Posts of July 2012

Eternity's End: Venezuela Joins MERCOSUR Today

♠ Posted by Emmanuel in Latin America,Trade at 7/31/2012 01:09:00 PM

...or, more accurately, what's left of MERCOSUR. Read on to understand why. Well I guess you should never say never: Hot on the heels of Russia joining the WTO after eighteen long years of negotiating its membership (or what passes for it), Venezuela is finally going to join MERCOSUR (Mercado Comun del Sur or the Common Market of the South). For a long time, right-leaning Paraguayan policymakers held back Venezuelan membership over ideological differences. In an interesting twist of fate, these right-leaning lawmakers summarily impeaching the left-leaning Paraguayan President Fernando Lugo earlier this year actually hastened...

Geopolitics 40 Years Ago: USSR 'Beat' US in B-Ball

♠ Posted by Emmanuel in Sports at 7/30/2012 09:21:00 AM

Bloomberg has not one but two features recounting the famous basketball match in which the Soviet team famously beat the US team at the 1972 Munich Olympics by a single point forty years ago--albeit with a lot of controversy. Alike Pacquiao versus Bradley, the result is eminently contestable. In the Olympic finals, the Soviet team was granted dubious time extensions until they finally managed to go up 51-50. While they were in control for most of the game, a late US comeback put the Americans ahead by a single point with three seconds remaining after Doug Collins sunk both his free throws. The Americans began celebrating...prematurely,...

Chuck Schumer Gets Misty on PRC FDI...in Canada

♠ Posted by Emmanuel in China,Trade at 7/27/2012 05:51:00 AM

With apologies to Johnny Mathis: PRC...you're as nasty as a kitten bred by...Dick Cheney While that may be the intro to the theme song of Senator Charles Schumer (D-NY/China Suxland), rest assured that Democrats are far from alone in declaring open season on China and its assumed unfair trade practices. See, for instance, the private equity maven-turned-protectionist Mitt Romney. Today, though, let us focus on the latest shenanigans of Senator Schumer. Back in 2005, he washed his hands clean of the attempted CNOOC purchase of the middling American oil firm Unocal: There was nothing wrong with CNOOC taking over UNOCAL...

Dirigisme 2012: Hollande v Hyundai, France v Korea

♠ Posted by Emmanuel at 7/26/2012 08:18:00 AM

You've got to hand it to the South Koreans. They've managed to outmanoeuvre everyone else in setting up FTAs with nearly every other region that they have substantial export markets in. While the trade concessions it gains may be comparatively small in this day and age of near-universal WTO membership, any gains are welcome when it comes to obtaining a competitive edge in commodified industries where margins are quite thin alike in automobiles and electronics. (Take that, Japan, which has been an FTA signing slug by comparison--see its merely prospective FTA with the EU.) Think of all the trade deals involving Korea which have been inked in the past few years: It got the ball rolling with AKFTA between itself and ASEAN member countries. It subsequently managed to finally conclude a KORUSFTA with the United States. Of particular concern here though is its deal with the EU which came into force in July 2011. Call it EUKFTA if you will. Meanwhile, the new French President Francois...

Need More Proof Patent Systems Favour the West?

♠ Posted by Emmanuel in Health,Trade at 7/25/2012 11:49:00 AM

It's sad but true that the more you know about our world, the more disillusioned you become. However, in the name of normative inquiry, I am duty-bound to bring you the truth (no matter how hard it hurts). Today we return to that old IPE chestnut, global patent regimes. Recently, the distinguished patent law expert Carlos M. Correa (no relation to either the ballplayer of the same name or the president of Ecuador) contributed a piece to the South Centre that illustrates the magnitude of the problem. Before heading to the developing world, consider the case in Europe alone according to the EC: Although the intrinsic value of the technology protected under such patents is low, they are often strategically used to generate or keep monopolistic positions that affect competitors and consumers. Thus, the proliferation of patents that do not make a genuine technical contribution limits legitimate competition and undermines innovation. An investigation conducted by the European...

Solar Wars: Now China Will Investigate US Firms

♠ Posted by Emmanuel in China,Environment,Trade at 7/24/2012 05:45:00 AM

When countries fight over trade, you usually assume that they have meaningful things to fight over. That is, there is something at stake. I am thus befuddled by the likes of the US, China and the European Union going at it tooth and nail over solar panels when (a) the global market for them is small and (b) they are seldom central to national interests. Sure there is lip service about paving the way for the green economy and so forth, but let's just say solar panel manufacturing doesn't exactly represent the commanding heights of the economy circa 2012. In an act of gamesmanship, however, the Chinese government is now investigating...

The Dark Knight Rises: American Life Imitates Art

♠ Posted by Emmanuel in Americana at 7/20/2012 06:39:00 PM

Nobody really doubts that Americans have an exceptional penchant for violence. Over the years, they have spent far more than any other nation building up an unparalleled capability to destroy human life. Despite various massacres like the current one, it remains exceptionally easy to acquire weapons in their country to shoot one's neighbours with utter convenience. Go ask Gotham City Mayor [sic] Michael Bloomberg. Strangely enough, they do not particularly like the persons who best exemplify this capacity for violent behaviour, jailing a quarter of all persons worldwide despite having only 5% of the world population. Nor...

Yale, Money Lust, Academic Freedom & Singapore

♠ Posted by Emmanuel in Education,Southeast Asia at 7/20/2012 03:19:00 AM

There's much talk about how American academia differs from British academia. Separated by a common language and all that as applied to the ivory towers. To me, nowhere is this more evident than in views about revenue generation in academia. Unlike in the US, nearly all quality UK institutions of higher learning are government-funded. This situation cuts both ways: On one hand, British universities appear underfunded relative to their American peers. What's more, often lacking real incentives to "market" themselves, they have not been as active in the global craze to establish satellite campuses in places such as the Middle...

Priceless: Mastercard/Visa Win at WTO vs China

♠ Posted by Emmanuel in China,Litigation,Trade at 7/18/2012 03:33:00 PM

Yours truly has long noted that the PRC has not been too forthcoming about allowing foreign financial services providers to do business in China. As it turns out, not only is it difficult for foreign banks to set up branches in the mainland, but it is also difficult for American credit card firms to get into the RMB payment card transaction business. While the Chinese have acquired a reputation as savers, perhaps it's partly due to a lack of available consumer credit since the government promotes a domestic alternative that precluded the likes of MasterCard and Visa peddling their brands there. While they dominate in the rest...

Doesn't Guanxi Work in the US for Chinese Firms?

♠ Posted by Emmanuel in China at 7/18/2012 02:57:00 PM

Let us begin by defining "guanxi" [關係], or forming relationships crucial to doing business in China: “Guanxi” literally means "relationships", stands for any type of relationship. In the Chinese business world, however, it is also understood as the network of relationships among various parties that cooperate together and support one another. The Chinese businessmen mentality is very much one of "You scratch my back, I’ll scratch yours." In essence, this boils down to exchanging favors, which are expected to be done regularly and voluntarily. Therefore, it is an important concept to understand if one is to function effectively in Chinese society. The WSJ recently had an article that illustrates the challenges for Chinese firms wishing to invest in the United States. Why do they keep encountering problems--especially over "security" concerns? The answer may be that they do not fully understand that investing in the US is not quite the same challenge as investing...

Catholic Church on Finance and Financial Crises

♠ Posted by Emmanuel in Casino Capitalism,Credit Crisis,Religion at 7/16/2012 06:01:00 PM

I once again came upon the pre-Benedict XVI Compendium of the Social Doctrine of the Church (2004) while looking for something else. While Marginal Revolution's all-purpose commentator Tyler Cowen may be no fan of Caritas in veritate, he does state that "our versions of capitalism and democracy are still based squarely on Christian ideas, and I believe this marriage of liberalism and Christianity has been for the better." While I generally agree with this statement, I do take issue when he characterizes much of Catholic Church writing as circuitous and by committee in mentioning a laundry list of ways to improve, say, globalization. To gain a better appreciation of Caritas in veritate, for instance, Cowen should read some of its predecessors that provide a lot of the specificity he is after. For instance, the social teaching embodied in the Compendium was quite accurate in describing the dynamics of separating the financial economy from the real economy and the dangers it posed...

SE Asia Proxies: Philippines/US vs Cambodia/PRC

♠ Posted by Emmanuel in China,Security,Southeast Asia at 7/13/2012 11:34:00 AM

I guess it's ARF-ARF: Because the current rotating chair of the Association of Southeast Asian Nations is none other than Cambodia, it is no surprise that it has been more partial to China. To the disappointment of the Philippines and Vietnam, Cambodia has been unwilling to bring up the South China Sea matter at the ASEAN Regional Forum as China becomes increasingly assertive. The Philippines has had run-ins with Chinese (should I call them paramilitary?) vessels at the Scarborough Shoal, whereas Vietnam has been irked by the Chinese auctioning off blocks for exploration in areas which it contests dominion over. After all, how can you auction exploration rights to territories you do not have a clear claim to? Those with historical awareness of our region will remember that the Chinese supported Cambodia even during its Khmer Rouge/Pol Pot era when (Soviet-supported and already united) Vietnam invaded Cambodia to stop Khmer incursions into Vietnam. To this day, of course, Vietnam...

Huawei to Hell: PRC Threatens Trade Spat w/ EU

♠ Posted by Emmanuel in China,Economic Diplomacy,Trade at 7/09/2012 06:56:00 AM

There's so much controversy over Chinese-made and -designed telecommunications gear: While the American solution to denying market access to budding Chinese telecoms giants / national champions Huawei and ZTE is to treat them as security threats--their investment is not welcome in the "Land of the Free"--Europeans have another tack. Namely, these PRC champions have been styled by EU trade authorities as heavily subsidized competitors. Nobody doubts the EU's penchant for raising a ruckus over competition law or unfair trade--go ask Microsoft, Google, Boeing and so on. It was thus probably only a matter of time before the Europeans...

South Sudan Cuts Off Its Oil To Spite Its Economy

♠ Posted by Emmanuel in Africa,United Nations at 7/06/2012 03:01:00 PM

It seems like only yesterday that we were wishing the new nation of South Sudan all the best after it voted to create a new, independent republic. However, it probably wasn't long in coming that the tensions with Sudan (call it the old, "North" Sudan) resurfaced. You see, while many of the oil-rich parts of the old Sudan went to South Sudan, the problem is that South Sudan is landlocked. To access ports and from there export markets, it had to rely on the old pipelines which brought crude to the coast and ports of "North" Sudan. Fully aware of this situation, the latter has not been averse to holding South Sudan "hostage" with exorbitant transport fees for using these pipelines (lifelines?) As we near South Sudan's first anniversary, its authorities have since the beginning of the year discontinued exports passing through "North" Sudan over a dispute involving transit fees. Which, in effect, cuts off its entire oil industry from the rest of the world for geographic reasons: Brave...

Success Stories: Philippines, the Next Indonesia?

♠ Posted by Emmanuel in Development,Southeast Asia at 7/04/2012 03:10:00 PM

In contrast to the America #1 cheerleaders I am duty-bound to debunk day in and day out, I am actually rather guarded about my home nation's economic prospects. This despite it growing at rates that make the United States look lethargic by comparison. Indonesia has somewhat surprisingly become our region's most dynamic economic performer in recent years, but commentators believe the Philippines is posed to join it soon in being investment grade. Already there's talk about it being one of the world's "New Tigers." Also, unbeknownst to me, the Philippine Stock Exchange has been the world's fourth-best performer in 2012. The FT's Lex further adds that the best-performing stocks are those of infrastructure firms which promise to fix the nation's famously crappy transportation system. (Fortunately, the Philippines' main international airport NAIA is now "only" second worst in the world after JFK, but that's not exactly an improvement.) That said, stock valuations are on the high...

Why China's Communist Party Will Endure, AEI

♠ Posted by Emmanuel in China,Development at 7/02/2012 07:14:00 AM

There's a much-read contribution by Michael Auslin of the American Enterprise Institute on why "China's Party is About to End" from (surprise!) the WSJ op-ed pages. This coming from the libertarian AEI, you pretty much know how their story goes in following the classic American narrative: Political freedoms should go hand in hand with economic freedoms, otherwise the existing political order will collapse. Since I am teaching development this semester, it again bears repeating how thinktanks alike the AEI repeat mistakes American commentators have made time and again in abstracting the unique circumstances of American development...