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Trade
President George W. Bush had been in office a little more than a year when, on March 5, 2002, he decided to impose temporary tariffs on steel. It was clearly a calculated political move to try and curry favor with steel unions in the rustbelt swing states of Pennsylvania and West Virginia.
As if backtracking on its strong commitment to free trade weren’t enough, the administration pushed economist and presidential advisor Larry Lindsey into writing an op-ed for The Wall Street Journal defending the tariffs.
Conservatives around the country groaned for their friend Lindsey and pitied the fact that he was compelled to defend what he knew was bad policy.
Now President Barack Obama has imposed a 35 percent tariff on Chinese-made tires, and some are lamenting this as a reversal of his stated support for free trade. Read More...
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Congress has passed a massive “cap and trade” energy bill designed to raise the price of energy in the U.S. in order to reduce the use of fossil fuels by 17 percent by 2020 and by 83 percent by 2050.
President Barack Obama has called the bill a “jobs bill.” But sentencing the U.S. economy to high-cost energy is not a particularly good strategy for creating jobs. Charles River Associates, a Harvard-based economics consulting firm, estimates a net loss of about 2.5 million jobs each year.
During the campaign, candidate Obama also pledged that he would never raise taxes in any form on Americans making less than $250,000 per year. But his cap and trade tax is estimated to cost American families almost $2,000 a year when it becomes effective—due to higher prices for electricity, oil, gasoline, natural gas, home heating oil, coal, food and transportation costs—to almost $7,000 a year for a family of four by 2035.
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Congratulations to all of those who have been worried for the last several years about America's "trade deficit"--for the first three months of 2009 our trade deficit has dropped dramatically, running at a rate of $359.7 billion, compared to last year's trade deficit of $681.1 billion.
So, if you're worried about trade deficits, there's nothing like a smacking-good economic collapse to remedy our trade deficit problems. Hope all you trade deficit hawks out there are happy.
(End obvious sarcasm)
No, the fact is that trade is the solution, not the problem. A drop-off in trade is associated with a drop-off in economic growth, and trade deficits in the United States for the last several decades have been associated with healthy economies, not sick economies.
Those who fear trade really fear that the U.S. is not able to compete globally, and fear that U.S. workers aren't able to adapt to changing labor markets. Read More...
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Note: The Institute for Policy Innovation will be highlighting trade issues this week in recognition of World Trade Week.
Why are domestic policies, both here and abroad, threatening to tear apart the most globally competitive companies? Rather, we should be doing all we can to encourage their success, especially now.
The European Union has been on a tear, swinging a wrecking ball at U.S. globally competitive companies. Just last week the EU fined Intel a record-shattering $1.45 billion for “anticompetitive practices”—the largest fine ever imposed for any breach of EU antitrust law. The previous record-smashing fine was $677 million, imposed on Microsoft in 2004.
Which U.S. companies are next? Could it be: - IBM facing a new complaint after settling a decades-old case?
- How about Rambus or Qualcomm, which are under an ongoing inquiry?
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While Iraq may have been “Bush’s War,” it increasingly seems that “Obama’s War” will be a trade war.
The $787 billion stimulus package included a “Buy American” provision requiring companies, governments and agencies receiving stimulus funds to buy products that are “made in America.”
While such provisions are being touted as a way to reduce unemployment, they’re simply back-door protectionism, which allows the president to maintain he both supports global trade while simultaneously undermining it. As a White House spokesperson said recently, “The president is committed to creating jobs in America and committed to global engagement with our trading partners and does not see any contradiction between those two goals,” according to a recent story in The Washington Post.
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Note: The Institute for Policy Innovation will be highlighting trade issues this week in recognition of World Trade Week
A Texas company, Dallas-based Mary Kay, Inc., is wondering what’s going on with Congress.
Mary Kay’s concern: What were the people’s representatives thinking when they decided to make U.S.-made personal care products less attractive and saleable in the Mexican market?
Here’s the deal: U.S. truckers wanted to kill a pilot program, set up under the North American Free Trade Agreement (NAFTA), for resolving safety concerns about Mexican trucks driving on U.S. roads. So Congress, with a nod from the Obama administration, used this year’s omnibus spending bill to kill the pilot program; no more “threat” of Mexican truckers bringing us Mexican goods on Mexican trucks. Read More...
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So this Mexican trucker drives up to the Texas border. He stops short, gets out and unloads his truck. An American driver sees the Mexican driver, picks up the unloaded stuff, puts it on his own truck, then drives off…
The punch line? Sorry, but if you’re expecting a joke you’re out of luck, just like the Mexican truckers who’ve been going through this charade since the ‘90s.
In fact, the joke’s on us. The U.S. Department of Transportation estimates this unloading-loading silliness costs $400 million annually—which is passed on to U.S. consumers.
The North American Free Trade Agreement (NAFTA), intended to promote trade between the U.S., Canada and Mexico, was signed in 1992. The treaty said borders were open for trade. But the politically powerful Teamsters said, never mind the treaty, Mexican trucks aren’t safe and we can’t let them in.
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In a new op/ed featured today in TCS Daily, IPI senior fellow George Pieler and International Affairs Forum editor-in-chief Jens F. Laurson discuss that while Russia’s gas prices are low, Europe should take heed, diversifying its energy supply and increasing competition.
They write:
“In his inaugural address, President Obama observed that, 'Each day brings further evidence that the way we use energy strengthens our adversaries'. Tell it to Europe, Mr. President.
Russia has resumed delivering Gas to Europe—for now. The latest crisis, with dramatic visuals from freezing Bulgarians, is out of the headlines, but the issue is only becoming more important. Europe's future will be shaped, if not determined, by how soon Western politicians realize the need for a sound, non-ideological energy policy. Read More...
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In a brand new op/ed published in South Africa’s Business Day, International Affairs Forum editor-in-chief Jens F. Laurson and IPI senior fellow George Pieler discuss that while the news is focused on the current transition period in Washington, it is important to consider President Bush's final words of advice on the financial crisis, free trade and open markets.
Pieler and Laurson write:
"Here Bush’s advice and policy stance is the only right one, and his words of warning might be the most pertinent, the most needed, of his presidency…
Free trade, lest we forget, is the foundation of that global growth we are so desperately trying to keep alive."
To read the full op/ed, please visit Business Day online. Read More...
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International Affairs Forum editor-in-chief and IPI senior fellow George Pieler are featured in a new op/ed in TCS Daily discussing why Asia and its markets may be the ‘chief beneficiary’ of today’s global economic turmoil.
Laurson and Pieler write: “For President-elect Obama, the danger of forgetting such basic truths is acute. He has signaled his belief in a winners-vs-losers concept of markets. A global recession creates losers globally, but there are those who profit in times of distress. In the mid-term, Asia may be the chief beneficiary of this turmoil, thanks to movements in the West that will exacerbate the crisis while trying to fight it.
Among the latter, are France's habitual, knee-jerk protectionist reactions to any crisis, the undue interference of German politicians in coercing banks into being 'rescued', and last but far from least Read More...
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IPI senior fellow George Pieler and International Affairs Forum editor-in-chief Jens Laurson are featured today on the dangers of economic protectionism in Atlantic Community.
Pieler and Laurson write:
“The first dangerous results from governmental overreaction to the financial crisis are beginning to show. Bailout bills have counterproductive effects as political pressure is even brought on institutions that do not need the governmental help. Following protectionist approaches could lead to a harmful and tragic economic outcome. Last month we wrote about the dangers of the well intended and plausibly-argued necessity for government intervention into the banking sector. The salient danger we cited was "[o]verreaction and overregulation. Read More...
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IPI resident scholar Dr. Merrill Matthews will appear Thursday morning at 7:40 am PST on CBC-British Columbia’s “Early Edition” radio program, hosted by Rick Cluff.
Dr. Matthews will discuss the results of the presidential election, as well as the national and international economic issues the Obama administration will be facing.
To listen live, visit Early Edition online. Read More...
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| IPI senior fellow George Pieler, with International Affairs Forum editor-in-chief Jens F. Laurson, join the Opposing Views debate and say the U.S. should not restrict free trade. Pieler and Laurson write: "With world financial markets plummeting and markets everywhere reflecting the certainty of a widespread recession, the only question is: why would any responsible person advocate further US restrictions on international trade? An economic downturn, with less buying power here and abroad, triggers less buying and selling across borders and within borders. While it’s too late to change the near-term trajectory of the economy, recovery will be slower if the US signals that it is no longer interested in championing free trade (not that we do so perfectly). Read More...
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In a brand new op/ed featured today in San Diego’s Voice and Viewpoint, IPI adjunct fellow Susan Finston discusses “Thailand’s Trade Off: All Guns, No Butter.”
Finston writes: “Free trade agreements (FTAs) between the U.S. and developing countries like Jordan and Mexico, to name just a few, have generated long-term social and economic benefits for both partners. Nonetheless, President Bush’s recent call to renew FTA talks in Thailand in recent days brought more jeers than cheers from so-called civil society groups. Those activists reportedly fear that a U.S. FTA would curtail Thailand’s continued expansion of compulsory licensing, a controversial practice in which a country over-rides intellectual property rights (generally) associated with a brand name prescription drug. Read More...
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Continuing protests destabilizing Thailand’s democratically elected government appear to enjoy tacit support from the military and from former military rulers. Given continuing threats to democracy in Thailand, it may be timely to recall some of the controversial policies of the former military junta, the last time around, like the abrogation of rule-of-law protections for private intellectual property rights, also known as compulsory licensing.
Compulsory licensing is controversial practice in which a country over-rides intellectual property rights (generally) associated with a brand name prescription drug. On review, it turns out, this counterproductive move had little or nothing to do with urgent public health needs, and everything to do with the junta’s need to bite the hands of multinational companies to further their political ends.
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In a new op/ed featured today in South Africa’s Business Day, IPI senior fellow George Pieler and International Affairs Forum editor-in-chief Jens Laurson discuss how the legal trade of ivory benefits, not harm, elephant populations through the basic economic principle of property rights.
An excerpt:
AFTER nearly 20 years, ivory trade is legal again. This is good news for callous lovers of exotic trinkets or traditionalists among pianists, but hardly a reason for elephants to celebrate, you might think. Somehow it’s not more comforting to know that China, quickly becoming the premier neocolonial force in Africa, is a key reason why the Convention on International Trade in Endangered Species of Wild Fauna and Flora (Cites) has allowed the export of 110 tons of ivory. Read More...
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In a new op/ed featured in the Mobile Press-Register, IPI senior fellow George Pieler and International Affairs Forum editor-in-chief Jens Laurson discuss the recent Boeing-Airbus contract dispute in Congress, and how it evolved into a global fight.
An excerpt: Might the never-ending story of the Air Force's competition for new refueling tankers actually end this December? Or will it lead to a new international trade dispute? In this competition's first round, Boeing officials were caught bribing Air Force officials, bringing prison time for both. In the inevitable re-competition, and after painstaking analysis, the Air Force awarded the contract to a Northrop Grumman/EADS partnership, which based its proposal on the Airbus 330.
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| The U.S., Japan, the EU and a number of other countries whose economies and consumers are paying a heavy price because of the growing plague of piracy and counterfeiting are meeting this week in Geneva to discuss an Anti-Counterfeiting Trade Agreement (ACTA). ACTA would establish a high standard for intellectual property enforcement and would hopefully grow over time to include a wide range of countries committed to the fight against illicit trade. Sounds like a reasonable idea and the type of leadership needed, right? Well, there are actually two caveats to that view. First, you have to believe in intellectual property rights in the first place, and second, you have to also support the effort to protect consumers, workers and businesses from piracy and counterfeiting. The anti-IP activists don’t share these priorities and, therefore, are incredibly concerned about the work being done to develop ACTA. Read More...
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In a new op/ed published today in the Atlantic Community entitled “Expansion Does Not Solve NATO’s Dilemma,” IPI senior fellow George Pieler and International Affairs Forum editor-in-chief Jens F. Laurson say smart energy policy is the key to security in Europe.
An excerpt:
"NATO will not expand to include Ukraine or Georgia - at least not any time soon. There are many reasons - and many good ones - that membership hasn't yet extended to these countries. Alas, it is difficult not to have the impression that it was Russian grumbling that ultimately deterred Western leaders to invite these former Soviet republics into their military alliance.
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The leftist IP skeptic agitators have discovered the Anti-Counterfeiting Trade Agreement (ACTA), and they are coming unglued.
ACTA is an attempt to put together a treaty to ensure closer cooperation between governments in fighting piracy and counterfeiting, which is an increasingly important issue to countries, especially countries with developed economies, since they are more dependent on the creative industries, and thus incur significant economic damages from counterfeits and piracy.
Additionally, counterfeit medicines have become a serious health concern, especially in developing countries but also in developed countries.
As I said, the leftist IP skeptic community (commune?) is coming unglued. Read More...
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H.R. 1201, the ill-named “Freedom and Innovation Revitalizing U.S. Entrepreneurship” (FAIR USE) Act, is the latest attempt to unravel the Digital Millennium Copyright Act (DMCA), while taking the Supreme Court’s unanimous Grokster decision and recent U.S. trade treaties down with it in a single piece of legislation.
As “Still Bad: A Critique of the Latest Attempt to Gut the DMCA” notes, the bill has little to do with “freedom,” “innovation,” “revitalizing entrepreneurship,” or even “fair use.”
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In a new op/ed featured in the Atlantic Community, George Pieler and Jens Laurson discuss how market manipulation and the craze over biofuels have led to a growing international food crisis.
An excerpt:
Soaring prices for widely-traded (and subsidized) commodities like rice, corn, soy, - the bedrock of the global food supply, have created a short-term, we hope, hunger crisis. For the poorest of the poor, food is becoming too expensive. For the most insular and corrupt governments, food aid is a vital instrument of political control or, in sunnier dictatorships, a powerful tool in public relations.
High prices usually mean goods are scarce and demand is high, and there seems to be broad consensus that one factor is demand in the rising economies of Asia (China, India), as well as parts of Latin America, and even Russia. Read More...
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George Pieler and Jens F. Laurson are featured this week in the Alabama Press-Register discussing defense contracts and earmarks in “Competition Ensured the Selection of the Best Quality Tanker.”
Reps. John Murtha, Nancy Pelosi and Todd Tiahrt all want to give Boeing the contract for refueling tankers the Air Force awarded to a Northrop Grumman-Airbus partnership. Protecting local (Boeing) jobs is a classic congressional move, but this time there's an extra dimension: an attack on international trade and a presidential-campaign hit on John McCain.
Sen. McCain is accused, by the Financial Times, among others, of self-interest, because some of his campaign team lobbied for the Northrop Grumman bid. That may look bad, but McCain has a long history with this particular contract.
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While we have pointed out the many positive impacts of trade during “World Trade Week,” we should not overlook the growing and increasingly dangerous global trade in illicit goods. Everything that is good in legitimate global trade has its equal and opposite component in the huge flow of pirated and counterfeit goods that traverse the globe every second.
This problem has hit the headlines recently in the U.S.
- Instances of fake and adulterated health care products and toys has sensitized the broader population to potential (and actual) damage imposed by illicit trade.
- And a recent major seizure of counterfeit Cisco routers by U.S. law enforcement officials adds an extra layer of concern, since there is speculation that some of these counterfeit products (all from China) were sold to sensitive U.S. government and military offices.
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Ask what is the biggest impediment to widespread, multilateral trade agreements and the answer is likely to be . . . agriculture. Even purportedly free-trade advocates, once elected to high office, get sweaty palms when it comes to agricultural subsidies.
And even though food prices are soaring and both the developed and developing countries are crying foul, don’t expect the politicians to see their anti-free trade policies as the culprit.
The villains, depending to whom you listen, are: globalization, China, bio-fuels or price-gouging commodity traders—but never protectionist agricultural policies. And the mother of all such policies is the European Union’s “Common Agricultural Policy” (CAP), which eats up nearly half the EU’s $70 billion annual budget.
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For most of the postwar era there was a consensus on the social and economic benefits of trade. Then a new antitrade conventional wisdom emerged, primarily among a handful of vocal critics.
There are (at least) two anti-free trade arguments, though, ironically, they are somewhat antithetical. One says that the free trade hurts developed countries; the other says it hurts developing countries.
The first argument claims that workers in poor countries steal jobs from workers in rich countries. Nonsense! In a voluntary contract, both the seller and the buyer benefit.
These same critics buy goods and services every day for personal use, and they don’t claim they are being robbed by sellers who are doing a job they (the buyers) should be doing. Trade between countries is no different than trade between people, except on a larger scale.
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A new op/ed by IPI senior fellow George Pieler and International Affairs Forum editor-in-chief Jens F. Laurson published in Forbes.com discusses how the tentacles of pork-barrel politics are reaching into U.S. defense contracts.
An excerpt: Bipartisanship is rearing its ugly head in Congress.
Reps. John Murtha, Nancy Pelosi and Todd Tiahrt all want to give Boeing the contract for refueling tankers the Air Force awarded to a Northrop Grumman-Airbus partnership. Protecting local (Boeing) jobs is a classic congressional move, but this time there's an extra dimension: an attack on international trade and a presidential-campaign hit on John McCain.
Sen. McCain is accused, by the Financial Times, among others, of self-interest, because some of his campaign team lobbied for the Northrop Grumman bid. That may look bad, but McCain has a long history with this particular contract. Read More...
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The theory of free trade is based on the idea of comparative advantage. In a nutshell, it says that people do well when they do what they do best and buy everything else from others. Indeed, that’s the hallmark of economic advancement.
This idea has been the basis of trade policy throughout the modern era, with its chief expositors being the British political economist Adam Smith and statesman Richard Cobden.
Empirical data consistently show that trade between nations has helped to achieve significant economic gains in those nations that have embraced it, and especially in the United States.
But in the U.S., the belief that trade between nations benefits both parties has recently come under assault.
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Last Friday, President George W. Bush closed the week with a proclamation:
“NOW, THEREFORE, I, GEORGE W. BUSH, President of the United States of America, by virtue of the authority vested in me by the Constitution and laws of the United States, do hereby proclaim May 18 through May 24, 2008, as World Trade Week. I encourage all Americans to observe this week with events, trade shows, and educational programs that celebrate the benefits of trade to our Nation and the global economy.”
We at the Institute for Policy Innovation (IPI) think there are few things more important to economic growth than the free-trade economy. And so, in keeping with the president’s proclamation, we intend to recognize World Trade Week by publishing a daily “TradeByte” discussing some aspect of trade policy.
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Is It Time for a Free Trade Agreement with Colombia?
The Institute for Policy Innovation’s Dr. Merrill Matthews says only if we want a strong economy.
The key to an individual’s economic success is being able to sell what you have to others, whether it’s products or your time. And being able to buy what you need at the best available price.
That’s also the key to a country’s economic success.
So why do so many Democrats oppose what’s known as free trade agreements with other countries, especially Colombia?
Colombians pay tariffs, or taxes, on about 8 percent of what they sell to the U.S.
Americans, by contrast, pay tariffs of up to 37 percent on nearly all of the products we sell to Colombia.
Those tariffs make U.S. products more expensive and harder to sell. A free trade agreement would end that disparity.
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A few weeks ago, we wrote about France’s expansion of its champagne region to sate the discerning palates of nouveau-riche Chinese and Indian consumers.
It gets better. In addition to brow-beating international producers of sparkling wine into giving up the commercially valuable “champagne” label, now France is going after use of the “de Champagne” label in Champagne, Switzerland, even for biscuits sold under the brand since the 1930’s. No joke.
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A new op/ed from IPI senior fellow George Pieler and International Affairs Forum editor-in-chief Jens F. Laurson discusses a recently failed co-investment deal between U.S. Bain Capital and Chinese telecom equipment provider Huawei.
The authors describe how the collapse occurred after a review performed by the US government may have raised serious security concerns, and ask what lies in the future when it comes to foreign investment deals.
An excerpt: A proposed co-investment deal between Bain Capital and Huawei, a major Chinese provider of telecom equipment, collapsed after preliminary review by the Committee on Foreign Investment in the United States (CFIUS).
The deal would have resulted in the acquisition of 3Com, a U.S. supplier of network security technology, with Bain Capital as the majority owner and Huawei a minority owner.
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Republican Presidential nominee John McCain gave a speech on economic issues this morning, and there is much in the speech that should help cheer conservatives and make them more enthusiastic about the McCain candidacy.
McCain is talking about ideas that appeal directly to the conservative base, but are also in direct contrast with the positions that are being taken by both Obama and Clinton. These are ideas that should appeal to every common sense voter, leaving either Obama or Clinton with only the hardcore leftists, and that's not enough to win an election with.
For one thing, McCain is talking about tax cuts, not tax increases:
In the same way, many in Congress think Americans are under-taxed. They speak as if letting you keep your own earnings were an act of charity, and now they have decided you've had enough. By allowing many of the current low tax rates to expire, they would impose -- overnight -- the single largest tax increase since the Second World War. Among supporters of a tax increase are Senators Obama and Clinton. Both promise big "change." And a trillion dollars in new taxes over the next decade would certainly fit that description. Read More...
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IPI president Tom Giovanetti is cited in the American City Business Journals' latest article on the presidential candidates’ positions on free trade, “Free Trade Frozen in Congress, Hot on Campaign Trail.”
In the article, Washington bureau chief Kent Hoover sums up the discussion amongst the presidential policy advisors and other experts from IPI’s latest event, “Trade and the Race for the White House.”
An excerpt:
Congress won't vote on any more free trade agreements until the federal government expands assistance to U.S. workers who lose their jobs due to imports. Meanwhile, both Democratic candidates for the presidency oppose the three trade deals awaiting action by Congress and want to renegotiate the North American Free Trade Agreement (NAFTA), which lowered trade barriers among the U.S., Canada and Mexico in 1994. Read More...
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| A Houston Chronicle article today discussing the pending free trade agreement with Colombia mentions the IPI trade policy event held on March 27th, “Trade and the Race for the White House.” Chronicle reporter Bennett Roth writes in the article, At a recent forum on trade, sponsored by the Institute for Policy Innovation, a Lewisville, Texas, think tank, advisers to Clinton and Obama said both candidates opposed not only the Colombia agreement, but also other pending deals with South Korea and Panama. To view the full article, please visit the Houston Chronicle online at Chron.com. Read More...
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I don’t expect the stimulus rebates to be received by taxpayers next month to have any significant lasting effect in boosting the economy. That is because these rebates do not involve marginal tax rate cuts. They are simply old-fashioned Keynesian cash grants, financed by Federal government borrowing. Any stimulus from taxpayers spending that money would be offset by the borrowing drawing the same amount of money out of the private sector.
Maybe the policymakers who dreamed up this outdated policy for President Bush and the Democrats in Congress will be lucky, and the economy will rebound this summer on its own. But maybe not, maybe the economy will deteriorate further this summer, providing an enormous political boost for the Democrats.
I think the election will turn on the economy, not on the war in Iraq. The challenge for McCain is to frame the issue as who has the better plan to turn the economy around and get it booming again.
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In a new op/ed published in the Tucson Citizen, IPI senior fellow Dr. Lawrence A. Hunter discusses a great canard coming from Washington regarding the costs of prescription drugs.
Several lawmakers are pledging lower costs for Americans on prescription drugs if Congress legalizes the importation of foreign price-controlled drugs. Hunter calls this a “false promise guaranteed to backfire.”
An excerpt:
If you liked waiting in line for gas in the 1970s, you'll love what's coming next from Washington.
A number of lawmakers, including Sens. Barack Obama, Hillary Clinton and John McCain, have pledged to legalize the importation of prescription drugs from countries where price controls are imposed with the promise that it will lower costs for American consumers. But it is a false promise guaranteed to backfire.
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Peter Pitts has an oped on how compulsory licensing leads to reduced R&D in medicine. One early response appeared here.
One point that is made in response is that the US issues more compulsory licenses than any other country. The US is certainly capable of hypocracy; nor would one want to start down the path of arguing that compulsory licensing is okay here but not elsewhere. It is rarely a good idea. Still, the idea that "the US does it, so everyone should" is misleading... most of the examples of compulsory licensing in the US are *not* pharmaceuticals (some are) and were issued in a quite different context. Examples include:
-copyright compulsory licenses, of which there are many. Read More...
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France is reaching a whole new level on hypocrisy over trade and intellectual property rights.
For years the French and other EU states have pressed for limitations on naming rights for foods and wines. They succeeded in bullying the United States into restrictive labeling for California “sparkling wine,” limiting use of the term “Champagne” to wine from the historic Champagne province of France.
In trade circles, this IP issue is known as "geographic indicators," or GIs, which are similar to protections for trademarks. GI protection means that products deriving their names from certain areas, such as French Champagne, Parma ham or Swiss watches, could not be marketed under the same name by anyone from another location.
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An article appearing today in CongressNow, “White House Willing to Deal on Colombia Trade Agreement; Skeptics Say It Might Not Be Enough to Secure Passage,” discusses the current debate in Washington over the Colombian Free Trade Agreement, and cites IPI Adjunct Fellow Susan Finston. Susan Finston, an adjunct fellow with the free-market Institute for Policy Innovation, believes a failure to pass the deal would could hurt the ability of the U.S. to negotiate future agreements. "To have put the other side through the kind of lengthy negotiations - the comprehensive negotiations we went through with Colombia and then turn it down - I think it would certainly not help the credibility of the U.S. as a trading partner," she said. "There have been consultations with Congress throughout. That's the way it always works. Read More...
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Expanding free trade agreements (FTAs) became more difficult when the Democratic Party took over control of Congress. And with both Democratic presidential candidates expressing skepticism over free trade, there is little immediate optimism about continuing to advance the liberalization of trade policy.
Even opponents of free trade grant that trade liberalization benefits the "poorer" country or countries involved. The key question is whether free trade helps or hurts the richer, or in this case, the U.S. economy. The answer is: Increased trade helps ANY economy because free trade encourages the most efficient use of workers’ time and skills.
Here’s why:
You have a skill, let’s say accounting, that you do well. But you find your ability to do even more work is limited by other demands on your time: obtaining food, taking care of the yard, cleaning the house, maintaining the car, and on and on. Read More...
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Last January, when the goal of an Easter Ministerial for the WTO was announced, the joke was: whose Easter (Roman Catholic or Greek Orthodox)? Now that we are approaching mid-March with 150 differences remaining in agriculture alone, no one is laughing.
And now Sebastian Mallaby, citing Obama trade advisor Dan Tarullo, says it is because there are too many WTO members. IMHO, this ignores history and is off the mark.
But when the United States negotiated the Uruguay Round, the trade round leading from the GATT into the WTO, it didn’t matter if there were 50, 100, or 150 countries engaged in the talks. Read More...
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In the Wisconsin campaign, Democratic candidate for president Barack Obama said that he was "the only candidate in the race that had consistently opposed NAFTA."
Obama's campaign has already distributed mass mailings critical of Clinton on the issue in Ohio. "Bad trade deals like NAFTA hit Ohio harder than most states. Only Barack Obama consistently opposed NAFTA," it said.
When I heard this, I thought "Wait a minute--the debate over NAFTA took place in 1992 and 1993. What high office did Barack Obama hold back in '92-'93 that he had to take a position on NAFTA? What job did Obama have that required him to wrestle with all the complicated issues of the NAFTA debate?"
What was Obama doing in '92-'93 during the NAFTA debate?
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IPI Senior Fellow George A. Pieler is featured in a new oped on Forbes.com with Editor-in-Chief of the International Affairs Forum Jens F. Laurson.
The piece, entitled "Fear Stalks in the Andes," discusses the new U.S.-Peru Free Trade Agreement and how trade deals are increasingly used for political triangulation rather than for economic freedom.
An excerpt:
“The just-approved free-trade deal between the U.S. and Peru is said to be the last such arrangement. There are just so many reasons to fear foreign trade and overseas competition. Competition itself is unsettling, but when it benefits people whose name you can't pronounce, is it really worth risking your market share for? Read More...
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IPI Cobden Fellow Doug Bandow is featured in the American Spectator, calling the Law of the Sea Treaty a second United Nations.
The Law of the Sea Treaty, rejected by President Ronald Reagan, is back before the U.S. Senate. The LOST turns unowned natural resources over to the UN; creates a byzantine regulatory structure for seabed mining; establishes international taxation without congressional approval; and transfers U.S. technology to Third World states. It also subjects American navigational rights to international arbitration.
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Read Dr. Lawrence A. Hunter's latest oped, "Supporters of Drug Re-importation are TRIPping," published by Georgia's The Post-Searchlight newspaper.
An excerpt:
Congress is soon expected to consider whether U.S. consumers should be able to purchase medicines from abroad.
The legislation to allow drug re-importation is expected to include a provision that represents one of the most destructive government interventions into free markets since the New Deal.
Called "forced sale," the provision would compel American companies to sell drugs to any foreign re-seller planning to re-import them back into the United States, and they will be required to sell them at a price and in quantities dictated by the U.S. government.
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| Read George Pieler, IPI Senior Fellow, and Jens Laurson’s latest oped featured on Forbes.com. In the piece entitled “Who Needs Free Trade Anyway?” the authors discuss the strengths of unilateral free trade. Read More...
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The legendary neutrality of the Swiss is again on display, this time in the WTO.
Early on, the Swiss Government coordinated closely with the United States Government. and other IP demandeurs against China in the pending TRIPS copyright enforcement suit. However, while the EC, Japan and Mexico have joined the United State’s ongoing formal consultations with China, the Swiss are nowhere to be found now that the case has been filed and is moving forward.
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China’s Central Committee would be forgiven if it looked with nostalgia on the 1990’s when it could seemingly do no wrong and when Western companies welcomed China in to the WTO (negotiated in the 1990s, effective in 2001), showered the country with foreign direct investment, outsourced manufacturing, and overlooked rampant piracy and counterfeiting.
Even at the level of the U.S. Trade Representative, Ambassador Barshefsky was swept up in what became known as “Beanie-gate” for violating rules on import of (possibly counterfeit) Chinese Beanie Baby toys. For China, those may have been the good old days.
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According to a story yesterday in the Latin Business Chronicle, there is plenty of support within Latin America for free trade.
Indeed, a surprising amount of support:
Amazingly, enough, Venezuela is the country with strongest support for free markets. A whopping 72 percent of Venezuelans favor free markets, while only 27 oppose it, according to the survey. That despite the daily attacks against free markets from Venezuelan President Hugo Chavez and his administration.
Brazil, Latin America's largest economy, followed - with 65 percent support for free markets versus 33 percent opposition. Brazil has since 2003 been led by a nominally leftist, Luiz Inacio "Lula" da Silva, who has generally followed market-friendly economic policies.
Another surprise: Chile came in third in terms of free-market support, with 60 percent support and Read More...
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Memo to Susan Schwab, United States Trade Representative:
Susan,
You should overturn the International Trade Commission's ban on the import of wireless handsets containing disputed Qualcomm chips.
You should overturn it now--certainly before the August 6 deadline. Today would be good.
You should overturn it because the ITC's vote was wrong. The Chairman of the ITC himself dissented from the ITC's decision, saying that it was antithetical to the public good. And he was right.
Arguably, the ITC shouldn't even have this authority in the first place. The ITC's authority to ban import of foreign made products is derived from the now-infamous Smoot Hawley Tarriff of 1930, which arguably caused the Great Depression. It's a relic of all that is bad about U.S. trade policy. We've learned those lessons.
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Check out IPI’s latest op/ed published today in The Hill on the issue of free trade in agricultural goods.
Authors George Pieler and Jens Laurson say European policymakers have developed an unsubstantiated fear with regard to genetically modified food and make the case against the “precautionary” policy which has instituted absolute bans on the products. Pieler and Laurson argue that “there is no practical limit to the application of the precautionary principle,” and that it is “dangerously vague.”
While the authors admonish EU officials to qualitatively assess the risks when it comes to GM foods, they also point out how illogical bans provoked by unfounded phobias could do real damage to the global agricultural market. Read More...
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I was delighted to see Ron Cass' op/ed in today's Wall Street Journal (subscription required) on the Democrats' short-sighted attacks on IP protection in trade agreements.
Essentially, Democrats on the Hill have fallen victim to a PR campaign by a cabal of anti-IP activists who persuaded them to start pressuring the office of the U.S. Trade Representative to stop pressing countries, in this case Thailand, to respect and enforce intellectual property laws.
In the 1980s, Congress, with a Democratic majority, instituted the Special 301 process for the U.S. Trade Representative to identify countries whose failure to protect intellectual property harms the U.S., making potential trade sanctions leverage for better protection. In the 1990s, the U.S. and Europe secured world-wide assent to greater IP protection through the TRIPS (Trade-Related Aspects of Intellectual Property) agreement that brought these issues within the world trade framework.
Ever since, however, a reactionary coalition -- composed of unions in declining U.S. industries, companies threatened by changes in the global economy, health activists seeking free or heavily subsidized access to innovative drugs, and Ralph Nader acolytes (financed by George Soros and left-leaning foundations) who reflexively prefer government control to markets and private property rights -- have endeavored to reverse protections for trade and IP rights. Read More...
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It has always been a bit strange to me that in the United States the Environmental Protection Agency (EPA) and the Food and Drug Administration (FDA) administer unequal standards for protection of commercially valuable, and sensitive, clinical dossiers associated with applications for marketing approval for agro-chemical products vs. pharmaceutical products. Now it looks like at least the Senate may recognize the need to equalize data exclusivity periods for biologics.
In the case of agro-chemicals, the EPA currently provides a full ten years of protection (and the U.S. Trade Representative has negotiated similar terms with most trading partners in free trade talks). During this period, no one but the right holder is entitled to rely on the data submitted in support of the initial application for marketing approval. Read More...
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"French President Nicolas Sarkozy caused a stir (several stirs, actually) when he insisted that the new European treaty -- what some call 'constitution-lite' -- delete classic references to the primacy of unfettered competition as a governing principle of economic policy. Sarkozy also got language included that many read as a boost to trade protection for Europe, which is something he campaigned on in the recent French election.
Now, "competition policy" in Europe is broadly what we call antitrust in the States. It refers to regulatory oversight of the fairness of business practices in competing, undue market shares, and business combinations deemed unduly large or fundamentally monopolistic in nature. So, if the European Union really is backing off of "open competition" as a regulatory goal, why doesn't it drop the Microsoft case?
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"Let the multinationals go . . . . We will supply whatever drugs the Thai or other governments may want." Cipla CEO Yusuf Hamied, Wall Street Journal, April 24, 2007
Cipla, the Indian generic manufacturer, has earned a reputation as the drug company with a heart of gold, dedicated to the plight of poor HIV/AIDS patients in Africa. As is often the case, the truth is more complicated:
- Cipla sells drugs to make money - - it is not a charity. Cipla’s deals, most recently with the William J. Clinton Foundation, guarantee the company large captive markets and comfortable profit margins.
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Guess what? No one in Europe wants the ‘special’ version of Microsoft Vista (the one without a browser, by order of EU competition authorities), just as they didn’t want the browser-free Windows offered before. EU bureaucrats can order a browser-free party, but they can’t force anyone to show up.
Another example of how Europe’s economic policies, very successful in promoting the Euro as a standard of value and producing (and exporting) quality products, nevertheless are still running on twentieth-century fumes. The European Commission’s endless Microsoft prosecution seems set on a multi-decade trajectory, while the actual market for software products and services—even in Europe—has long ago left that station.
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By nine votes earlier this month, the U.S. Senate put the breaks on what appeared to be a run-away effort to allow the re-importation of prescription drugs without adequate safety certification. While they were at it, unfortunately, Senators neglected to remove a poison pill from the bill that could be just as deadly—the "forced sale" provision—which represents one of the most audacious and pernicious government interventions into free markets since the heyday of the New Deal.
This poison pill is a time-release capsule too. When the Senate adopted the Cochran safety-certification amendment to the drug re-importation legislation, it effectively put a moratorium on re-importation pending certification by the Secretary of Health and Human Services that it can be done so safely, something that is not likely to happen under the current administration. Read More...
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America should feel safer: the House just passed legislation revamping and tightening up the federal review process for OK'ing foreign investment in the US. Under HR 556, the Committee on Foreign Investment in the US (CFIUS) will be required to monitor foreign acquisitions more closely than in the past, and more often. For example, acquisitions of US based assets by government-controlled foreign corporations will be automatically subject to heightened scrutiny. More reporting to Congress, too (not always the best route to decisive action, though).
But wait: just as this bill moved through the House, global financial markets had one of their most turbulent weeks in years. Probably a coincidence, but a warning shot that we can meddle only so much in market-based business deals, even when they cross national boundaries. Read More...
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Thailand is almost unique among developing nations in that the country's leadership has generally valued economic growth driven through innovation and protected by intellectual property.
Until lately, that is.
The King of Thailand, His Majesty King Bhumibol Adulyadej, is a noted musician, bandleader and composer. He holds numerous patents, copyrights and trademarks, and is the creator of over 1,000 creative works.
His Majesty the King feels very strongly about the importance of intellectual property:
His Majesty addressed the issue of intellectual property by stressing the importance of patent and copyright. Read More...
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IPI's Doug Bandow has an op/ed today in the American Spectator pointing out that Washington's trade priority should be Asia.
Bandow writes:
"Washington's trade priority today should be Asia, which is becoming the center of the global economy. An agreement encompassing the 21 members of the Asia-Pacific Economic Cooperation forum deserves "serious consideration," as President Bush put it."
"The Republic of Korea (ROK) should be at the top of the administration's bilateral list. The U.S. and South Korea are in the midst of drafting a Free Trade Agreement (FTA). Negotiators met for the fifth and what was supposed to be the final time in early December in Big Sky, Montana, but the talks did not go well. Disagreement on several issues remain deep and little progress was achieved."
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IPI's Senior Research Fellow George Pieler has an op/ed in today's Baltimore Sun that you don't want to miss. "Resist the Democrats on Economic Freedom" (co-authored with Jens Laurson) warns that under the new Democrat House Leadership, pro-growth and free-trade policies may be a thing of the past.
A few good quotes from the op/ed:
"Free trade may not have "left the building," as one observer recently asserted, but its lease may become a lot more expensive. There have been stirrings of discontent over foreign investment, hostility toward cutting agricultural subsidies to advance the Doha round of trade talks, and tax penalties on U.S. companies operating overseas. Read More...
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An interesting take on 'globalization' from Will Hutton in the January 9 edition of The Guardian. Hutton dispels the myth that developed countries (US, Europe) can't compete with low-cost labor from Asia and Latin America, concluding that
"Western companies can still compete against low-wage Asian businesses, as a study of 500 multinationals by Susan Berger, of the Massachusetts Institute of Technology, has confirmed. They [western companies] tend to be better organized and embedded in better institutional networks."
This strongly suggests that the institutional and governance regimes of free-market economies have an inherent advantage, as do having an advanced knowledge base, high skill levels in the workforce, and leading-edge technology. Read More...
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IPI's George Pieler and co-author Jens Laurson had a recent op/ed published on Forbes.com. You can read the op/ed online here.
A few good quotes from the piece:
"Backed by oil and gas reserves, Vladimir Putin's Russia is an object lesson of how policies based on global self-assertion can quickly turn very ugly. Skilled in the arts of brazen lying and feigned outrage, Russia plays international politics and finance like a tin drum. The Russian Bear well knows that pragmatic Western interests see profits, dividends and investment opportunities that far outweigh the indignities, injustices and lawlessness they confront along the way. Read More...
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Freshly and enthusiastically re-elected by the Venezuelan people, Hugo Chavez must think he has a Sweeping Mandate. His government is proposing punitive tariffs on imports (mainly co-called luxury goods, jewelry, liquor, tobacco products) and a strong presumption in favor of domestic producers of goods used in Venezuelan industry. Oh, and he wants to control his own regional pipeline and create a 'socialist trade zone' in Latin America which would, presumably, export Venezuelan protectionism on a wider scale.
It would be nice to dismiss this as a self-defeating, economically destructive last-gasp of Latin socialism. Unfortunately, there is more difference in degree than in kind between Venezuela's trade economics and what we increasingly see in Europe, Africa, and even the US. Read More...
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In a fairly unnoticed development, the FTA between the U.S. and Colombia, which has been being negotiated since 2004 and was concluded some time ago, will now not be ratified by the Democrat-controlled Congress.
Democratic lawmakers drafted a letter to Mr Bush on Tuesday night signalling their opposition to the pacts because they lacked tougher labour standards, while a senior congressman rebuked the president for pressing ahead with today’s signing of the Colombian deal.
What is really frustrating about this is that the President didn't bother to sign the deal and then send it to Congress until November 22nd, even though the agreement has been finished since February and simply awaited the President's signature. Read More...
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You know things aren't going in the right direction in Russia when defector critics of the Putin administration are being poisoned. It's KGB all over again.
Journalists murdered, political opponents jailed, defectors poisoned. Of course they belong in the WTO. Roll out the red carpet.
It's good that Russia is making noises on more intellectual property protection.
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My thanks to Philip Stevens of the International Policy Network in London for drawing my attention to this article in Slate, explaining that free trade has now left the building:
Many of the Democrats who recaptured seats held by Republicans have been described as moderates or social conservatives, who will be out of synch with Speaker-to-be Nancy Pelosi. The better term, with props to Fareed Zakaria, is probably illiberal Democrats. Most of those who reclaimed Republican seats ran hard against free trade, globalization, and any sort of moderate immigration policy. That these Democrats won makes it likely that others will take up their reactionary call.
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Author: Merrill Matthews Jr. || Location: Lewisville, Texas, USA