Opinion

The Great Debate

China bashing: A U.S. political tradition

In every U.S. presidential election, the major party candidates vie to see who can appear tougher on China. Once the election is over, however, the substance of U.S. policy toward China usually changes little and is far more pragmatic than the campaign rhetoric. There are ominous signs, though, that things could be different this time.

The accusations have been among the most caustic ever. Republican presidential nominee Mitt Romney has denounced the Obama administration for being “a near-supplicant to Beijing” on trade matters, human rights and security issues. An Obama ad accuses Romney of shipping U.S. jobs to China through his activities at the Bain Capital financier group, and Democrats charge that Romney as president would not protect U.S. firms from China’s depredations.

In large measure these jabs resemble a quadrennial political ritual. Ronald Reagan repeatedly criticized President Jimmy Carter for establishing diplomatic relations with Beijing. Bill Clinton excoriated the “butchers of Beijing” in the 1992 campaign and promised to stand up to the Chinese government on both trade and human rights issues. Candidate Barack Obama labeled President George W. Bush “a patsy” in dealing with China and promised to go “to the mat” over Beijing’s “unfair” trade practices.

Obama highlighted his decision to impose tariffs on Chinese tires in a recent campaign speech. The administration, he said, had decided to file two complaints with the World Trade Organization over Beijing’s allegedly illegal subsidies to China’s automobile industries. It was no coincidence that Obama announced this in Ohio, a battleground state where the auto parts industry is a major component of the economy.

Chinese leaders have learned to regard this quadrennial anti-China rhetoric with a mixture of patience and bemusement. They note that despite Clinton’s fiery comments, U.S.-China trade soared during his administration, and after the first year or so, criticism about Beijing’s human rights policies virtually disappeared. Bilateral relations during the Reagan administration were exceptionally good, as the two governments cooperated to contain the Soviet Union’s power.

The most important trade deal you’ve never heard of

By David Gordon and Sean West The views expressed are their own. 

With Europe at the fore, it seems hard to justify paying attention to a congressional hearing about a trade deal nobody’s ever heard of.  But the most important trade agreement in a generation—the Trans-Pacific Partnership (TPP), the subject of a House Ways and Means Committee hearing yesterday—is quietly advancing.  The pact, a free-trade deal including the US and several other Pacific Rim nations, will profoundly affect economic and security relations between the US and Asia.  And it may ultimately reshape global economics.

Negotiations are only starting, and with Japan just joining the talks they could go on for years.  The true significance of TPP lies in what it promises: a new type of broad alliance for a world where trade and investment issues are no longer separate, and together underpin a new geopolitical reality.  It’s the first of what could be many “coalitions of the willing” to unlock economic and financial efficiency.  And if works, it will act as a magnet to pull many more countries into its fold.

TPP’s emergence follows nearly a decade of disappointment in trade talks.  The World Trade Organization’s (WTO) Doha Development Round of talks first collapsed in 2003 and effectively died with the financial crisis.  Doha’s moribund state is a direct result of the massive changes in the international economic system that the crisis brought to the fore. Now there is a new approach for trade and investment negotiations.

The G20 summit should commit to growth

By Gordon Brown
The views expressed are his own.

The build-up to the G20 summit has been dominated by the euro’s failings. With Europe now the epicenter of the global crisis, its continued weakness will dominate the G20 discussions. Even now, uncertainties about Greece’s future — and about the real strength of Europe’s commitment to its new stability fund — has left little opportunity for a focus on the global economy as a whole.

But even if the state of the world economy has featured less than the euro in the preparatory work for the summit, the decisions world leaders will make on the global economy will dictate the mood of the coming two years. President Sarkozy has major global initiatives he will unveil to improve global food security, and may even force his plan for a global financial levy on the agenda. But there is a big choice the G20 must make. Either the world will come together and agree on a coordinated growth plan — or we will retreat into a new, more acrimonious protectionism.

Already the head of the World Trade Organization is warning of a return to protectionism, and every day we find yet another new country following Brazil, Switzerland, Indian, Korea, and Japan in introducing either new tariffs, currency controls, or capital controls. In response, the draft G20 communiqué assumes a free trade world where each continent steps up what it is doing in order to achieve sustained growth.

Moving Doha forward: The U.S. view

By Ron Kirk, U.S. Trade Representative Ron Kirk. The opinions expressed are his own.

Ron KirkRight now in Geneva, Switzerland, a test is underway.  It is a test of the willingness of World Trade Organization (WTO) members to move the decade-long Doha Development Round negotiations into the “end game” – as President Obama and other G20 Leaders have directed negotiators to do this year.  The window of opportunity for the talks to avoid decline into futility is a narrow one.  The United States will leave no stone unturned in its quest for an ambitious and balanced outcome.  But key negotiating partners must share this motivation.

The world has changed since the Doha negotiations began in 2001.  To succeed today, WTO trade talks must address the world as it is and as it will be in the coming decades.  The remarkable growth of emerging economies like China, India, and Brazil must be reflected in a final Doha outcome.

from Summit Notebook:

Does Germany need Europe?

Jim O'Neill, the new Goldman Sachs Asset Management chairman who is famous for coining the term BRICs for the world's new emerging economic giants, reckons he knows why Germany might not be rushing to bail out all the euro zone debt that is under pressure. Europe is not as important to Berlin as it was.

Speaking at the Reuters 2011 Investment Outlook Summit being held in London and New York, O'Neill pointed out that in the not very distant future Germany will have more trade with China than it does with France.

"It's a different global environment. That's why maybe Germany (ties)  itself to a rules-based game with the rest of Europe because economically it doesn't mean so much to them now. What goes on in China is more important than what goes on in France and that's puts a different economic (spin) on the situation for the Germans."

from Commentaries:

Why Russia needs America

In the wake of President Obama's decision to scrap the U.S. missile defence shield in eastern Europe, many are pondering Russia's response. The relationship will remain in the spotlight this week, when President Medvedev heads to the U.S. for the G20 summit. Although the precise nature of Russia's reaction remains to be seen, it has a big incentive to improve relations. It badly needs American investment and co-operation to help solve serious economic problems at home.

Critics of Obama's decision worry that it will "embolden" Russia, causing more aggressive behaviour abroad. Yet they forget that the Bush administration's antagonistic policies failed to provide security to Russia's neighbours. These policies didn't prevent Russia's war with Georgia, the repeated gas disputes with Ukraine, and a serious cooling of relations with countries such as Poland. Far from being restrained, Russia's confrontational attitude had a lot to do with its perception that the U.S. was busy encircling the country with missile bases and alliances.

The critics also imply that Russia is preoccupied with external expansion, but that hardly seems appropriate today. Russia's GDP is set to plummet by 8 percent this year. Russian analysts estimate that the country needs up to $2 trillion to renovate its dangerously clapped-out infrastructure. In major industrial cities, Russia's dilapidated factories are mulling huge job losses. For the foreseeable future, Russia's leaders are likely to be preoccupied with thorny domestic problems.

Faced with such daunting challenges, it's entirely logical that both Medvedev and Putin say they are keen to kick-start American trade and investment. Responding to Obama's decision -- which he described as "brave and correct" -- Putin immediately linked it to economic issues. He called for the U.S. to back Russia's entry into the World Trade Organisation (WTO), and scrap Soviet-era trade restrictions against Russian companies, especially those that regulate technology transfer to Russia.

For Chinese exporters, grass is greener abroad

WeiGucrop.jpg- Wei Gu is a Reuters columnist. The opinions expressed are her own. -

The U.S.-China tire dispute threatens to spill into other sectors and squeeze Chinese exporters’ already razor-thin margins further. It might seem mind-boggling to many that Chinese manufacturers are still hanging on to weak overseas markets even though the domestic economy looks much healthier and surely offers more potential.

But there are structural reasons why the grass is greener outside China. The risk of not getting paid, or getting paid late, is significantly lower when dealing with foreign buyers. The cost of international shipping has dropped so much that it can be cheaper to send goods over the Pacific Ocean than across the country.

In addition, selling to large buyers such as Wal-Mart creates volumes large enough to compensate for weak margins. Moreover, Chinese exporters get all sorts of export rebates and local government incentives which help to lower their costs.

Africa at the threshold

john-simon– John Simon was recently U.S. Ambassador to the African Union and former Executive Vice President of the Overseas Private Investment Corporation.  He is currently a Visiting Fellow at the Center for Global Development in Washington DC. The views expressed are his own. —

President Obama’s trip to Ghana highlights one of Africa’s leading success stories – a country that has held five consecutive democratic elections, recently transferring power peacefully to the opposition after it won a razor thin victory.

Ghana is not alone. Sub-Saharan countries made tremendous progress in the past decade. Freedom House ranks seven out of ten of Sub-Saharan countries as free or partly free. Through 2007, Africa experienced 10 years of uninterrupted economic growth, the last five at rates above 5 percent. Foreign capital inflows increased from only $7 billion in 2002 to $53 billion in 2007.

Starting a trade war with “Buy America”

diana-furchtgottroth

–- Diana Furchtgott-Roth, former chief economist at the U.S. Department of Labor, is a senior fellow at the Hudson Institute. The views expressed are her own. –-

When Congress inserted “Buy America” protectionist provisions that required some goods (such as steel, cement, and textiles) financed by the stimulus bill to be made in America, our government invited a trade war with important economic partners.  Now China and Canada are imposing their own protectionist regulations, potentially destroying well-paid American jobs in the export sector.  Other countries may follow suit.

This week China reported that the government now requires stimulus projects to use domestic suppliers when possible, even though in February it promised to treat foreign companies equally.  The Chinese $585 billion stimulus package has resulted in a World Bank growth forecast of 7.2% for China this year, far above other industrialized countries.

What Asia needs from the G20 meeting

stanchartJaspal Bindra is Chief Executive, Asia, for Standard Chartered Bank. The views expressed are his own.

Asia has come of age. When leaders from the Group of 20 nations converge in London, Asia’s rising powers – China, India,  Korea and Indonesia – will be sitting at the global high table to decide on ways to reshape the world’s financial and economic order.

There are expectations that the meeting will include concrete steps to revive economic growth, a boost in funding for the International Monetary Fund, and an understanding on the new financial architecture to restore trust in the financial system.

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