Economic Integration
Economic Integration & Cooperation Archive
BRAZIL ON THE INTERNATIONAL STAGE.
Council on Foreign Relations. Stephanie Hanson. July 21, 2009.
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In the past several years, Brazil has assumed a more prominent voice on global trade and energy issues. As the global financial crisis took hold in 2008, Brazil appeared poised to recover more quickly than many others due to strong industrial and agricultural exports. Brazil's economic rise has led it to pursue greater influence in international forums at the same time that it fosters cooperation among countries in the developing world with "south-south" initiatives. Analysts say that the United States stands to benefit from a stronger Brazil that serves as a partner on energy and regional security initiatives, but it must be careful not to view Brazil's rise as a challenge, or, during a time of great economic turmoil, neglect the relationship.
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DECLARATION OF THE SUMMIT ON FINANCIAL MARKETS AND THE WORLD ECONOMY.
White House. November 15, 2008.
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Since the outbreak of the financial crisis, the world’s leading nations have coordinated actions more closely than ever before. In large part to these decisive measures, once frozen global credit markets are beginning to thaw and businesses, around the world, are gaining access to essential short-term financing. No single nation will be able to fix this crisis, but with continued cooperation and determination, it will be solved with commitment to reform financial sectors and maintain free and open markets.
FDI SPILLOVERS AND THEIR INTERRELATIONSHIPS WITH TRADE.
Organisation for Economic Co-operation and Development. Molly Lesher and Sebastien Miroudot. October 7, 2008.
Full Text [PDF format, 40 pages]
Foreign direct investment (FDI) represents an increasingly important dimension of international economic integration with global FDI flows growing faster than output over the past two decades.
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INTERNATIONAL COOPERATION FOR THE FINANCIAL CRISIS.
Brookings Institution. Ralph C. Bryant. October 2, 2008.
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The financial meltdown is now worldwide. Financial institutions have failed or are under severe pressure not only in the United States but in the United Kingdom, Belgium, the Netherlands, Germany, France, Italy, Ireland, Iceland, Russia, China, India, and other nations. The turmoil began with falling prices for housing and for securities and derivatives backed by mortgages. But it is increasingly unanchored from those original causes. Herd behavior and self-fulfilling expectations are now threatening even healthy, adequately capitalized institutions.
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INNOVATION, INCLUSION AND INTEGRATION: FROM TRANSITION TO CONVERGENCE IN EASTERN EUROPE AND THE FORMER SOVIET UNION.
World Bank. Pradeep Mitra. July 2008.
Full Text [pdf format, 161 pages]
According to the report, the countries of Eastern Europe and the former Soviet Union have put the crisis of the 1990s behind them, but they need to innovate, include all their citizens in the development of their countries, and integrate with the broader global economy if they want to sustain growth. The growth of productivity, a viable route to lasting prosperity, depends on a supportive business environment, specifically one that delivers competition, a deep financial sector, good governance, and superior skills and infrastructure.
[Note: contains copyrighted material]
RUSSIA'S ACCESSION TO THE WTO.
[Congressional Research Service, RL31979, Library of Congress]. William H. Cooper. Updated January 7, 2008.
Full Text [pdf format, 29 pages]
Accession to the WTO is critical to Russia and its political leadership. President Vladimir Putin has made it a top priority. He views accession as an important step in integrating the Russian economy with the rest of the world and in fostering economic growth and development by attracting foreign investment and by lowering trade barriers. For the United States, the European Union (EU) and other trading partners, Russia’s accession to the WTO could increase stability and predictability in Russia’s foreign trade and investment regime.
DISPUTE SETTLEMENT UNDER THE PROPOSED U.S.-PERU TRADE PROMOTION AGREEMENT: AN OVERVIEW.
Congressional Research Service, RS22752, Library of Congress. Jeanne J. Grimmett, et. al. Web posted February 10, 2008.
Full Text [pdf format, 6 pages]
The proposed U.S.-Peru Trade Promotion Agreement (TPA) follows current U.S. free trade agreement practice. Implementing legislation was signed into law December 14, 2007 (P.L. 110-138); the TPA has not yet entered into force. This report will be updated.
GLOBALIZATION AND INNOVATION IN EMERGING MARKETS.
Institute for Study of Labor, Discussion Paper No. 3299. Yuriy Gorodnichenko, et. al., January 2008.
Full Text [pdf format, 43 pages]
Globalization brings opportunities and pressures for domestic firms in emerging markets to innovate and improve their competitive position. Using recent data on firms in 27 transition economies, the authors test for the effects of globalization through the impact of increased competition and foreign investment.
[Note: Contains copyrighted material.]
THE G20 AFTER EIGHT YEARS: HOW EFFECTIVE A VEHICLE FOR DEVELOPING-COUNTRY INFLUENCE? Leonardo Martinez-Diaz. Working Paper, Global Economy and Development, Brookings Institution. Web posted October 22, 2007.
Full Text [pdf format, 31 pages]
This paper tries to determine if G20 (Group of Twenty Finance Ministers and Central Bank Governors) participation has strengthened the influence of developing countries in global governance. The results show that after “eight years, the G20 has done little to enhance developing-country influence,” but the authors advocate that it is too early to give up on the G20.
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Walker, Martin GLOBALIZATION 3.0 (Wilson Quarterly, vol. 31, no. 4, Autumn 2007, pp. 16-24)
Full text available from your nearest American Library
The author, a senior scholar at the Wilson Center, writes that “Globalization 2.0” –- the network of Western-dominated international organizations founded after World War II to foster global trade -- gave way to “Globalization 3.0” when China was granted WTO membership. With that event, a new era of globalization dawned, in which the West can no longer set the rules for world trade. Walker notes that globalization has been “one of the greatest achievements of the human race”, in which hundreds of millions of people worldwide have been able to pull themselves out of abject poverty. However, it also represents an unprecedented transfer of economic power from the West to the rising economies of Asia and the Middle East. Emerging countries in Africa and Latin America are no longer dependent on the World Bank or the IMF for economic development; China, with its colossal foreign-currency reserves and insatiable appetite for resources, has become the developing world’s biggest customer and investor. Walker notes that “3.0” may sow some seeds of its own undoing, as anti-globalization sentiment grows among middle classes who sense that they are not sharing in the economic growth, or concerns about greenhouse-gas emissions and environmental degradation may erode support for global trade. However, he notes, the real test of the globalization “that the West built, but which is now coming under new management”, is if it continues to allow the global poor to better their circumstances.
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Yiwei, Wang CHINA'S RISE: AN UNLIKELY PILLAR OF US HEGEMONY (Harvard International Review, vol. 29, no. 1, Spring 2007, pp. 56-59)
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China's economic rise, characterized by huge reserves of U.S. dollars and a towering trade surplus with the United States, is bolstering rather than undermining U.S. global hegemony, asserts the author, a professor at Fudan University in Shanghai. With their interlocking economies accounting for half of global economic growth, the author states, "China's rise is actually supporting US hegemony." He argues that China's economic growth dampens criticism of U.S.-led globalization and thwarts the development of regional trading blocs. If regionalization became the dominant economic trend, then the United States would see its global influence curtailed, although it would certainly remain the preeminent power in North America, Yiwei writes. "Regionalization cannot be sustainable in the long run, and could result in a far more unstable world than one marked by a power-sharing arrangement between China and the United States," he concludes.
ECONOMIC INTEGRATION, GROWTH, AND POVERTY. Xavier Sala-i-Martin. Integration and Trade Policy Issues Paper, Integration and Trade Sector, Inter-American Development Bank. July 2007.
Full Text [pdf format, 39 pages]
In the past thirty years, global poverty rates have fallen by two thirds, economic growth has increased, and individual inequality has dropped. During this same period, international trade has increased more than 60 percent. Many suggest that regional trade agreements have played a major role in this increase. Presently there are over 200 regional trade agreements and another 60 are being negotiated.
This paper argues that poverty reduction, economic growth, and economic integration are related. The author reviews the theoretical mechanisms that boosts trade growth, reduces poverty, and increases incomes.
U.S.-EUROPEAN UNION RELATIONS AND THE 2007 SUMMIT. Raymond Ahearn, Kristin Archick, and Paul Belkin. Congressional Research Service, Library of Congress. Updated May 14, 2007.
Full Text [pdf format, 6 pages]
Over the years, past Congresses and administrations have supported the European Union (EU) in fostering a stable Europe, cultivating democratic states, and promoting trading partners. However, over the past five years, trade and foreign policy conflicts have strained this relationship. Both the U.S. and EU have worked to improve cooperation and renew their commitment to tackling global challenges.
This report summarizes the actions at the annual U.S.-EU summit in April 2007.
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Detomasi, David Antony THE MULTINATIONAL CORPORATION AND GLOBAL GOVERNANCE: MODELLING GLOBAL PUBLIC POLICY NETWORKS (Journal of Business Ethics, vol. 71, no. 3, March 2007, pp. 321-334)
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Globalization has increased the trans-border economic power of multinational corporations (MNCs), giving rise to concerns about their social accountability. Who is to provide governance and enforce corporate social responsibility (CSR)? Several well-known actors – national governments, international organizations, NGOs and industry associations – try to keep MNCs in check, but all of them, taken separately, display serious weaknesses and limitations. The author, an assistant professor of international business at Queen’s University, Ontario, argues that the only governance entities capable of establishing and enforcing CRS standards globally are Global Public Policy Networks (GPPNs). In such informal networks “the strengths of state, market, and civil society actors combine to create an effective international governance system that overcomes the weaknesses afflicting each individually.” The author says that GPPNs, empowered by the common interests of their participants, already are beginning to emerge and engender a number of global corporate codes of conduct, such as OECD’s Guidelines for Multinational Enterprises or the United Nations Global Compact initiative. Unlike a state, the international system lacks centralized governing institutions, but is not bereft of governance – a set of rules and regulatory mechanisms that “function effectively even though they are not endowed with formal authority,” writes the author. In his view, emerging GPPNs are one example of how such governance can be instituted and successfully exercised in today’s globalized world.
CHINA ENERGY: A GUIDE FOR THE PERPLEXED. Daniel H. Rosen and Trevor Houser. Center for Strategic and International Studies (CSIS) and Peterson Institute for International Economics. Web posted May 9, 2007.
Full Text [pdf format, 49 pages]
China’s current energy challenge is the shifting from an industrial structure to heavy industry or a “consumption-led demand.” The issues are systemic and go beyond the energy sector; consequently, energy policy will not provide all the answers. “While structural adjustment is necessary to address root causes, given the conflicting pressures on China's leaders, the international community must be realistic in working with Beijing to mitigate important negative effects of China’s energy profile on global energy security and climate change.”
SUSTAINABLE BIOENERGY: A FRAMEWORK FOR DECISION MAKERS. UN Food and Agricultural Organization (FAO), The United Nations. Web posted May 8, 2007.
Full Text [pdf format, 64 pages]
“This paper on sustainable bioenergy was drafted collectively by UN-Energy members, which include all of the United Nations (UN) agencies, programmes, and organizations working in the area of energy, reflecting their insights and expertise. It is intended to contribute to international discussions on the strategies and policies needed to ensure economic, sustainable, and equitable development of bioenergy in the years ahead.”
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Kurlantzick, Joshua PAX ASIA-PACIFICA? EAST ASIAN INTEGRATION AND ITS IMPLICATIONS FOR THE UNITED STATES (Washington Quarterly, Vol. 30, No. 3, Summer 2007, pp. 67-77)
Full text [pdf format, 12 pages]
Kurlantzick, a fellow at the Pacific Council on International Policy and a visiting scholar at the Carnegie Endowment for International Peace, describes how the countries of East Asia have begun to integrate and move toward the formation of a true regional community focused on “actors within the region such as China, rather than the United States, to resolve security and economic disputes.” He attributes the beginning of this movement to the slowness of the United States to respond to the Asian financial crisis in the late 1990s, which created the impression that the region was not important to the Americans, and to China’s efforts to normalize ties with its neighbors.
The East Asia Summit (EAS), a meeting of all Asian nations which first convened in 2005, could be the first step toward integration along the lines of the European Union. Some in Washington see this as a threat to U.S. influence in the region, but Kurlantzick discounts this, saying that U.S. opposition to Asian integration “will only enhance the appeal of China.” He proposes instead that Washington encourage integration and revitalize its public diplomacy in the region, tasking Foreign Service officers to specialize in one country, developing close contacts with business and political leaders. The U.S. should also support democratization in the region and publicly back the idea of an Asian currency unit.
A BLUEPRINT FOR GREEN ENERGY IN THE AMERICAS: STRATEGIC ANALYSIS OF OPPORTUNITIES FOR BRAZIL AND THE HEMISPHERE: FEATURING: THE GLOBAL BIOFUELS OUTLOOK 2007.
Garten Rothkopf. Inter-American Development Bank. Web posted April 2007.
Full Text [pdf format, 669 pages]
This is a comprehensive study of the biofuel markets. The study surveyed the development of biofuels in 50 countries worldwide and identified trends that have shaped markets, policies, regulations, investment, and growth. The report also offers recommendations for building and maintaining competitive biofuels industries in the Americas, and its goal is to provide “a strategic blueprint for IDB activities in the region . . .”
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Heinberg, Richard BURNING THE FURNITURE (Richard Heinberg’s MuseLetter, No. 179, March 2007)
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Faced with the prospect of growing demand for shrinking oil and gas supplies, many countries are banking on coal to make up a growing share of the energy mix. Heinberg, a journalist and educator, writes that a recent study on global coal reserves published by the Germany-based Energy Watch Group, which reports to the German Parliament, has far-reaching implications –- recoverable coal reserves are much smaller than is commonly thought, and that a peak in global coal production is possible as soon as 15 years from now. The report’s authors note that data on global coal reserves is badly outdated or unreliable; countries that have taken the effort to update their estimates have experienced, in many cases, downward revisions on the order of 50-90 percent. China, the world’s largest coal producer, reports 55 years of coal reserves left at current rates of consumption -– but their reserves estimates are 15 years old, China’s coal consumption is increasing rapidly, and a move toward coal-to-liquid-fuels production means that China’s coal production may peak in 5-15 years. In the U.S., the world’s second-largest producer, total volumes may increase for 10-15 years, but in terms of energy content, U.S. coal production peaked in 1998. Heinberg writes that the current global energy predicament, far from being limited to a potential shortfall of liquid transportation fuels, is growing into a “broad-spectrum energy crisis” impacting all aspects of modern life. He concludes that “nations that are currently dependent on coal -- China and the U.S. especially -- would be wise to begin reducing consumption now, not only in the interests of climate protection, but also to reduce societal vulnerability arising from dependence on a resource that will soon begin to become more scarce and expensive.”
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Runge, C. Ford; Senauer, Benjamin HOW BIOFUELS COULD STARVE THE POOR (Foreign Affairs, Vol. 86, No. 3, May-June 2007, pp. 41-54)
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The rush to biofuels by advanced economies could lead to more hunger in low-income countries, according to the authors, both at the University of Minnesota. The combination of high oil prices and subsidies to U.S. agribusiness companies has resulted in diversion of a growing percentage of the U.S. corn crop into biofuel production. That has raised the price not only of corn, but also of wheat and rice, which are more in demand as substitutes for corn, and of seemingly unrelated crops that U.S. farmers are planting less as they plant more corn. Brazil, Europe, and Southeast Asian countries are also diverting more land to biofuel crops. If oil prices remain high and if government policies do not change, global prices for corn are likely to rise 20 percent by 2010 and more than 40 percent by 2020, with similar increases for wheat and oilseeds. "In the poorest parts of sub-Saharan Africa, Asia, and Latin America, where cassava is a staple, its price is expected to increase by 33 percent by 2010 and 135 percent by 2020," the authors say. Poor people in low-income countries that import both fuel and food may find that the necessities of life may become unaffordable. For many landless laborers and rural subsistence farmers, large increases in staple food prices will mean malnutrition and hunger.
U.S.-EUROPEAN UNION RELATIONS AND THE 2007 SUMMIT.
Raymond Ahearn, Kristin Archick, and Paul Belkin. Congressional Research Service (CRS), Library of Congress. April 13, 2007.
Full Text [pdf format, 18 pages]
Over the years, the U.S. Congresses and administrations have supported the European Union (EU) and European integration. However, recently a number of trade and foreign policy conflicts have strained this relationship. Since the dispute over Iraq in 2003, the United States and the EU “have sought to improve cooperation and demonstrate a renewed commitment to partnership in tackling global challenges.” This report evaluates the U.S.-EU relationship and the current issues.
THE NEXT 4 BILLION: MARKET SIZE AND BUSINESS STRATEGY AT THE BASE OF THE PYRAMID.
Allen L. Hammond, William J. Kramer, Robert S. Katz, Julia T. Tran, and Courtland Walker. International Financial Corporation and the World Resources Institute. April 2007.
Full Text [pdf format, 164 pages]
The analysis provides a quantitative assessment and characterization of the economic pyramid (BPO), and is a new perspective on low-income communities worldwide.
A majority of the world population are low-income consumers. This study measures “their aggregate purchasing power and behavior as consumers suggest significant opportunities for market-based approaches to better meet their needs, increase their productivity and incomes, and empower their entry into the formal economy.”
THE GLOBAL DYNAMICS OF BIOFUELS: POTENTIAL SUPPLY AND DEMAND FOR ETHANOL AND BIODIESEL IN THE COMING DECADE.
Daniel Budny. Brazil Institute Special Report, Woodrow Wilson International Center for Scholars. April 2007.
Full Text [pdf format, 8 pages]
This paper reports the results and recommendations from a recent conference held at the Wilson Center for U.S. and Brazilian experts that assessed the agricultural implications of increased production and trade of biofuels. The energy policies of both countries have implications beyond their own borders; therefore, the consequences of their policies must be “analyzed within the international context and be conscious of market interconnections.” The conference participants detailed a six-policy alternative for the U.S. energy sector.
U.S.-CHINA RELATIONS: AN AFFIRMATIVE AGENDA, A RESPONSIBLE COURSE: REPORT OF AN INDEPENDENT TASK FORCE.
Dennis C. Blair and Carla A. Hills. Council on Foreign Relations. Web posted March 29, 2007.
Full Text [pdf format, 131 pages]
Many Americans believe that China’s interests are incompatible to ours; consequently, the Council of Foreign Relations set up a task force to examine and evaluate our current and future relationships with China. The Task Force report recommends that the U.S. “pursue a strategy focused on the integration of China into the global community and finds that such an approach will best encourage China to act in a way consistent with U.S. interests and international norms. The Task Force concludes with a series of recommendations aimed to reinforce recent efforts to deepen U.S.-China cooperation.”
STOCK MARKET DEVELOPMENT UNDER GLOBALIZATION: WHITHER THE GAINS FROM REFORMS?
Sergio L. Schmukler, Juan Carlos Gozzi, and Augusto de la Torre. Policy Research Working Paper, The World Bank. April 1, 2007.
Full Text [pdf format, 38 pages]
“Over the past decades, many countries have implemented significant reforms to foster domestic capital market development. These reforms included stock market liberalization, privatization programs, and the establishment of regulatory and supervisory frameworks.” Using event studies, the authors analyzed the impact of these reforms in six capital markets and determined whether these reforms have had the intended effect on capital markets.
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McKibben, Bill. REVERSAL OF FORTUNE
(Mother Jones, vol. 32, no. 2, March/April 2007, pp. 32//88)
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For the last three centuries, exponential growth has been axiomatic to Western civilization; more prosperity has been created during the modern era than Adam Smith, the author of THE WEALTH OF NATIONS, could have ever imagined. McKibben, a writer and activist, notes that the distinguishing feature of our age is that growth “no longer makes most people wealthier, but instead generates inequality and insecurity. Growth is bumping up against physical limits so profound — like climate change and peak oil — that trying to keep expanding the economy may be not just impossible but also dangerous.” McKibben writes that the past fifty years of American economic growth have been a “loosely controlled experiment” in determining if more is better, but studies have shown that the degree of happiness has not grown; in fact, it has decreased, not just in the U.S., but in other countries that have followed America in mass affluence. He notes, “on the list of major mistakes we've made as a species, this one seems pretty high up. Our single-minded focus on increasing wealth has succeeded in driving the planet's ecological systems to the brink of failure, even as it's failed to make us happier.” McKibben believes that “we kept doing something past the point that it worked” -– as the economy nationalized and then globalized, the checks and balances of close-knit communities of an earlier era eroded in the face of a market-driven world with minimal social tethers. He believes that relocalizing economies may help to restore some balance to and address the growing inequalities in modern society.
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Cornelius, Peter; Story, John. CHINA AND GLOBAL ENERGY MARKETS
(Orbis, vol. 51, no. 1, Winter 2007, pp. 5-20)
Full text available from your nearest American Library
A rising China’s struggle to meet its ever-increasing demand for oil is shaping global energy markets as well as the international security agenda. The authors assess oil’s role in China’s energy mix (22 percent and growing), as demand for automobiles increases as its domestic oil reserves dwindle. While China has raised eyebrows with its global push to seek out new resources, the authors argue that the key to China’s energy future hinges on the maze of conflicting domestic actors driving its energy policy. They note that China is facing a major turning point: will the Communist Party follow its WTO accession commitment to open its financial markets to international competition and stop shielding its domestic market from rising oil prices? Their decision will have major ramifications for the future of Sino-American relations, but the authors conclude that as long as they open their markets and global price mechanisms continue operating efficiently, conflict between Washington and Beijing will be far from inevitable.
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Abdelal, Rawi; Segal, Adam HAS GLOBALIZATION PASSED ITS PEAK?
(Foreign Affairs, vol. 86, no. 1, January/February 2007, pp. 103-114)
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Not long ago, most governments embraced the benefits of the global free flow of capital, goods and labor. Recently, however, barriers to free trade have begun to rise and institutional foundations of globalization to weaken, argue Abdelal, of Harvard University, and Segal, of the Council on Foreign Relations. Public skepticism about globalization is evident everywhere, but it is most striking in the two countries that seem to have benefited most from free trade and cross-border investment: the United States and China. The reasons are many, from the financial crises of the 1990s to current account imbalances, to tensions over free movement of labor, worries about energy markets, and dissatisfaction with the uneven distribution of globalization benefits. All of them can be overcome through deft, internationally coordinated policies, say the authors. But globalization is likely to slow down considerably and require more effort on the part of the United States and other major free-trade stakeholders.
THE U.S.-JAPAN ALLIANCE: GETTING ASIA RIGHT THROUGH 2020.
Richard L. Armitage and Joseph S. Nye. Center for Strategic and International Studies (CSIS). Web posted February 16, 2007.
Full Text [pdf format, 33 pages]
“With half the world’s population, one-third of the global economy, and growing economic, financial, technological, and political weight in the international system, Asia is key to a stable, prosperous world order that best advances American interests. The goal of this report is to outline a vision that offers the best prospect for achieving ‘a balance of power that favors freedom.’” This report considers the prospects for Asia through 2020 and reflects on ways in which the U.S. and Japan can work together to have a positive influence in Asia’s future.
INTELLECTUAL PROPERTY RIGHTS AS A KEY OBSTACLE TO RUSSIA'S WTO ACCESSION.
Sherman Katz and Matthew Ocheltree. Carnegie Endowment for International Peace (CEIP). Web-posted October 12, 2006.
Full report [pdf format, 40 pages]
Russia has been seeking membership in the World Trade Organization (WTO) since June 1993. Currently, the United States is the only major economic power that has not finalized a bilateral market access agreement with the Russian Federation. Enforcement of intellectual property rights laws remains, along with agriculture, one of the two major hurdles to Russian accession to the World Trade Organization.
Russia is home to some of the most notorious and widely used pirate web sites in the world, notably mp3search.ru and allofmp3.com, which the USTR's 2006 Special 301 Report labeled "the world's largest server-based pirate music web site. [ See relevant USTR report
] Optical disc piracy is another huge problem in Russia. Experts believe that there are between 45 and 52 optical plants in Russia, and an estimated annual production capacity of more than 450 million discs. In the past three years, about half of these plants have been found through forensic detection or law enforcement actions to have engaged in pirate production. Between 8 and 18 of these plants are located on Russian State Restricted Access Regime Enterprise (RARE) territories owned or leased by the Russian government.
The authors assert that "the examples of Ukraine, which wrapped up bilateral talks with the United States in early 2006, and China, which accepted a uniquely comprehensive accession package in 2000, demonstrate the kind of political will Russia must show before it can hope to complete accession [to the WTO]. To prove its resolve to be a responsible member of the international trading regime, Russia must further strengthen its copyright laws and regulations governing optical disc plants, step up its enforcement efforts in areas of priority to WTO members, impose deterrent fines, and follow through with substantial increases in criminal convictions."
CHINA'S WTO IMPLEMENTATION AND OTHER ISSUES OF IMPORTANCE TO AMERICAN BUSINESS IN THE U.S.-CHINA COMMERCIAL RELATIONSHIP.
Myron Brilliant and Jeremie Waterman. United States Chamber of Commerce. September 2006.
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At the outset of this report, the U.S. Chamber of Commerce states: "As principal advocates for open markets with China, the U.S. Chamber of Commerce and our members are primary stakeholders in the success of China's integration into the global economy." The report says that China must do more to meet the letter and spirit of its World Trade Organization (WTO) obligations. Although significant intellectual property rights (IPR) protection and enforcement efforts are underway in China, the report asserts that China continues to fall short of its commitments to protect IPR and that counterfeiters and pirates generally remain undeterred in the marketplace.
The report also emphasizes growing concern over resurgent Chinese industrial planning in key sectors, and policies that obstruct market access for American services providers. Among other issues of concern is the uncertainty of currency reform and the continued utilization of government plans rather than reliance on market forces to build the Chinese economy.
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Tarullo, Daniel K. THE END OF THE BIG TRADE DEAL
(The International Economy, vol. 20, no. 3, Summer 2006, pp. 46-49)
Full text available from your nearest American Library
The author, a professor of law at Georgetown University and a former Clinton assistant for international economic policy, asserts that the Doha Round will be the last of the grand multilateral trade negotiations. It has been characterized by missed deadlines and recurring charges by the protagonists that someone else is to blame for the lack of progress. Also, he notes, the slow erosion of the U.S.-European alliance following the end of the Cold War has had a subtle but real impact on most areas of cooperation, including trade. He discusses several other factors contributing to the decline of big multilateral trade deals, including a growing reliance on non-controversial bilateral trade agreements. Many committed free traders now question how extensively the WTO should govern domestic regulation. Historically, American, European, and Japanese multinationals have provided a major part of the domestic support for trade agreements. Ironically, the very success of past rounds has given many of these companies most of the trade liberalization they need.
TRADE AND DEVELOPMENT REPORT (TDR) 2006.
United Nations Conference on Trade and Development (UNCTAD) Secretariat. Web-posted August 31, 2006.
Full Report [pdf format, 280 pages]
Overview [pdf format, 26 pages]
This most recent annual Trade and Development Report (TDR) warns that without quick international action to reduce global trade imbalances, financial crises in the wake of a tumbling dollar will threaten the benign growth performance of the world economy. UNCTAD cautions: "Up to now, turbulence has been limited to some peripheral economies with rather high current account deficits. There is no evidence that a major financial crisis --comparable to the Asian or Latin American crises of some ten years ago -- is looming. But the flexibility and pragmatism of US macroeconomic policy that so far has prevented deficiencies in the global trading system from leading to outright deflation and recession -- that has limited the damage 'only' to huge trade imbalances -- cannot and will not go on forever."
UNCTAD economists urge other countries to play a larger role in preventing global market turbulence: "The main reason for the US's perhaps increasingly unmanageable global burden is the fact that other key industrial countries have not only failed to play their corresponding global part, but have actually decisively added to the US's burden. The huge external surpluses of Japan and Germany and the massive improvement of their competitive positions show that the required competitiveness gains on the US's part should mainly come at their expense, a process that would be greatly eased if this occurred in the context of buoyant -- rather than stagnant -- domestic demand."
THE EVOLUTION OF THE G-7 AND ECONOMIC POLICY COORDINATION.
Mark Sobel and Louellen Stedman. United States Department of the Treasury, Office of International Affairs.
July 2006.
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[Note: Disclaimer from the Department of the Treasury: "This is the third in a series of Occasional Papers from the Treasury Department's Office of International Affairs. These papers examine international economic issues of current relevance in an effort to identify underlying trends and issues for policymakers. These papers are not statements of U.S. Government, Department of the Treasury, or Administration policy and reflect solely the views of the authors."]
In 1985, the finance ministers of the five largest industrial countries (G-5) met at the Plaza Hotel in New York and agreed to adjust monetary exchanges. Representatives of the G-5 countries met again, this time in Paris. They reached another agreement (the Louvre Accord) to intervene again with monetary policies in their respective economies, this time to slow the pace of the dollar's decline.
In this paper, the authors debate the efficacy of the agreements reached in the Plaza Agreement and the Louvre Accord. More, they frame a debate that centers on:
- Whether the G-7 should initiate another agreement to adjust monetary exchanges (a Plaza II agreement);
- Whether the G-7 should in fact be disbanded.
They note that "...economic policy discussions in the G-7 have evolved over time to focus to a greater extent on informal exchanges of views.... But even if the potential for explicit macroeconomic coordination has diminished, policy-makers are acutely aware of the interactions among their
economies." Furthermore, the G-7 countries have strengthened cooperative
ties that extend to issues wider than exchange rates, for example, "the transformation of the ex-Soviet states, the Asian financial crisis and its wake, and debt relief for the poorest.... And the creation of the G-20 and other mechanisms for broader consultation, policy debate, and mutual education have helped deepen discussions, build consensus, and enhance policy-making well beyond the G-7." But, the authors warn, the G-7 members need to adapt to increasing globalization and the escalating importance of private capital markets on the world stage.
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Maggs, John BUSH'S NEXT CRISIS
(National Journal, vol. 38, no. 19, May 13, 2006, pp. 32-39)
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According to the author, three crises have shaped the Bush presidency: expanding the power of the presidency, managing the insurgency in Iraq, and handling Hurricane Katrina. The next one could involve the global economy, as the risk of emerging-market financial crises may be increasing; Maggs believes that America's borrowing binge is the No. 1 threat to the stability of the world economy. Bush has embraced multilateralism on economic matters, and the International Monetary Fund has made data more available to the world. Despite Bush's uneven record in assembling an economic team and the challenges of his almost solitary approach to foreign policy, a number of factors suggest that his administration is well positioned to respond to a global financial crisis. As a candidate in 2000, Bush was skeptical of financial bailouts -- but as president, he helped Argentina in 2002-2003. Four years after Argentina defaulted on its loans, President Nestor Kirchner announced in 2005 that his country would repay $9.8 billion lent by the IMF. At home, the U.S. has borrowed $5.3 trillion from foreigners since becoming a debtor in 1977. Fortunately, international economic institutions and cooperation have remained strong under Bush, and he has hired some experienced people, such as Deputy Treasury Secretary Robert Kimmitt and Timothy Adams, undersecretary for international affairs, who have the confidence of international bankers.
AA06242
Gottesman, A. Edward TWO MYTHS OF GLOBALIZATION
(World Policy Journal, vol. 23, no. 1, Spring 2006, pp. 37-44)
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The author notes that an economic discussion of globalization has often focused on two widely accepted, but mainly misunderstood, theories. First, China is the "next economic superpower". The growth of the U.S. in the nineteenth century, then an underpopulated, resource-rich country, during the Industrial Revolution bears no resemblance to the export-dependent growth spurt that China, with limited natural resources, has experienced since 1979. The second myth is that the current-account deficit the U.S. has run for a number of years (about a third from trade with China) is "unsustainable" and will result in some global economic catastrophe.
The author writes that if we want to make sense of globalization, we need to re-focus our thinking about globalization by not comparing apples (the mature Western industrial economies) with oranges (the economies of what used to be called the underdeveloped countries, now designated as developing countries or newly industrialized countries -- NCIs, for short). In a global free market, the accumulated wealth and productive resources built up over three hundred years in Europe and in North America are the main source of financing, either directly or indirectly, for the growth of these NCIs. Debunking these theories of globalization requires an attempt to put the world economy in perspective so that one can understand the complex and often fragile process of globalization.
AA06223
Aron, Leon RUSSIA'S OIL: NATURAL ABUNDANCE AND POLITICAL SHORTAGES
(American Enterprise Institute for Public Policy Research: Russian Outlook, Spring 2006, 6 pp.)
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With six to ten percent of the world's known oil reserves, Russia pumped an average 9.4 million barrels a day and exported around seven million in 2005, second only to Saudi Arabia. Capitalizing on these developments, President Vladimir Putin reportedly plans to place "energy security" as a central discussion point at the G-8 summit in St. Petersburg in July 2006. No one doubts that Russia will remain one of the world's leading exporters for many years but, unless arrested or reversed, several structural tendencies may significantly jeopardize Russia's ability to meet the world's rapidly growing demand for oil. These include transportation, taxation, domestic consumption, investments and ownership. Also, the success of the Russian oil boom is increasingly threatened by the government's economic policy of quasi-nationalization, which amounts to a short-term redistribution of oil wealth and asset control instead of the crucially needed long-term strategy of creating new riches and new resources.
NATO AND ENERGY SECURITY. Paul Gallis. Library of Congress, Congressional Research Service. March 21, 2006.
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Energy security is becoming an issue of increasing importance to the United States and its European allies, as some energy producers are showing a tendency to use oil and gas as political leverage. Although most European allies believe that a market solution exists to ensure security of energy supplies, NATO has begun to discuss the issue as an allied concern.
Over the last several years, the view has grown that the power to ensure access to International energy resources has shifted away from energy consumers to energy producers. The growth of China and India as large consumers of energy, coupled with an inability to develop reliable and affordable alternatives to oil and natural gas, is largely the cause behind this development. In December 2005-January 2006, when Russia dramatically raised the price of natural gas that it was supplying to Ukraine, many saw an effort to squeeze Ukraine politically and economically to secure Kiev within Russia's orbit. Moscow's effort also underscored the shift towards the ability of energy producers to exert pressure on countries dependent upon them for supplies. In addition, Russia's actions made the issue of energy security a high-priority item on the European Union's agenda.
CHINA: THE BALANCE SHEET. WHAT THE WORLD NEEDS TO KNOW NOW
ABOUT THE EMERGING SUPERPOWER.
C. Fred Bergsten, Bates Gill, Nicholas R. Lardy and Derek Mitchell
Center for Strategic and International Studies (CSIS); Institute for
International Economics (IIE). April 26, 2006.
Report [pdf format, 57 pages]
Background papers for this report [pdf format, 54 pages]
The Center for Strategic and International Studies (CSIS) and the Institute for International Economics (IIE) have launched a joint multi-year project that brings together leading specialists to examine the key questions, uncover the pertinent facts, and analyze the dynamics underpinning China's domestic transformation and emergence as an international power -- as well as its implications for the United States and the world. This report is the first publication from that project. The report highlights several specific factors: China's domestic economy; China's domestic transformation; the world economy; and China's foreign and security policies.
The authors present four main conclusions:
- China clearly represents both an opportunity and a threat to the U.S. in economic and security terms.
- The extent to which China becomes either a challenge or an opportunity is not predetermined and will depend greatly on the policy choices and internal dynamics of China and the U.S. in coming years.
- While U.S. influence over China should not be overstated, U.S. policy can play a role, for good or ill, in shaping the decisions China makes about its future.
- While a responsible strategic approach toward China must include preparation in U.S. domestic, foreign, and defense policies to deter and deflect Chinese actions that are contrary to U.S. interests, the United States has an overriding stake in effectively integrating China into the global economic and security systems in a way that reinforces the American people's long-term security, prosperity, and peace.
[Note: Contains copyrighted material.]
CHINA'S GROWING DEMAND FOR OIL AND ITS IMPACT ON U.S. PETROLEUM MARKETS.
Congress of the United States. Congressional Budget Office. April 2006.
Report [pdf format, 58 pages]
This Congressional Budget Office (CBO) paper reviews major developments in China's demand for crude oil and refined petroleum products over the past decade and considers the implications of those changes for motor fuel prices in the United States through 2010. A key concern in this analysis is not whether China's demand for petroleum will continue to grow-as it undoubtedly will-but how fast it will grow over the next five years.
The report lays out two basic alternative scenarios regarding the petroleum demand growth in China. On the one hand, demand may be restrained by slower growth in the Chinese economy overall, high oil prices, an easing of some pressures that temporarily increased demand, and policies put in place by the Chinese government that may reduce petroleum consumption. On the other hand, demand may be accelerated by the reinforcing trends of growing urban populations and incomes and more vehicles and drivers with an expanding road system on which to travel. For each scenario the authors explore the implications for U.S. oil imports and possible changes to domestic U.S. oil production, including changes to policies affecting refineries.
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Rice, Susan E. THE THREAT OF GLOBAL POVERTY (National Interest, No. 83, Spring 2006, pp. 76-82)
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The author, a senior fellow at the Brookings Institution, believes that global poverty is not just a humanitarian concern but a threat to U.S. national security. Poverty erodes weak states' capacity to prevent the spread of disease and protect the world's forests and watersheds, creates conditions that are conducive to transnational criminal enterprises and terrorist activity, and enhances tensions that erupt in civil conflict, she explains. Poor countries with limited institutional capacity to control their territory, borders and coastlines provide safe havens and training grounds for terrorist networks; terrorists, in turn, exploit the natural resources and financial institutions of these low-income countries. By some estimates, 25 percent of the foreign terrorists recruited by Al-Qaeda to Iraq came from North and sub-Saharan Africa. Most important, Rice states, poverty undercuts U.S. security by inflicting major damage through new drug-resistant strains of microbial pathogens that have spread to the U.S. from developing countries, as more Americans travel to these areas.
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Yergin, Daniel ENSURING ENERGY SECURITY (Foreign Affairs, vol. 85, no. 2, March 2006, pp. 69+)
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Energy expert Daniel Yergin says energy security will be one of the main challenges for U.S. foreign policy in the years ahead. The current tight oil market and growing demand require a fresh look at energy security issues, he notes. He highlights four traditional energy security principals: supply diversification to provide alternatives; resilience to ensure a buffer against shocks and disruptions; recognizing the reality of an integrated energy market; and quality information on all aspects of the energy industry. Yergin asserts that there are two more critical principals that need to be incorporated into energy security plans. First, the entire energy security system needs to be globalized, and engaging rising economies like China and India will be central to accomplishing this. Second, the entire energy supply chain and infrastructure needs to be protected. Global trade in energy will grow substantially, he emphasizes, as world markets become more integrated and demand continues to escalate. Assuring the security of global energy markets will require coordination on both an international and national basis between private sector and governments -- including all the agencies involved from environmental to intelligence.
AA06124 Economides, Michael J. THE COMING NATURAL GAS CARTEL (Foreign Policy, web exclusive, posted March 28, 2006)
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The author, editor-in-chief of the Energy Tribune, warns of the dangers of the formation of a cartel by the world's suppliers of natural gas, pointing out that natural gas is increasingly popular because it is the world's cleanest-burning fossil fuel. Historically the United States has relied on domestic sources, but increasing demand and the inevitable decline of domestic production will combine to force an increase in the importation of natural gas, in competition with other importing countries. The author mentions Russia's use of natural gas as a political weapon and expresses concern that other exporting countries, notably Iran, "already appear headed for confrontation with the United States and Europe." As an example, he cites Iran's role in the formation of the Gas Exporting Countries' Forum (GECF), a group of 15 gas-producing countries which controls 73 percent of the world's natural gas reserves and 41 percent of production.
AA06073
Lynn, Barry C. WAR, TRADE AND UTOPIA
(National Interest, no. 82, Winter 2005/06, pp. 31-38)
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The author, a senior fellow at New America Foundation, argues that the production systems of the vitally important electronics industry for both the United States and China has become dangerously intertwined and interdependent. Any conflict in or around the Taiwan Strait that resulted in a break in trade would cause the "computing equivalent of Mutually Assured Destruction" with extreme damage to both economies, he says. If the United States and China do in fact depend on the same means of production, explains Lynn, the political ramifications are immense, as raw trade flows continue to grow dramatically and the number of firms that have adopted super-specialized production models similar to those of the electronics industry has increased. This is a shocking transformation from the industrial division that existed as late as 1993, he notes. Since then, he writes, there has been a normalization of trade relations between the United States and China -- among other developments -- which has fostered the situation today.
AA06057
Wachtel, Howard M. THE SINO-AMERICAN GAME OF FINANCIAL CHICKEN
(New Perspectives Quarterly, Summer 2005, pp. 58-60)
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The author, a professor of economics at American University, believes that China, as an emerging economic superpower, is entangled with the United States in a financial relationship so complex that to try to unravel it would cause financial disaster. When the Chinese Communist Party merged its political authoritarianism with managed market economics in the 1980s, one of the beneficiaries was U.S. companies that entered the Chinese market with the support of U.S. government policy, he says. By the 1990s, U.S. companies were far ahead of other countries in benefiting by the explosive growth of production in China. However, explains Wachtel, Chinese imports are mostly created by American companies in China, sold in the United States as imports, then counted as imports just like any other product made by foreign companies. In turn, American jobs and income are lost through such outsourcing. If the U.S. places undue pressure on China or slows down the rate of Chinese imports, he warns, it risks losing the financial foundation on which its debt-ridden economy prospers. If China retaliates by diversifying out of U.S. debt into the stronger euro, it could risk a financial fallout in the United States that would have consequences for its prosperity from reduced imports from China. He notes that political pressure has increased because of the further expansion of Chinese textile imports following a WTO-mandated end in 2005 of the 1974 Multifiber Agreement that established quotas on textile imports.
AA06023
White, Gregory. FREE TRADE AS A STRATEGIC INSTRUMENT IN THE WAR ON TERROR? THE 2004 US-MOROCCAN FREE TRADE AGREEMENT (Middle East Journal, vol. 59, no. 4, Autumn 2005, pp. 597-616).
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The author, associate professor of government at Smith College, gives a detailed analysis of U.S.-Morocco trade relations. In June 2004, he notes, the United States signed a Free Trade Agreement (FTA) with Morocco which contains an implicit security component, the result of the post-September 11 era and the war on terror. U.S. officials consider the agreement an opportunity to build strategic, economic, and political ties with a moderate, friendly regime in the Middle East that will serve, in turn, as a model for other countries. But will it work? White notes that the signing of this agreement coincides with Morocco's denomination as a non-NATO ally of the United States; the FTA will undoubtedly increase the volume of trade between the two countries, create jobs, attract direct foreign investment, and encourage domestic economic reforms. However, he writes, this new U.S.-Moroccan FTA, along with Morocco's new stature in U.S. security policy, also runs a deep risk of increasing societal resentment within Morocco toward the government and, by extension, the United States.
AA06040
Singham, Shanker; Hrinak, Donna POVERTY AND GLOBALIZATION (The National Interest, No. 82, Winter 2005/06, pp. 117-122)
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Poverty, often cast as the fault of multinational corporations or "imperialist" governments, is the most virulent killer on the planet, say the authors. Trade "liberalization" has not lived up to its promise to relieve poverty, primarily because the liberalization reforms have not been accompanied by the domestic economic reforms required to create a true competitive market, they explain. Additionally, trade negotiations are conducted with a strong bias toward producers rather than consumers. As long as producers' interests continue to trump those of consumers and elites protect their own interests, say the authors, true competition cannot take place and poverty will continue to lead its victims toward the false promises of radical leaders. They propose that trade negotiators should adopt a stronger stance in favor of consumer welfare by finding ways to link the level of competition in markets to the liberalization processes. For example, they note, trade agreements that reward internal reforms which support competitive markets will lead to the economic growth that alleviates poverty and desperation.
AA05329
Liang, Margaret EVOLUTION OF THE WTO DECISION-MAKING PROCESS (Singapore Yearbook of International Law, Vol. 9, September 2005, pp. 125-132)
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Although the decision-making process in the World Trade Organization (WTO) has become more difficult as the agency has expanded to 148 members, it does not require major reform, according to Liang, who was Singapore's deputy permanent representative to the WTO in 1998-2002. Already, WTO leadership has worked to expand the number of participants in consensus-building informal sessions. The small-group sessions, collectively known as the Green Room process, remain indispensable to forge the basis for broader consensus in the formal plenary session. They should be made more "balanced, representative and accountable," however, by requiring more exchanges with the full plenary session.
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Stark, Juergen. THE STATE OF GLOBALIZATION (The International Economy, Vol. 19, No. 2, Spring 2005, pp. 52-70)
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Stark, Deputy Governor of the Deutsche Bundesbank, notes that since the 1990s an increasing proportion of global economic activity is market-determined. Major centrally planned economies have turned into market economies and several strongly regulated emerging market economies have implemented radical reforms. Realistically, he adds, the United States and Asia will remain the centers of gravity of the global economy in the coming years. The impact the growing range of low-cost goods and services produced in the Far East will lead to significant changes in global production patterns, trade, and relative prices, he writes, and with that will come an increasing the risk of countries responding with protectionist measures. Adjustments to these changing economic dynamics will likely include new alliances and relationships, says Stark. To optimize Europe's place in this changing world economy, he recommends that the European Union deepen its political integration and instill a clear vision of its future.
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Kriz, Margaret. FUELING THE DRAGON (National Journal, Vol. 37, No. 32. August 6, 2005, pp. 2510-2513)
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Kriz, National Journal staff writer on the environment, explores the political implications of the dramatic increase in China's energy consumption. She notes that acid rain from China's coal-burning plants has triggered diplomatic tensions with downwind Asian countries such as Japan and South Korea. Kriz points out that China feels vulnerable because the U.S. controls the shipping lanes on which they depend for oil imports; to meet the nation's escalating oil demand, Beijing is forming new political and economic alliances around the world, which could shake up the balance of power among the oil-consuming and oil-exporting countries.
AA05125
Drucker, Peter F. TRADING PLACES (National Interest, Vol. 79, Spring 2005, pp. 101-107)
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Drucker says that the U.S. economy is no longer the single dominant economy on the world stage, although it is likely to remain the richest and most productive economy for a long time. The emerging world economy is a pluralistic one, with a substantial number of economic "blocs", of which the U.S.-dominated North American Free Trade Agreement is an important player. Further, he explains, what is emerging is not one but four world economies: a world of information; of money; of multinationals (no longer dominated by U.S. enterprises); and a mercantilist world of goods, services and trade. These world economies overlap and interact with one another, he writes, but each is distinct with different members, a different scope, different values and different institutions.