wants to protect its domestic industries so that the country does not sustain a loss of jobs, such as factories closing down and moving operations to Eastern Europe or Asia. It provides the French government popularity in time for the upcoming presidential and parliamentary elections in 2007; tackling unemployment and successfully coping with globalization's challenges are vital to enhance the administration's credibility. In fact, without appreciable results in reducing the jobless figure in the country, de Villepin will hardly get the necessary support to achieve his ambitious industrial and energy policy. [See: "Intelligence Brief: French Energy Policy"]
As previously mentioned, de Villepin made the protection of French manufacturers a major policy goal after the PepsiCo Inc. bid was announced. After the bid was presented, President Jacques Chirac was reported saying that "the splitting up and the instability of the capital of certain large French businesses are risk factors for employment and for our industrial strength." It was then that de Villepin boldly announced it was time for France to display "real economic patriotism," or, in other words, economic nationalism. He argued, "When times are hard, when the world is changing, it is a question of gathering our strengths … and defending France and things French."
While Paris' rhetoric is very bold, in the end the French policy is similar to unspoken protectionist policies in other states with advanced economies, as was most recently seen in the protectionist bid by the U.S. and the E.U. against Chinese textile imports.
The important difference, however, is that the protectionist actions in the face of increased Chinese textile imports were taken by the E.U. as a whole, whereas Paris' "economic patriotism" idea is distinctly French. [See: "Economic Brief: Textile Quotas"]
Despite this concern, Les Echos reported that the list of protected industries it acquired did not list any food companies or, for instance, oil companies. However, the French Industry Ministry did state that it would reserve the right to prevent foreign takeovers of companies that had subsidiaries involved in any of the listed "sensitive sectors" and that the government would make the decision to bar a foreign takeover on a case-by-case basis.
The Bottom Line
After decades of dominating political discourse, economic liberalism looks now in a crisis because important decision-makers (such as in France) perceive it as fiction that conceals the hard reality of economic warfare and power relations among states. If France's republican and social-democratic traditions form an axis with the neo-Gaullist right-wing and prevail in the short/medium term over the neo-liberal reformists, look for a new social and political bloc to take shape around the "economic patriotism" policy in France, with considerable consequences for the European Union as a whole.
Economic Brief: French Protectionism
Report Drafted By:
Erich Marquardt, Dr. Federico Bordonaro
15 September 2005
On August 31, France announced that it would protect from buyouts by foreign companies domestic industries it considers as strategic. French Finance Minister Thierry Breton stated that the country's "very sensitive sectors" would be shielded from foreign bids. While the complete list of protected industries has not been made public yet, some of the protected industries were leaked to the media. As reported by Les Echos, the protected industries include defense, biotechnology, space technology, telecommunication companies, casinos, encryption, IT security, and antidote production.
France's turn toward protectionism follows a global pattern where states with advanced economies are shielding their domestic industries from foreign competition and from potential state rivals.
French Protectionism Returns
For many observers, the ongoing wave of "economic patriotism" advocated by French Prime Minister Dominique de Villepin is nothing else but the renewal of French-style protectionism marked by the Colbertian tradition of statist direction of the national economy.
After rumors circulated in the summer of 2005 about a possible bid from U.S. drinks giant PepsiCo Inc. for French food giant Danone, and a Wal-Mart bid on supermarket chain Carrefour, many in the French political landscape called for an immediate reaction by the current administration so that France's industrial gems could be saved from American takeover. Therefore, on July 27, de Villepin announced that he would gather all available forces to launch a new economic patriotism.
Additionally, France bailed out its major engineering company Alstom in order to promote the French idea of creating "national champions," and avoided Switzerland's Novartis from buying out the French and German pharmaceutical company Aventis by backing Sanofi's merger with Aventis to create Sanofi-Aventis.
E.U. Concern
Protectionist acts from one of the leading states of the European Union have caused justifiable concern in Brussels. Gregor Kreuzhuber, spokesman for the E.U. Commission, told the press that the E.U. does not "want to see any disguised protectionism" and that the E.U. would review France's proposed economic policy.
Paris, predicting the concern in Brussels, quickly argued that its actions would comply with E.U. economic laws. French Budget Minister Jean-Francois Cope explained to the press, "Our move is completely consistent with community law. … Each country is allowed to define 'strategic' sectors in accordance with national interests -- for example in the defense or sensitive technology sectors." Cope further stated, "It's strictly within this framework that the government is considering measures which would be comparable to those in other European Union countries."
While it is obvious that France will try to argue that its protectionist measures abide by E.U. rules and regulations, there is concern that Paris' actions could set an example for other E.U. states to take similar protectionist measures. The fact that the French have casinos listed as one of their strategic industries -- under the notion that casinos could be used for money laundering -- exemplifies E.U. concern that France's actions are "disguised protectionism."
In its attempt to avoid the E.U. from blocking the passage of the new legislation, France will no doubt try to protect only its most vital industries so as to not draw the scorn of Brussels, but also to protect enough industries so as to appeal to domestic interests at home.
Why Protectionism?
French protectionism partly emanates from Paris' concern with foreign companies purchasing major firms in strategic or pivotal industries. Similar to the way that the U.S. Congress reacted to China National Offshore Oil Corporation's attempted purchase of the U.S. energy company Unocal, Paris does not want to see vital industries owned by outside companies tied to the governments of foreign states.
Additionally, however, Paris also wants to protect its domestic industries so that the country does not sustain a loss of jobs, such as factories closing down and moving operations to Eastern Europe or Asia. It provides the French government popularity in time for the upcoming presidential and parliamentary elections in 2007; tackling unemployment and successfully coping with globalization's challenges are vital to enhance the administration's credibility. In fact, without appreciable results in reducing the jobless figure in the country, de Villepin will hardly get the necessary support to achieve his ambitious industrial and energy policy. [See: "Intelligence Brief: French Energy Policy"]
As previously mentioned, de Villepin made the protection of French manufacturers a major policy goal after the PepsiCo Inc. bid was announced. After the bid was presented, President Jacques Chirac was reported saying that "the splitting up and the instability of the capital of certain large French businesses are risk factors for employment and for our industrial strength." It was then that de Villepin boldly announced it was time for France to display "real economic patriotism," or, in other words, economic nationalism. He argued, "When times are hard, when the world is changing, it is a question of gathering our strengths … and defending France and things French."
While Paris' rhetoric is very bold, in the end the French policy is similar to unspoken protectionist policies in other states with advanced economies, as was most recently seen in the protectionist bid by the U.S. and the E.U. against Chinese textile imports.
The important difference, however, is that the protectionist actions in the face of increased Chinese textile imports were taken by the E.U. as a whole, whereas Paris' "economic patriotism" idea is distinctly French. [See: "Economic Brief: Textile Quotas"]
Despite this concern, Les Echos reported that the list of protected industries it acquired did not list any food companies or, for instance, oil companies. However, the French Industry Ministry did state that it would reserve the right to prevent foreign takeovers of companies that had subsidiaries involved in any of the listed "sensitive sectors" and that the government would make the decision to bar a foreign takeover on a case-by-case basis.
The Bottom Line
After decades of dominating political discourse, economic liberalism looks now in a crisis because important decision-makers (such as in France) perceive it as fiction that conceals the hard reality of economic warfare and power relations among states. If France's republican and social-democratic traditions form an axis with the neo-Gaullist right-wing and prevail in the short/medium term over the neo-liberal reformists, look for a new social and political bloc to take shape around the "economic patriotism" policy in France, with considerable consequences for the European Union as a whole.
Sunday, January 27, 2008
Biofuels Protectionism Trumps Climate Concerns: Just How Green is Biofuel?
http://www.reuters.com/article/GlobalAgricultureandBiofuels08/idUSN1661111120080116?sp=true
Biofuels protectionism trumps climate concerns
By Inae Riveras
Reuters
January 16, 2008
SAO PAULO (Reuters) - Despite world concerns about global warming and the impact of biofuel production on food prices, policy makers have done little to boost international trade of cheaper and more environmentally friendly fuels for consumers, experts said.
Import tariffs and trade barriers have prevented, for example, an increase in cane-based ethanol exports from Brazil, the world's most competitive producer of the biofuel. Shipments are actually expected to be lower in 2008 than last year.
In Europe, biodiesel producers have been hit by an increase in U.S. imports, which benefit from subsidies if they are blended with mineral diesel. To counterattack, the EU bloc may impose countervailing duties, industry leaders said.
The EU has also been affected by large volumes of Argentine biodiesel at cheap prices, which are encouraged by preferential taxes. The product is charged a 5 percent tariff by Argentina's government, while edible oil exports have a 30 percent duty.
"Some countries are trying to solve a world problem, which is global warming and climate change, just with national solutions," said the head of Brazil's Sugar Cane Industry Union (Unica), Marcos Jank, at the Reuters Global Agriculture and Biofuel Summit.
According to Unica, cane-based fuel has higher productivity than other feedstocks. Sugar cane yields seven liters of ethanol per hectare compared with three liters with corn.
Production costs are lower, and energy efficiency -- amount of energy used in the process versus energy resulting -- is five times higher with cane than with corn, Unica said.
Moreover, its impact on food prices is much more limited than the one caused by corn or wheat. Almost a third of the next U.S. crop may be turned into fuel, increasing upward pressure on food inflation.
But tariffs in some of the world's largest fuels markets like the U.S. and Europe will limit ethanol exports. Shipments from Brazil are to drop this year to 3.4 billion liters, down from 3.8 billion liters in 2007, Datagro consultants said.
GLOOM PERSPECTIVES
Unica argues its position is not self-promotional as cane-based ethanol could come also from Asia, Africa or South America. More than 100 countries -- most of them poor nations -- have natural conditions to grow cane.
"Europe is trying to subsidize their farmers to produce ethanol from beet and wheat instead of buying ethanol from abroad. The same happens in the U.S. Most of the ethanol there will come from corn, probably from biomass in the future, but not imported (ethanol)," Jank said.
"We believe that if these countries consider to import more from developing countries, the energy and environmental balance would be much better, and costs would be much lower."
But signals from these countries point to the opposite direction.
The chairman of the U.S. House Agriculture Committee, Rep. Collin Peterson, said on Tuesday tax credits and tariffs on ethanol would have to be maintained to create the necessary conditions for the development of cellulosic ethanol.
"We are hoping that we won't have any changes in the tax or tariffs any time soon," he said.
Brazilian ethanol is charged with a 54-cent-a-gallon tariff to enter the U.S. market. This makes direct sales possible only on specific and uncommon occasions, depending on low prices in Brazil and high prices in the United States.
And perspectives remain negative as the U.S. passed in December its Energy Bill, which sets a target for biofuel use of 36 billion gallons -- none of them imported, in principle.
"They (U.S.) won't open their market. They will stick to its import tariff and create a quota, and then administrate this quota under geopolitical criteria," said the president of Brazil's Datagro consultants, Plinio Nastari.
Wallace Tyner, professor at Purdue University in West Lafayette, Indiana, said it would be necessary either alter the mandate or change the tariff for U.S. to meet its goal.
"Brazil and a lot of Central American countries have a capacity to expand pretty quickly their ethanol production if they get signals that there's a market for it," Tyner said.
Biofuels protectionism trumps climate concerns
By Inae Riveras
Reuters
January 16, 2008
SAO PAULO (Reuters) - Despite world concerns about global warming and the impact of biofuel production on food prices, policy makers have done little to boost international trade of cheaper and more environmentally friendly fuels for consumers, experts said.
Import tariffs and trade barriers have prevented, for example, an increase in cane-based ethanol exports from Brazil, the world's most competitive producer of the biofuel. Shipments are actually expected to be lower in 2008 than last year.
In Europe, biodiesel producers have been hit by an increase in U.S. imports, which benefit from subsidies if they are blended with mineral diesel. To counterattack, the EU bloc may impose countervailing duties, industry leaders said.
The EU has also been affected by large volumes of Argentine biodiesel at cheap prices, which are encouraged by preferential taxes. The product is charged a 5 percent tariff by Argentina's government, while edible oil exports have a 30 percent duty.
"Some countries are trying to solve a world problem, which is global warming and climate change, just with national solutions," said the head of Brazil's Sugar Cane Industry Union (Unica), Marcos Jank, at the Reuters Global Agriculture and Biofuel Summit.
According to Unica, cane-based fuel has higher productivity than other feedstocks. Sugar cane yields seven liters of ethanol per hectare compared with three liters with corn.
Production costs are lower, and energy efficiency -- amount of energy used in the process versus energy resulting -- is five times higher with cane than with corn, Unica said.
Moreover, its impact on food prices is much more limited than the one caused by corn or wheat. Almost a third of the next U.S. crop may be turned into fuel, increasing upward pressure on food inflation.
But tariffs in some of the world's largest fuels markets like the U.S. and Europe will limit ethanol exports. Shipments from Brazil are to drop this year to 3.4 billion liters, down from 3.8 billion liters in 2007, Datagro consultants said.
GLOOM PERSPECTIVES
Unica argues its position is not self-promotional as cane-based ethanol could come also from Asia, Africa or South America. More than 100 countries -- most of them poor nations -- have natural conditions to grow cane.
"Europe is trying to subsidize their farmers to produce ethanol from beet and wheat instead of buying ethanol from abroad. The same happens in the U.S. Most of the ethanol there will come from corn, probably from biomass in the future, but not imported (ethanol)," Jank said.
"We believe that if these countries consider to import more from developing countries, the energy and environmental balance would be much better, and costs would be much lower."
But signals from these countries point to the opposite direction.
The chairman of the U.S. House Agriculture Committee, Rep. Collin Peterson, said on Tuesday tax credits and tariffs on ethanol would have to be maintained to create the necessary conditions for the development of cellulosic ethanol.
"We are hoping that we won't have any changes in the tax or tariffs any time soon," he said.
Brazilian ethanol is charged with a 54-cent-a-gallon tariff to enter the U.S. market. This makes direct sales possible only on specific and uncommon occasions, depending on low prices in Brazil and high prices in the United States.
And perspectives remain negative as the U.S. passed in December its Energy Bill, which sets a target for biofuel use of 36 billion gallons -- none of them imported, in principle.
"They (U.S.) won't open their market. They will stick to its import tariff and create a quota, and then administrate this quota under geopolitical criteria," said the president of Brazil's Datagro consultants, Plinio Nastari.
Wallace Tyner, professor at Purdue University in West Lafayette, Indiana, said it would be necessary either alter the mandate or change the tariff for U.S. to meet its goal.
"Brazil and a lot of Central American countries have a capacity to expand pretty quickly their ethanol production if they get signals that there's a market for it," Tyner said.
The Time For Doha Is Now
http://www.merinews.com/catFull.jsp?articleID=129745
2008 is ‘make or break’ for Doha trade talks: World leaders
MeriNews, India
Amidst fears of a worldwide fiscal depression mounting, trade leaders at the WEF pressed businesses to push their governments to seek a successful conclusion to the Doha Round of trade talks this year or risk rise in new barriers to international business
WITH FEARS of a global economic recession growing, trade leaders at Davos urged businesses to press their governments to seek a successful conclusion to the Doha Round of trade talks in 2008, or risk seeing a rise in new barriers to international commerce.
“If it’s not concluded this year, it won’t be concluded next year - and by 2010 the caravans will have moved on elsewhere,” Peter Mandelson, commissioner, Trade, European Commission, Brussels, told participants at the World Economic Forum Annual Meeting 2008. “Not only will the caravans have moved on in different directions of trade negotiations, but what has already been on the table, which in my view is quite substantial, will have been put into deep freeze.”
After more than six years of stop-start negotiations, the Doha talks between members of the World Trade Organization have ground to a halt. With less than a year before US President George Bush leaves office, time is rapidly running out for reaching an agreement to reduce tariffs, subsidies and promote freer and fairer trade, panelists said.
The plenary session “Threats to the Global Trading System” followed an informal lunch meeting of trade ministers in Davos. Despite important progress on technical issues over the past six months, panelists revealed, the group remains no closer to an agreement and scepticism is high. Concerns persist among developing countries that lower tariffs will unfairly expose poor rural farmers to global competition and jeopardise growth that would be a potential buffer against a global slowdown.
“The content of this Round must deliver to healthy economies in Asia, in Africa, in the Pacific and in Latin America because that’s the goose that’s laying the golden egg,” said Kamal Nath, minister of Commerce and Industry of India.
But the cost of failure is rising, panelists said. Failure in the Doha Round would be likely to increase protectionist pressures around the world and result in a rollback from the progress already made towards freer global trade. Mandelson said the negotiations had become a prisoner to some extent of the American political calendar. Campaigning is already underway for elections to replace Bush next January, and a new president is unlikely to be able to put the Doha Round at the front of the US policy agenda, he said. The new President is likely to want to review any commitments that have already been made.
President Bush remains strongly committed to reaching a trade deal, insisted US representative Susan Schwab, and bipartisan support for a deal in the US Congress means there is still time to ratify a deal if one can be reached, she said.
Pascal Lamy, director general, World Trade Organization (WTO), Geneva, said a failure in the talks could exacerbate the impact of a slowing global economy and heighten geopolitical tensions. Celso Amorim, minister of Foreign Relations of Brazil, echoing these concerns, said failure to reach a deal in 2008 would “give the wrong signals to the global economy. And this will be detrimental to everybody, most of all the developing economies.”
Indeed, continued delays had lost the negotiators’ credibility among voters and companies, said Doris Leuthard, federal councillor of Economic Affairs of the Swiss Confederation. “When we don’t get a result, national protectionism is a big threat,” she said.
While businesses may be frustrated with the lack of progress in the Doha Round, companies still have a great deal to gain from it, Mandelson stressed - and a great deal to lose if a deal is not reached. “There is very significant economic value in binding the existing openness in the global economy,” he said.
Companies, therefore, most overcome their scepticism to push for a successful deal, panelists said. “The capacity of any one of us to deliver such a package through our political systems will depend in large measure on what the private sector is doing and saying, and whether they hold accountable leaders in their countries,” said Schwab.
2008 is ‘make or break’ for Doha trade talks: World leaders
MeriNews, India
Mineguruji, 27 January 2008,
Amidst fears of a worldwide fiscal depression mounting, trade leaders at the WEF pressed businesses to push their governments to seek a successful conclusion to the Doha Round of trade talks this year or risk rise in new barriers to international business
WITH FEARS of a global economic recession growing, trade leaders at Davos urged businesses to press their governments to seek a successful conclusion to the Doha Round of trade talks in 2008, or risk seeing a rise in new barriers to international commerce.
“If it’s not concluded this year, it won’t be concluded next year - and by 2010 the caravans will have moved on elsewhere,” Peter Mandelson, commissioner, Trade, European Commission, Brussels, told participants at the World Economic Forum Annual Meeting 2008. “Not only will the caravans have moved on in different directions of trade negotiations, but what has already been on the table, which in my view is quite substantial, will have been put into deep freeze.”
After more than six years of stop-start negotiations, the Doha talks between members of the World Trade Organization have ground to a halt. With less than a year before US President George Bush leaves office, time is rapidly running out for reaching an agreement to reduce tariffs, subsidies and promote freer and fairer trade, panelists said.
The plenary session “Threats to the Global Trading System” followed an informal lunch meeting of trade ministers in Davos. Despite important progress on technical issues over the past six months, panelists revealed, the group remains no closer to an agreement and scepticism is high. Concerns persist among developing countries that lower tariffs will unfairly expose poor rural farmers to global competition and jeopardise growth that would be a potential buffer against a global slowdown.
“The content of this Round must deliver to healthy economies in Asia, in Africa, in the Pacific and in Latin America because that’s the goose that’s laying the golden egg,” said Kamal Nath, minister of Commerce and Industry of India.
But the cost of failure is rising, panelists said. Failure in the Doha Round would be likely to increase protectionist pressures around the world and result in a rollback from the progress already made towards freer global trade. Mandelson said the negotiations had become a prisoner to some extent of the American political calendar. Campaigning is already underway for elections to replace Bush next January, and a new president is unlikely to be able to put the Doha Round at the front of the US policy agenda, he said. The new President is likely to want to review any commitments that have already been made.
President Bush remains strongly committed to reaching a trade deal, insisted US representative Susan Schwab, and bipartisan support for a deal in the US Congress means there is still time to ratify a deal if one can be reached, she said.
Pascal Lamy, director general, World Trade Organization (WTO), Geneva, said a failure in the talks could exacerbate the impact of a slowing global economy and heighten geopolitical tensions. Celso Amorim, minister of Foreign Relations of Brazil, echoing these concerns, said failure to reach a deal in 2008 would “give the wrong signals to the global economy. And this will be detrimental to everybody, most of all the developing economies.”
Indeed, continued delays had lost the negotiators’ credibility among voters and companies, said Doris Leuthard, federal councillor of Economic Affairs of the Swiss Confederation. “When we don’t get a result, national protectionism is a big threat,” she said.
While businesses may be frustrated with the lack of progress in the Doha Round, companies still have a great deal to gain from it, Mandelson stressed - and a great deal to lose if a deal is not reached. “There is very significant economic value in binding the existing openness in the global economy,” he said.
Companies, therefore, most overcome their scepticism to push for a successful deal, panelists said. “The capacity of any one of us to deliver such a package through our political systems will depend in large measure on what the private sector is doing and saying, and whether they hold accountable leaders in their countries,” said Schwab.
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