Obama Picks Ron Kirk as Trade Representative

By Michael Cebon | December 23, 2008

The incoming Obama administration has annouced that Ron Kirk will be the new US Trade Representative. (We previously linked to reports that Xavier Becerra would be the new USTR, but apparently he said no.)

Kirk is a former mayor of Dallas, Texas, who doesn’t seem to have much of a background on trade issues.

But there is cause for some cautious optimism, with APF reporting that

The Democrat is strongly backed by trade unions and opposes free trade pacts with Colombia and South Korea that were signed under President George W Bush’s administration

In announcing Kirk, Obama also said some excitingly progressive things about his future trade policy, including that FTAs “must be written not just with the interest of big corporations in mind, but with the interests of our whole nation and our workers at heart.” He also said that Kirk has “seen the promise of trade, but also its pitfalls, and he knows there is nothing inconsistent about standing up for free trade and standing up for American workers.”

On the flip side Kirk has spent the last 5 years working as a corporate lobbyist for Energy Future Holdings Corporation, a group created by Kohlberg Kravis Roberts, TPG Capital and Goldman Sachs to acquire power utility TXU.

There’s some more background on Kirk here.

Topics: US Trade Policy | No Comments »

Asian Monetary Fund?

By Michael Cebon | December 18, 2008

Apparently the 10 countries of ASEAN are ready to set up an Asian Monetary Fund - an idea which has been floating around since the 1997-8 Asian Financial Crisis.  AFP is reporting that an “AMF” worth $120 billion will be set up at a regional meeting in February.  The idea for an AMF emerged after it became obvious that the policies imposed by the IMF on Asian borrowers were the main reason for the financial crisis.  Civil society has been criticising the IMF & world bank’s so-called “conditionality” policies for a long time, so it’s exciting that this might be the beginning of the end of such destructive policies, at least in Asia.

But Reuters is reporting that Asian countries hit hard by the current financial crisis will have little choice but to continue to seek IMF loans. Reuters thinks that

one reason why more ambitious ideas such as a regional crisis fund to bail out banks or invest in equities proposed by the Philippines and Thailand have come to nothing is a reluctance of richer nations such as Japan to lend money without strong IMF-style safeguards.

I guess we’ll see who’s right come February.

Topics: Global Economics, IMF & World Bank | No Comments »

Out of (South) Africa

By Michael Cebon | December 12, 2008

Johanesburg’s The Times has a great article this week looking at the way that the IMF & World Bank have influenced the policies of post-aparteid South Africa.  The article is an excerpt from ANC MP Ben Turok’s new book From the Freedom Charter to Polokwane: The Evolution of ANC Economic Policy.

And for an amazing insight into just how destructive these economic policies have been for ordinary South African’s there’s an extraordinary article in Harpers Magazing this month entitled Mandela’s Smile. (It’s not specifically on the issue of globalisation, but it gives a heartfelt perspectives on the ravages of free-market economic fundementalism, as practiced in South Africa.)

Topics: IMF & World Bank | No Comments »

Obama’s Pick for US Trade Rep?

By Michael Cebon | December 12, 2008

Apparently Obama is likely to choose Rep. Xavier Becerraas his new Trade Representative.  You can read a bit about him here.

Topics: US Trade Policy | No Comments »

FTAs Badly Failing Australia

By Michael Cebon | December 11, 2008

The Australian Parliamentary Library has released a Background Note analysing Australia’s bilateral Free Trade Agreements (FTAs) which shows how clearly destructive they have been (although the analysis is only from an economic perspective).  It starts by noting that FTAs aren’t really that much about trade anyway:

Research suggests that FTAs offer little in the way of trade liberalisation and a shift to more liberal trade policies, particularly in agricultural trade. Rather, FTAs are used more often to promote other non-economic, diplomatic and regional interests

The report notes that thanks to the:

The report ends with a scathing assessment of the impacts of Australia’s FTAs:

The FTAs were followed by higher Australian trade deficits and a much slower rate of reciprocal export growth, as well as trade diversion as products were sourced from countries with which Australia has zero tariffs.

The potential risks of the current FTA model adopted by Australia are clear: structural trade imbalances leading to higher trade deficits favouring the FTA partner country, long phase-in periods for free trade (in particular agricultural trade), and negative impacts on the Australian economy which are related to trade diversion.

The anticipated gains for Australian exporters have fallen well short of estimates. Given the growing importance of FTAs in the Asia-Pacific economy, policymakers need to evaluate FTA models and their importance relative to the region’s most significant multilateral project, APEC.

So Mr Rudd (& Mr Crean), why are we negotiating more of these agreements?

Topics: Australian Trade Policy, Global Economics | 1 Comment »

Globalisation & the Decline of the Welfare State

By Michael Cebon | December 4, 2008

Dani Rodrik points to some interesting economic research which “suggests that as technological progress and multilateral trade liberalisation have made borders less of a barrier to economic activity, the scope of redistribution policies has become smaller.”

Apparently there is a correlation between a more open economy and lower spending on social welfare programs. This makes sense, given the observed increase in economic inequality which has flowed from increased opening of markets around the world.

Interestingly, the authors conclude that the current fragility of financial markets “does not bode well for globalisation.”

The breakdown of private financial markets excites calls for stronger redistribution. If redistribution is national (as it has to be as long as politics are national), it will only be sustainable if national borders become less permeable to economic activity.

The Guardian today passes on a similar concern from the World Trade Organisation’s director-general Pascal Lamy:

He is concerned that economic distress in the US, Europe and Asia is already prompting countries to use protectionist weapons yet to be outlawed by the WTO - raising tariffs to the maximum permitted, and introducing anti-dumping regulations.

This seems to be aimed very much at the US, where members of Congress from both parties have written to President Bush to make sure that the US continues to be a big winner from any agreement of the Doha Round of trade talks:

“Developed and advanced developing countries must commit to provide meaningful new market access opportunities [for the US] if Congress is to support a deal.”

This leaves the so-called Doha “Development” round, which was supposed to be first and foremost about securing the interests of developing countries, not looking in very good shape.  Which is probably good news, both for developing countries, but also for the poor in rich countries, which might see a bit more wealth flowing their way as “national borders become less permeable to economic activity.”

Topics: Global Economics, Global Inequality | No Comments »

Do tariffs matter any more?

By Michael Cebon | December 4, 2008

Martin Feil has an interesting article in The Age today criticising “free trade” as not particularly free.  he argues that

The global industry protection policy development of the past 30 years has moved light years away from tariffs and has extended into the much broader arena of every other form of government assistance.

Our government is giving money to the car industry. It is guaranteeing the money markets. It is lowering interest rates to stimulate sales in the finance sector. It will tax us to pay for innovations in climate change. It will give individuals cash gifts to stimulate spending. It will spend the surplus to bring infrastructure forward to create jobs in the construction industry. It is picking winners and losers all over the place.

So does that mean that tariff levels are pretty irrelevant now?  (In Australia at least…)

And a more important question: If successful economies are using government assistance in place of tariffs to protect and support their economies, where does that leave developing countries?  Restricted in their use of tariffs by mulilateral or bilateral trade agreements, but unable to afford significant government assistance to industry in the ways listed above, how are developing countries supposed to develop?

Topics: Australian Trade Policy, Global Economics | No Comments »

Alcoa argues for interests of “future generations” to take precedence over exports

By Michael Cebon | November 30, 2008

What is the world coming to?  It was reported today that Alan Cransberg, chairman of the Australian arm of the mutlinational aluminium producer Alcoa, said that

“For too long we have been focused on expanding and maximising energy exports, without proper protection for our own future generations.”

What?  Read that again - not only is he arguing for “protection” of particular interests against the blind short-termism of maximising Australian exports for short term gain, but he is doing it with his vision set of the rights and needs of “future generations”!

For decades environmentalists have argued that the rights of future generations need to be taken into account when decisions about resource extraction and pollution are being made.  And for years “fair traders” have argued that the needs of people and then environment should take perference over the simple maximisation of exports for short term gain.  It’s incredibly exciting to realise that these concepts are now well and truly mainstream.

Topics: Australian Trade Policy, Globalisation & Energy, Globalisation & the Environment | No Comments »

Australia-Chile FTA passes parliament

By Michael Cebon | November 14, 2008

The implementing legislation for the Australia-Chile Free Trade Agreement - Customs Amendment (Australia-Chile Free Trade Agreement Implementation) Act 2008 - passed the Australian Senate yesterday.  (You can read the House of Representatives “debate” on the bill here).  The media seems to have completely ignored this, presumably because the economic impacts for Australia will be relatively minor.

Indeed so minor, that it really begs the question of why the government went to the trouble of negotiating the agreement in the first place.

In 2006, Australia’s total merchandise exports to Chile were just $233 million - that is about one thousandth of our total merchandise exports of $180billion.

Perhaps the real reason is that 57% of Australia’s exports to Chile are coal, and the fact that we now have an FTA with them probably says more about the power of the coal industry in Australia than anything else.

However, there has been some real concern from Australian farmers that the deal will have a significant adverse impact on Australian horticulture.  Because Chile is in the southern hemisphere its produce - grown by workers paid about 40% less than Australian horticultural wages - will increasingly be competing directly with Australian produce on supermarket shelves.

A further concern is that this is Australia’s 3rd FTA (alongside agreements with Thailand and Singapore) to include “investor-state” provisions, which allow foreign investors to demand compensation from governments for regulations or laws which “expropriate” their property rights, which can include their right to future profits.  Under the FTA, investors can “sue” the government at the International Centre for Settlement of Investment Disputes (ICSID), an undemocratic, non-transparent arbitration court run by the World Bank.  Thus the agreement confers rights on foreign investors beyond those enjoyed by Australian investors.

This agreement explicitly allows “expropriation” to include government actions which have “an effect equivalent to direct expropriation without formal transfer of title or outright seizure”.  Such provisions have been abused by large corporations - most famously under the NAFTA agreement - to demand large sums of money from governments resulting from new environmental and health regulations.

The negotiators of this FTA have tried to avoid this with a section which states that “Except in rare circumstances, non-discriminatory regulatory actions by a Party that are designed and applied to protect legitimate public welfare objectives, such as public health, safety, and the environment, do not constitute indirect expropriations.”

The big question is: what are the “rare circumstances” where public health or environmental laws DO constitute expropriation?  And will the government have to explore this in future in an undemocratic, international arbitration court whose decisions are binding?

For some other concerns with this FTA, you can read the submission to the Joint Standing Committee on Treaties from AFTInet.

UPDATE: you can also read some concerns about intellectual property in the Australia-Chile FTA from ANU academic Mathew Rimmer.

Topics: Australian Trade Policy | 1 Comment »

New GlobalAction.org.au site focusing on Nov 15

By Michael Cebon | November 11, 2008

On November 15, prompted by the global financial crisis, the heads of the G20 group of countries will gather behind closed doors in Washington to discuss the reform of the global economic system.  Across the world on November 15 people will be protesting the G20 summit.

Instead of an exclusive meeting of only 20 countries, hundreds of civil society and citizens organisations from around the world are demanding a democratic, inclusive process that doesn’t see us heading down the same path we’ve been on to disaster.  It’s time for a radically different economic system which reduces inequality, creates jobs, puts people before profit, ensures a sustainable environment, and puts eradicating poverty at its heart. We need a ‘green new deal’ that will revolutionise the economy.

Global Trade Watch has been working with Jubilee Australia and the Australian Fair Trade and Investment Network to build a new website at http://www.globalaction.org.au, with information for Australians about the global day of action on Saturday, and actions you can take to make your voice heard. Check it out.

Topics: Events & Actions | No Comments »

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