Pope on Globalization, Dependencia & Easterly-ism

♠ Posted by Emmanuel in , at 12/25/2008 09:01:00 PM
I've previously featured some of Pope Benedict XVI's reflections on globalization, and here is more along those lines. The holiday season usually includes a visit from me to the highly popular Vatican website, and this year is no exception. A few days back, the Vatican site posted the message of the Pope for the celebration of the World Day of Peace, 1 January 2009. Aptly enough for this blog, it concerns "Fighting Poverty to Build Peace." To say that I am very impressed by the Pope's apparent familiarity with the development literature would be an understatement. Although there are the usual church teachings rehashed here,...
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Now China Takes US to WTO: Trade War Ahead?

♠ Posted by Emmanuel in ,, at 12/25/2008 08:42:00 AM
This seems to be a year when even IPE doesn't stop for the holidays. The US recently decided to file a case at the WTO Dispute Settlement Mechanism (DSM) concerning Chinese subsidies given to companies qualifying as "famous brands." Now, China is returning the favor by stating that it will file a case over US anti-dumping measures it believes are being unfairly applied to a number of its exports. From our favorite official publication, Xinhua:China on Monday asked the World Trade Organization (WTO) to establish an expert panel to investigate U.S. anti-dumping and countervailing duties on Chinese products which may violate WTO trade rules. The U.S. measures at issue "appear to raise a number of WTO concerns," and China "is deeply concerned" about the compatibility of these measures with U.S. obligations in the WTO, the Chinese delegation told a meeting of the WTO's Dispute Settlement Body (DSB).According to the delegation, China has called the United States' attention to its concerns...
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Brum at Xmas: Polish Migration and Other Stories

♠ Posted by Emmanuel in , at 12/24/2008 10:22:00 AM
This may very well be the last holiday note I will write about Birmingham. During Christmas last year, I took a look back at the important role Birmingham has played in economic history. This year, I will discuss the cross-currents of migration and religion in a still-evolving town with a rich and storied history. As probably everyone knows, church attendance across vast swathes of Western Europe is in decline. In Britain, this trend is very much in evidence. At this same time last year, newspapers were abuzz with news that Catholicism had "overtaken" the Church of England in mass attendance. This news was also accompanied...
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Foreign Affairs: On Doha, 'Beijing Consensus', etc.

♠ Posted by Emmanuel in ,, at 12/23/2008 11:31:00 AM
The latest issue of Foreign Affairs (January/February 2009) has plenty of timely and interesting articles for us on matters of global importance. First, Aaditya Mattoo and Arvind Subramanian discuss "From Doha to the Next Bretton Woods: A New Multilateral Trade Agenda." Something that you sometimes find missing when economists discuss trade matters is a lack of political realism. Unfortunately, that case seems to hold here as these authors suggest that LDCs are willing to make concessions they have been unwilling to make in the past. For more on this point see the IELP.) Nevertheless, it's still a thought-provoking read.Next we get a flavor of Martin Wolf's book, Fixing Global Finance, via a review written by the respected economic historian Harold James. Martin Wolf seems to be taking his fair share of lumps for writing a book entitled Why Globalization Works. Indeed, if globalization worked so darned well, what's led us to the current situation? Wolf gives us some clues and...
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Detroit 3 Go Begging in US, EU, LatAm & Canada

♠ Posted by Emmanuel in ,, at 12/21/2008 02:27:00 PM
Our American friends may get all they wish to know (and more) about the Detroit Three seeking government bailouts. Having failed to overcome opposition from Republican lawmakers to bailouts, the Bush administration decided to act on its own after some hesitation. As this purports to be a blog about international political economy, I would be remiss in not pointing out that this beggar-thy-government strategy utilized by the Detroit Three is confined not only to the United States but extends to a whole lot of other places where they have leverage. That is, where they can deploy that time-tested plea of "give us some 'bridge...
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US Drags China to WTO Court (Again)

♠ Posted by Emmanuel in ,,, at 12/21/2008 01:44:00 PM
Political science types like your truly more or less believe in the new golden rule: he who hath the gold maketh the rules. Until the turn of the century at least, the United States was by far the most powerful figure when it came to international affairs--including international economic diplomacy. As such, it is no surprise that the US is now taking China to the WTO's dispute settlement mechanism (DSM) and gaining the upper hand since the rulebook largely reflects America's previous predominance. First, China backed down on the subsidies case involving export tax rebates. Next, China just recently lost its appeal concerning tariffs applied against imported car parts.Just this Friday, the outgoing USTR filed yet another case against China at the WTO. This new one pertains to China aiming to establish what it calls "Famous Brands." The USTR claims that China applies WTO-illegal measures to companies lucky enough to merit this designation. Something which continues to largely...
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Ron Kirk, Obama's Palin-dromic USTR Pick?

♠ Posted by Emmanuel in at 12/19/2008 09:21:00 AM
Punning blogger that I am, you hardly expected me to pass this opportunity up. Earlier on, I styled incumbent EU Trade Commissioner Catherine Ashton as the EuroPalin for her lack of experience in international trade matters before assuming the post. The newswires are now buzzing that US President-elect Barack Obama will fill one of the few remaining unfilled cabinet posts by appointing former Dallas mayor Ron Kirk as his US Trade Representative. What is immediately striking is choosing someone whose experience is wholly in domestic politics--mostly at the municipal level, no less--for a very important international post. Being...
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Japan's Variations on ZIRP; ¥ Intervention Ahead?

♠ Posted by Emmanuel in at 12/19/2008 08:22:00 AM
We seem to be entering a time when the official policy rates of major industrialized nations are converging on a range. That range is between zero and one percent. By historical standards, these levels are undoubtedly unprecedented. The United States, having recently gone "all in" by lowering the Federal Funds rate to a range between 0.00 and 0.25%, has laid down an example of dubious merit. First out of the chute is Japan. In its rate-setting exercise concluded earlier today, the BoJ slashed its policy rate from 0.30% to 0.10%, a twenty basis point cut. It seems to me like splitting hairs. It's not so much that rates need...
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Korean Lawmakers Literally Fight Over US Trade

♠ Posted by Emmanuel in , at 12/18/2008 08:00:00 AM
South Koreans have this seemingly unusual mode of protest involving self-immolation. This practice first reached my attention during the student protests of the Eighties, but it still continues. The anti-globalization set has made a martyr of Huh Se-uk, a Seoul cabdriver who died in 2007 after--you guessed it--expressing his, er, burning desire to scuttle the Korea-US free trade agreement (KORUSFTA). As an aside, it always seemed odd to me why a cabdriver would be so vehemently opposed to a trade deal: wouldn't such a trade deal result in more "foreign devil" businessmen to ferry around Seoul? Go figure.In any event, the noteworthy...
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Euro/Dollar Parity? Madoff Wannabes on Parade

♠ Posted by Emmanuel in at 12/17/2008 11:31:00 AM
I have been of the unwavering belief that the US dollar is a flawed currency. Add the US government's apparent lack of concern with towering deficits to the Fed's willingness to reduce policy rates to virtually nothing and you have a tailor-made recipe for value destruction. Due to what I call "special FX"--foreign exchange moves oblivious to fundamentals--the dollar recently mounted a rally against virtually all currencies save for the Japanese yen. Various things have been said to contribute to "special FX" including the repatriation of foreign investments, growing risk aversion, and the movement to supposedly "safe" assets...
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Ben Bernanke, The Dollar Molester, Runs Amok

♠ Posted by Emmanuel in at 12/16/2008 07:32:00 PM
B-B-B-Bennie of the Feds is unparalleled in his disregard for the value of the dollar, dropping the Federal Funds rate to a range of 0.00 to 0.25%. The market was expecting a 50 basis point cut to 0.50%, but he has gone "all in." Holders of dollars, including yours truly (unfortunately), are screwed by the unprecedented money creation now being encouraged by the Fed. Unbelievably, the policy rate for the US dollar is now below the Japanese yen's. For a country fond of citing other countries for waging competitive devaluation, the US seems to be engaging in a lot of it at this moment. Some immediate thoughts:There is no guarantee...
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China Loses WTO Auto Parts Appeal

♠ Posted by Emmanuel in ,, at 12/16/2008 06:11:00 PM
To no one's real surprise, China has lost its appeal in regard to the auto parts case (DS 339, 340, and 342) lodged by the EC, US, and Canada, respectively [1, 2, 3]. The summary and the full ruling are available on the WTO site. The main point of contention centered on discrimination against foreign auto parts makers' wares. Cars made in China having less than 60% domestic parts content were treated similary to imported automobiles and were assigned a tariff rate of 25%. Conceivably, foreign auto parts manufacturers facing slumping auto demand at home can now more easily market their wares in the Middle Kingdom given its eventual compliance. From Agence-France Presse:China expressed regret [it always uses this term to denote diplomatic dissatisfaction] Tuesday over a World Trade Organisation ruling that its tariffs on imported car parts were not in line with global rules, and refrained from saying it would comply. Commerce ministry spokesman Yao Jian said Beijing welcomed sections...
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The Top 10 Migration Issues for 2008

♠ Posted by Emmanuel in at 12/16/2008 07:29:00 AM
Regular readers should not be surprised that I hold the work of the Washington, DC-based Migration Information Source in high regard. Not only is it staffed by a very international group, but it also addresses migration issues at a global level. (The New York Times recently ran a feature on this remarkable thinktank.) In contrast, many other US migration thinktanks--I needn't name them here-- frankly have neither of these qualities, mostly being "A Bunch of White Guys Thinking of New Ways to Keep Steenkin' Foreigners Out of the USA" and the Amerocentric focus that entails. The former's website is a fine resource for those...
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ASEAN Charter: Paving the Way for a Single Market

♠ Posted by Emmanuel in at 12/15/2008 04:40:00 PM
The subprime contagion has buried a very important event that may, in time, prove as momentous for persons in Southeast Asia--half a billion strong--as it was for Europeans in 1957 with the creation of the European Economic Community. On this day, 15 December 2008, the ASEAN Charter comes into effect. It was supposed to be signed at a gathering of member countries in Thailand, but recent events there waylaid proceedings. (You can read the Charter in its entirety here.) Just as the three pillars of what eventually came to be known as the EU involve economics, security, and policing, the ASEAN has three near-counterparts: the...
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Religion: Opium of Subprime-Addled Americans?

♠ Posted by Emmanuel in , at 12/15/2008 07:58:00 AM
Religious distress is at the same time the expression of real distress and the protest against real distress. Religion is the sigh of the oppressed creature, the heart of a heartless world, just as it is the spirit of a spiritless situation. It is the opium of the people. The abolition of religion as the illusory happiness of the people is required for their real happiness. The demand to give up the illusion about its condition is the demand to give up a condition which needs illusions.The above quote is taken from Karl Marx's Critique of Hegel’s Philosophy of Right. I was reminded of it by an article I've just read in the...
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Treasuries, 'Risk Free' Rate & Fed's Wicked Game

♠ Posted by Emmanuel in , at 12/14/2008 01:39:00 PM
It is hard not to marvel at the state of this lunatic assemblage collectively known as "the world economy." Treasury yield curves indicate that the US government can now borrow money repayable in one or three months' time for free or almost for free. Uber Cassandra Ambrose Evans-Pritchard of the Telegraph gleefully notes that three-month yields momentarily became negative, meaning lenders actually paid the Fed interest. This, of course, is beyond perverse. The US government, egged on by Wall Street lobbyists, lifted nearly all their unwanted rules pertaining to banking oversight. Yet in the end, even with all the rules bent...
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China's Currency: Yuan Blood, You Got It

♠ Posted by Emmanuel in , at 12/13/2008 09:29:00 AM
It's animal - living in a human zooAnimal - the s--t that they toss at youI am convinced that AC/DC was singing about the political economy of exchange rates in the abovementioned song. If you ask me, the most important price in the world economy is none other than the USD/CNY exchange rate. Of course, this price is "heavily managed," a euphemism for the Chinese government having a heavy hand in its determination via measures including unprecedented levels of reserve accumulation--all $2 trillion and counting of it. Its determination has little to do with being either "free" or "market"-based.China has long been on a collision course with the US over this trade practice, and the incoming Obama administration will likely take a less relaxed attitude to it. During the heyday of global economic imbalances not so long ago, protectionist forces in the US were balanced by the fake prosperity of cheap consumer credit care of surplus-running countries like China. Conversely, burgeoning...
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