Opinion

Felix Salmon

Counterparties: The incoherence of trade negotiations

July 10, 2012

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A few hours after filing a complaint with the World Trade Organization about China’s duties on American car exports, President Obama last week told an Ohio crowd that ”Americans aren’t afraid to compete”.

Competition is one of those loaded, euphemistic campaign terms. Last fall, the Obama administration passed the biggest group of free-trade agreements since NAFTA and even created an enforcement squad on the subject. But there’s no agreement on whether this will create or destroy American jobs.

If you’re interested in the slippery notion of free trade, read Zach Carter and Sabrina Siddiqui’s fascinating piece on the Obama administration’s attitude toward the international pharmaceutical market. India’s government, rather than leaving its citizens to pay $5,000 a month for the cancer drug Nexavar, opted to allow a local company to produce a generic version of it, which costs $157 per month. India’s actions, according to recent testimony from US Patent and Trademark Office Deputy Director Teresa Stanek Rea, were an ”egregious” violation of WTO trade rules.

The only problem with that contention, Carter and Siddiqui report, is that this “compulsory licensing” is one of the WTO-sanctioned ways countries offer versions of drugs like Nexavar to their citizens. Indeed, they add, the US uses the same technique. Strangest of all, Bayer, which owns the patent on Nexavar, isn’t even an American company:

Rea and others at the briefing also failed to note that Bayer is a German company. During a lengthy discussion of the Obama administration’s efforts to prevent the Indian government from providing affordable medication to its citizens, Rea declared, “We are doing everything we can to respect the rights of U.S. innovators.” But she didn’t mention that her efforts weren’t actually supporting an American corporation.

That’s the “spaghetti bowl effect” of bilateral trade negotiations for you: It’s so incredibly recondite that it almost never makes any sense when viewed dispassionately from the outside. – Ryan McCarthy

On to today’s links:

MF Doom
“We’re doomed” – An MF Global-like implosion, a suicide attempt and more missing customer money – Reuters

LIEBOR
Bob Diamond could lose out on $31 million in compensation over the LIBOR scandal – DealBook
We’d really like to know what happened at the NY Fed’s 2008 meeting on “Fixing LIBOR” – Reuters
LIBOR-fixing may have cost muni issuers tens of millions of dollars – Bond Buyer

EU Mess
Europe decides to release Spanish bailout funds now (as opposed to eventually) – Bloomberg
“The ECB is guilty of malpractice” – Christopher Mahoney

Housing
Rents reach record highs, vacancies drop to lowest level since 2001 – WSJ

Self-Harm
“It has become transparently clear that the central bank has failed to take the actions its own principles demand” – Bloomberg View
President of the St. Louis Fed: Current Fed policy is “appropriately calibrated” – WSJ

New Normal
Every Scranton city employee now earns minimum wage – NPR
Economic mobility still elusive for the poor, African Americans and non-college graduates – Pew Charitable Trusts

Remuneration
Wall Street employees lost $2 billion last year on their own company’s stock – Bloomberg
Wall Street CFO pay raises outpace all other sectors, up 21% in 2011 – WSJ

Wonks
What is a bank loan? – Interfluidity

Literary
A firsthand account of how the Pulitzer fiction finalists were chosen – New Yorker

Plutocracy Now
For just $2,500 you could eat boudin with Nouriel Roubini or do squat thrusts in the vicinity of George Soros – Bloomberg

God’s Work
A quarter of Wall Street execs see wrongdoing as a key to success – Reuters

Indicators
Consumer credit rose like crazy in May – WSJ

Must Watch
“Share it Maybe”: Cookie Monster’s version of “Call Me Maybe” – YouTube

Comments
One comment so far | RSS Comments RSS

Re: We’re Doomed. Am I the only one who sees this and MF Global as clear-cut cases of criminal fraud and grand larceny? These funds are known to belong to the clients, and have significant protections against use by the holding entity. Yet they were pretty clearly misused, and almost certainly with intention. But the clients are being treated worse than creditors of these brokers. If you were ever looking for a textbook definition of wrong in the strong sense, this is it.

Posted by Curmudgeon | Report as abusive
 

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