Foreign Investment, Duterte Drug War Victim

♠ Posted by Emmanuel in , at 9/17/2017 12:18:00 PM
Unlike poor, defenseless Philippine teenagers, foreign investors have successfully avoided Duterte's Philippines.
Philippine strongman Rodrigo Duterte has elicited international condemnation over his bloody drug war,  whose most visible result are thousands of deaths among poor Filipinos unfortunate enough to live in open areas targeted for anti-drug operations. While primarily a security issue, there are also apparent economic consequences for Duterte's "reign of terror" (as the Catholic Church describes it) being waged on the civilian population as foreign direct investment dries up.

In fact, foreign direct investment [FDI] inflows have fallen for the four consecutive quarters Dutertet has been in power.
Investment pledges made by foreign firms slid 55 percent year-on-year to P18.2 billion in the second quarter, the fourth straight quarter that commitments dropped. In a report Friday, the Philippine Statistics Authority (PSA) said foreign investments approved by seven investment promotion agencies (IPAs) from April to June declined from P40.4 billion in the same three-month period last year.

As of the end of the first six months, IPA-approved foreign investments totaled P41 billion, down 38.4 percent from P66.6 billion a year ago. To recall, foreign investment pledges fell 12.8 percent year-on-year to P22.9 billion in the first quarter. Also, approved foreign investments declined 9.3 percent year-on-year to P125.7 billion in the fourth quarter of last year after commitments dropped by a faster 45 percent to P26.7 billion in the third quarter of 2016. It meant that foreign investors’ pledges decreased in the first four quarters of the Duterte administration.
In brief, what we have here is a political risk issue. Would-be foreign investors fear for their safety in a country where a Korean businessperson has been falsely accused of involvement in the drug trade and killed inside of police headquarters in a kidnap-for-ransom scheme. There's also the problem of possible losses of market access. First, the European Union is evaluating whether to continue preferential trade access to the EU under its Generalized System of Preferences Plus (GSP+). Under GSP+, duty-free rates can be availed if participating countries meet various conventions, of which those concerning human rights are coming under scrutiny:
The Philippines was granted beneficiary country status under the EU-GSP+ in December 2014, allowing the country to export 6,274 eligible products duty-free to the EU market. The alleged cases of extrajudicial killings as part of President Duterte’s drug war, however, has put at risk the country’s GSP+ privileges.

The beneficiary status under the GSP+ necessitates the implementation of the 27 international treaties and conventions on human rights, labor rights, environment and governance. Results of the latest review are expected to come out this year.
Following the EU's lead, others are encouraging fellow democracies to impose economic sanctions on the Philippines to discourage Duterte's violence against his own people. As you would expect, Philippine investment authorities are up in arms:
Trade and Industry Secretary Ramon Lopez on Tuesday hit The New York Times (NYT) for urging the international community, in an editorial, to impose trade sanctions against the Philippines for extrajudicial killings under the Duterte administration's campaign on illegal drugs.

"The editorial by The New York Times last March 24, calling for trade sanctions against the Philippines, is baseless and unfair," Lopez said in a statement. "Any form of trade sanction against the Philippines is uncalled for, unfounded and undeserved," the Trade chief emphasized.

In an editorial, titled "Accountability for Duterte," the American daily urged foreign governments to "hit" President Rodrigo Duterte "where it may hurt the most" – trade – in a bid to hold the Philippine leader accountable over the alleged killings in his "deadly" war on illegal drugs.
It's a cliche to say that businesspersons appreciate the lack of uncertainty, but with Duterte in charge of the Philippines, let's say no one is rushing to make investments in a country that's becoming increasingly isolated due to human rights concerns when there are so many far more predictable places to invest.

Premier League Post-Brexit & Post-Free Movement

♠ Posted by Emmanuel in , at 9/12/2017 03:06:00 PM
Premier League clubs would have a harder time hiring European talent like N'golo Kante after leaving the EU.
The top flight of British football--the Premier League--is arguably not the most competitive in Europe if you go by the number of European Champions League winners it has produced. That said, the overall level of competition may be rather higher given its higher wages than comparable first divisions in other European countries. Something that has enabled a lot of transfer activity to the Premier League was being part of the European Union, where freedom of movement is part of the deal for EU citizens.

The UK's impending [sort of?] exit from the European Union is causing some consternation among Premier League clubs that will lose easy accessibility to European footballing talent. Instead of being readily available almost as though they were British, European players would now fall under the same restrictions facing migrant workers from elsewhere in the world. Fewer marquee European names playing in England due to these restrictions could negatively impact Premier League revenues:
England’s standing in the soccer world would be diminished if EU stars gravitated to other countries after Brexit, potentially cutting the value of future TV rights after the current 8-billion-pound ($10.5 billion) deal expires. Players from the bloc are allowed in to the U.K. under EU freedom of movement rules, while athletes from elsewhere must meet criteria that only permit the highest level of foreign players, judged on criteria including age and how many times they have played for their national team.
It's  not going to be the same. That said, there are plans afoot to tailor immigration rules to the demands of this sport:
The league says that, under current rules that apply to athletes from outside the EU, two French players who were crucial to Leicester City winning the championship in 2016, Riyad Mahrez and N’Golo Kante, wouldn’t have gained admittance to the U.K. in a post-Brexit world.

The government wants to develop an immigration system that’s in the best interest of the whole of the U.K., and plans to make initial proposals for a new policy later in the autumn, a spokesman said. “We recognize the importance of sport to the nation and within that the contribution that international talent makes,” the government said in a statement. “We are in discussions with key representatives from the sport sector, including the Premier League, regarding the challenges and opportunities that our EU exit brings.’’
Together with most things concerning Brexit, the fate of hiring foreign footballers is up in the air. Then again, there is no certainty that the departure will happen.

Deport-o-Mania 2: Houston's Rebuilding Labor Shortage

♠ Posted by Emmanuel in , at 9/05/2017 03:32:00 PM
Is Donald Trump's America so hateful of immigrants that it'd rather slow Houston's reconstruction significantly?
Being human after all, we have certain cravings that are personally destructive: nicotine cravings, sugar cravings, and so on. For several members of the American Trump administration--and those who voted for this affront to humanity--they have a different sort of craving that is rather worse in being societally destructive. That's right, their one true addiction is deporting people who are "different" from them culturally, ethnically or religiously. They're bringing drugs, they're bringing crime, they're rapists, etc.

In an earlier post I discussed the potential consequences of ramping up deportations from the US just as Houston lies devastated by Hurricane Harvey. Being a Trump voter-rich state, Texas has unfortunately been at the forefront of sending those from other countries packing:
Under President Trump, authorities in Texas have been bearing down on illegal immigrants. Until a judge blocked the measure last week, they threatened to enact a new state law that would outlaw sanctuary cities. Texas also has been leading a group of 10 states demanding that Trump end the Obama-era Deferred Action for Childhood Arrivals program, or DACA, which granted reprieves from deportation to nearly 800,000 undocumented immigrants who came to the United States as minors.
The last time a disaster of this magnitude hit the Gulf of Mexico area, then-President George W. Bush silently rolled back strict deportation to help reconstruct New Orleans in the wake of Hurricane Katrina in 2005. Indeed, Hurricane Harvey may have made immigrants more vulnerable by literally bringing them out in the open:
It is a harsher landscape for those in the country illegally than it was 12 years ago, when the Gulf Coast faced the similar-size task of cleaning up from Hurricane Katrina. Eight days after that storm made landfall, President George W. Bush bowed to pressure from construction firms and relaxed worker ID rules. By some estimates, that allowed more than a quarter of all government-paid recovery jobs to go to illegal immigrants [my emphasis]...

But 10 days after Harvey struck Texas with record-setting rains and caused unprecedented flooding, the Trump administration has made no similar proclamation. Worse, immigrant rights groups say, federal authorities have sent conflicting signals about whether they might start simply detaining and deporting those flushed out into the open by the storm.
Builders, unlike certain elected officials, know what really needs to be accomplished in order to meet the labor requirements in rebuilding Houston. Most certainly it isn't ramping up deportations:
Leaders in the construction industry have begun sounding alarms that there will not be enough American-born workers to rebuild as quickly as needed. “If they would relax the rules, honestly, that would be great, we could use it,” said Jeffrey Nielsen, executive vice president of the Houston Contractors Association, whose members include the city’s largest firms that build roads, bridges and other public works.

Nielsen said that even before Harvey hit, almost every member of the association was grappling with a shortage of workers. With a crushing list of jobs now growing by the day, thousands need to be hired — and fast. Nielsen said he and other construction industry officials were told at a weekend briefing that roughly 30 percent of all roads in and around Houston will remain impassable without some construction work.
The city's reliance on undocumented workers is substantial if left unsaid. As the saying goes, there are literally few gringos (white natives) willing to do the work:
“The truth is, there are not a lot of people jumping up and down to do civil construction work in Texas. It’s hot, and these jobs are pouring concrete or, worse, hot asphalt,” Nielsen said. “That’s the reality of it, and we need more people than ever.”

There are plenty in and around Houston who might consider taking on the work, which can pay $20 an hour or more, if ID requirements were relaxed, construction industry officials say.

The Houston metropolitan area has the third-largest illegal immigrant population in the country, about 575,000 people, according to a Pew Research Center report this year. Those workers already make up roughly a quarter of all construction laborers citywide, according to the study. Some estimate it could be closer to half [my emphasis].

But as the federal government this week is expected to begin signing massive contracts for debris removal, roofing work and other emergency efforts, none of Houston’s unauthorized immigrant population could pass worker verification guidelines required of federal contractors.
Trump-style bigotry certainly raises several ethical issues. However, as this storm illustrates, racism doesn't make much economic sense either while you're trying to rebuild an American megacity. Somehow, I doubt there are enough Breitbart readers out there [representative headline: Satanic illegals kill US teen!] willing to do the hard work that needs to be done.

Deport-o-Mania: But Who'll Rebuild Houston?

♠ Posted by Emmanuel in , at 8/29/2017 06:52:00 PM
Who'll rebuild Houston? With an immigration crackdown underway, it's a pretty big question.
First off, I wish to extend my sympathy to the residents of the great American city of Houston. While the United States' fourth-largest city is mostly imagined to be an oil town, the truth is that it's been busy diversifying away from energy. Hence, even if oil prices are depressed, the city hasn't just muddled through in wait for another oil boom. Instead, it's broadened its economic based to become less reliant on oil and gas.

When Hurricane Harvey runs its course--as it eventually will--the city will be in some need of rebuilding. As it's still ongoing, the ultimate amount of the damage cannot be known. That said, there will be a huge need for construction workers and others in the building trade. Unfortunately, this being the first year of the Trump administration, the storm is occurring amidst a large crackdown on immigrants. Immigrants making up a large stock of would-be construction workers Stateside, this situation poses a quandary: Who exactly will rebuild Houston?
Houston will require a surge of employment—tens of thousands of people. It will have to find places for them to live, since so much of the housing stock is damaged. And it will likely have to pay them above-market wages, because it will need to lure them away from existing jobs.

And given the Trump administration’s hostility to Latinos and desire to ramp up deportations, it’s unlikely that what worked in previous disasters will work again. Back in 2007, the Washington Post reported on a Tulane and University of California, Berkeley, study that found some 100,000 Hispanic workers thronged into the Gulf Coast region in the wake of Katrina, many of them undocumented. Houston will need a similar migration for it to recover. In 2017, from where will those workers come?
Houston, we've got a problem of not having enough folks willing and able to help rebuild the city (i.e., immigrants). To make matters worse, the state of Texas has just implemented legislation making cities like Houston more responsible for deporting undocumented workers:
But the Texas labor market is tight, and incentives will be needed -- usually in the form of higher wages -- to pull in engineers, tradesman and laborers from around the region. The Federal Reserve district banks in Dallas, Atlanta and St. Louis already have reported hiring difficulties.

Gathering manpower could be further complicated by a newly passed Texas law requiring cities to be more aggressive in helping deport undocumented people. “If Houston is going to be rebuilt in a reasonable amount of time, it will be rebuilt with the contributions of undocumented immigrant workers,” said Mark Jones, a political-science professor at Rice University in Houston. “If undocumented immigrants are afraid or unwilling to come to Houston because of fears of deportation, that’s going to delay the recovery, as well as make it far more expensive.”
Let's just say the Republican-dominated state government and Trump--eager to show how he's supporting the effort to get Houston back on its feet--will have facing a dilemma in fairly short order. Will they continue to "act tough" on immigrants, or will they come up with some sort of kludge to allow undocumented workers to help in the city's repairs?  Ever a pragmatist, I'd expect to see more of the latter than you'd expect from the political rhetoric. 

Canada's Plan to Keep NAFTA Alive and Kicking

♠ Posted by Emmanuel in , at 8/24/2017 02:54:00 PM
The Yanqui villain is on the left. The Canadian [C] and Mexican [R] protagonists seek to defuse his worst tendencies.
The commencement of the NAFTA renegotiation has been, if nothing else, an opportunity for the Trump administration to engage in grandstanding about how the protectionist president is fed up with Canada and Mexico not competing on a level playing field. Aside from running trade surpluses with the United States (which reveals the extent America is being "taken advantage" of), both stand accused of stealing American jobs (i.e., whenever US multinationals hire workers anywhere except the US). Hence US Trade Representative Robert Lighthizer's tale of woe at the beginning of negotiations:
We cannot ignore the huge trade deficits, the lost manufacturing jobs, the businesses that have closed or moved because of incentives -- intended or not -- in the current agreement.

The numbers are clear. The U.S. Government has certified that at least 700,000 Americans have lost their jobs due to changing trade flows resulting from NAFTA. Many people believe that number is much, much bigger than that. In 1993, when NAFTA was approved, the United States and Mexico experienced relatively balanced trade. However since then, we have had persistent trade deficits – in the last year totaling nearly $57 billion. In the auto sector alone, the U.S. has a $68 billion deficit with Mexico.  Thousands of American factory workers have lost their jobs because of these provisions. In recent years, we have seen some improvement in our trade balance with Canada.  But over the last ten years, our deficit in goods has exceeded $365 billion.
[Sniff] the vile things these foreigners are doing! To no one's real surprise, though, it appears that the US grandstanders do not really have a game plan:
In this case, however, the entire NAFTA renegotiation process is happening only because Donald Trump campaigned on doing it and insisted on formally triggering the treaty’s renegotiation provision back in mid-May. But with the [Trump] administration in a state of semi-permanent chaos, top officials not focused on the issue, and the White House’s leading trade protectionist unceremoniously fired [Steve Bannon], Trump does not appear to be well-positioned to secure any kind of meaningful concessions from Canada.
The Canadians, on the other hand, are not fooling around since their mission is rather more serious than catering to the ego of an economic populist and his minions. They do have a game plan to preserve the benefits which have come through this agreement. In stark contrast to US ineptitude, they've designated a veteran team to respond rapidly to the mental disturbances of Trump and company. One of the ways to accomplish Canadian objectives is to appeal to Americans who have a stake in maintaining the current deal:
According to Alexander Panetta of the Canadian Press, Prime Minister Justin Trudeau “has created an election-style nerve center to handle White House-related challenges” during the NAFTA renegotiation process. The team features eight staffers, including “two former trade officials, two senior PMO officials, an ambassador, a writer, a cabinet minister.”

The goal is to be able to push back on both a strategic and tactical level to presidential negotiating ploys, including social media threats to pull out of NAFTA altogether in order to gain leverage. One of the goals of the team in the prime minister’s office is to coordinate follow-up, if necessary, with the broad and deep range of American stakeholders beyond Trump whom Trudeau has spent months cultivating.

As Max Fisher reported in June, “Canadian officials have fanned out across the United States, meeting with mayors, governors, members of Congress and business leaders on matters from trade to the environment.” At meetings with local officials, Canadian ministers “travel armed with data on the precise dollar amount and number of jobs supported by Canadian firms and trade in that area,” cultivating current and potential allies to push back against Trump’s demands. 

Canada also has a clear list of negotiating objectives, including both key NAFTA provisions that Trudeau’s government is committed to keeping and aspirations to win more access for Canadian companies to state and local government contracts and more access for Canadian professionals like computer programmers to jobs in the United States. The US negotiating posture, by contrast, heavily emphasizes a couple of demands that appear to be symbolic, meaningless, or unworkable.
Actually, the barbs from Trump have already begun as negotiations are underway. Trump told a Phoenix, Arizona rally that the US will probably withdraw from NAFTA. However, Canadians and Mexicans are taking him less seriously by the day, as they should. Remember, the US president does not have sole discretion whether to withdraw from a trade deal like NAFTA. Instead, congress does. As long as the Canadians strategically appeal to American benefiting from the arrangement--and congresspersons who represent them--it does not make sense to count NAFTA out.

The weight of evidence suggests the Canadians understand their predicament and how to get a favorable result by appealing to US constituencies who've benefited from regional trade. Alas, the same cannot be said for Trump and company.The good guys here, the Canadians, stand a good chance of winning since they are much better prepared.

How Trump the Vulgar Boosted the Hallmark Channel

♠ Posted by Emmanuel in at 8/23/2017 03:06:00 PM
The Hallmark Channel is everything Trump's America is not: civil, polite, and uplifting.
Despite his improbable appeal to certain segments of the American electorate--you'll have to point them out to me since I can't find any sensible reason why--I'll bet they would agree that Donald Trump is a walking obscenity. Insulting anyone and everyone--people of color, people of other faiths, foreigners, white people who don't agree with him and so on--he arguably sets new lows for public discourse. His exceedingly crass manner has dragged American public discourse and the rest of the world's views of the United States into the gutter.

However, there is a bright side. Sort of. Given the putrid state of American life, wouldn't it be nice to go to a place of civility, kindness, and people lifting each other up instead of tearing them down? Well, there is such a place. It's called "The Hallmark Channel." Personally, I do not watch it because the story lines are exactly the opposite of what Trump sees. Instead of American Carnage, it's American Fluff. Neither is quite an accurate portrayal of North American reality, but hey, when you have too much of the former, I guess people pine for the latter. That is, a bygone era that's largely conjured suits more and more people:
It’s been called feel-good fluff by both critics and viewers alike, but the fact of the matter is Hallmark Channel, with its sugary sweet TV movies and shows, is currently one of the highest-rated TV channels in the United States.  Shows like Chesapeake Shores (starring Jesse Metcalfe) and saccharinely titled movies like A Dash of Love and Love at First Bark provide the mindless, wholesome entertainment people are turning to in Donald Trump’s America[...]
So what’s the deal here? Why are people flocking so heavily to Hallmark?

“It makes sense that in an era of war and political conflict, people turn to their TVs for feel-good escapism,” said Amber Dowling, TV critic and former president of the Television Critics Association. “Historically that’s been true over the years, and has usually led to an increase in production on family comedies and stories. Hallmark churns this type of programming out, so they’re able to easily fit that current appetite.”

Indeed, it’s true: Hallmark shows and movies, for the most part, are squeaky clean. No swears, no sex, closed-mouth kisses, and enforced “family values” can go a long way when the rest of TV is a melange of excessive violence and sex. Many contemporary TV shows try to go the other way, towards whatever forbidden button needs pushing. Hallmark and channels like it are salves, oases away from the chaos of network and cable TV. It’s no surprise its tagline is “The heart of TV.”

Trump's America is not a happy place, and people need to escape somewhere:


“The environment is undeniably contentious,” said Bill Abbott, chief executive of Crown Media, which owns Hallmark. “We are a place you can go and feel good. We intentionally branded ourselves as the happy place.” While Hallmark’s ratings have been going up consistently over the last few years, it’s gotten a noticeable bump since late 2015, when the latest presidential election cycle started. 
 I'll bet you the owners of this channel are secretly wishing for the continued reign of Trump. Just as cable news channels keep blasting him but wish he remains in office to get more viewers, so do the owners of the feelgood, happy ending channel wish for the endless torrent of misery that is the Trump administration. 

Heaven help us all.

Leave Banking, Hawk Cryptocurrencies for a Living

♠ Posted by Emmanuel in at 8/03/2017 04:56:00 PM
There's plenty of these already--with boatloads more to come.
Manias in the business world are nothing new. In the technology realm, we've had any number of these already like the dot-com boom followed by the dot-com bust earlier in this century. In the realm of finance, the latest and greatest gold rush concerns the issuance of cryptocurrencies. Instead of initial public offerings of shares of stock, the marquee events here are initial coin offerings (ICOs). As no shortage of issuers and investors buy the gospel (or Kool-Aid for skeptics) that cryptocurrencies represent the future widely-used form of money, there is a lot to be made (or lost).

A surefire sign of optimism about opportunities is when folks leave otherwise well-paying if predictable jobs for the Wild West of trading these largely unregulated instruments. Bloomberg says that's already happening with many ex-bankers setting their sights on the larger promised returns of virtual monies:
From Hong Kong and Beijing to London, accomplished financiers are abandoning lucrative careers to plunge into the murky world of ICOs, a way to amass quick money by selling digital tokens to investors sans banks or regulators. Cut out of the action, a growing cohort of banking professionals are instead applying their talents toward buying or hawking cryptocurrency.

They’re going in with eyes wide open. For [ex-banker Richard] Liu, who put together some of China’s biggest tech deals in his old job, the chance to shape the nascent arena outweighs the dangers of a market crash or crackdown. Loosely akin to IPOs, ICOs have raised millions from investors hoping to get in early on the next bitcoin or ether, and their unchecked growth over the past year is such that they’ve drawn comparisons to the first ill-fated dot-com boom. Yet with stratospheric bonuses largely a thing of the past, the allure of an incandescent new arena far from financial red-tape has proven irresistible to some.

“Traditional investment banks and VCs need to monitor this space closely, it could become very big,” said the 30-year-old partner at $50 million hedge fund FBG Capital, which has backed about 20 ICOs. He’s off to a quick start, getting in on this year’s largest sale: Tezos, a smart contracts platform that raised $200 million to outstrip the average Hong Kong IPO size this year of around $31 million.
That said, the potential for huge gains trading these monies comes with correspondingly huge risks as their critics point out:
Critics say many ICOs are built on little more than hyperactive imaginations. A cross between crowdfunding and an initial public offering, they involve the sale of virtual coins mostly based on the ethereum blockchain, similar to the technology that underpins bitcoin. But unlike a traditional IPO in which buyers get shares, getting behind a startup’s ICO nets you virtual tokens -- like mini-cryptocurrencies -- unique to the issuing company or its network. That means they grow in value only if the startup’s business or network proves viable, attracting more people and boosting liquidity.

That’s a big if, and the sheer profusion of untested concepts has spurred talk of a bubble. The U.S. Securities and Exchange Commission signaled greater scrutiny of the red-hot sector when it warned on Tuesday that ICOs may be considered securities, though it stopped short of suggesting a broader clampdown. The regulator however did reaffirm its focus on protecting investors: part of the appeal of ICOs lies in the fact that -- for now -- anyone with a bold idea can raise money from anybody.
Actually, the dot-com boom may illustrate the future of these virtual monies. Most startups of course went bust. However, those that survived for the longer run eventually did well enough and have introduced widely-adopted consumer standards. The survivors are exceedingly well-known including the likes of Amazon, EBay, Google, and so on. Like before, these newfangled entities cannot survive on novelty alone but must offer some sort of unique selling proposition to customers.

It will take some time to sort the Amazons from the Pets.coms of the cryptocurrency world. Meanwhile, there apparently be many gamblers drawn to this realm--even from the relatively stolid world of banking.

Blockaded Qatar Takes Saudi, UAE to WTO

♠ Posted by Emmanuel in , at 8/01/2017 04:57:00 PM
Of course Qatar knows the WTO. The current [?] WTO negotiations were initiated in the capital of Doha.
I am fascinated with the blockade on Qatar by fellow Gulf Cooperation Council (GCC) countries Saudi Arabia, the United Arab Emirates, and Bahrain, supposedly for supporting "terror." For the country where most 9/11 attackers came from and which has funded fundamentalist education throughout the world, Saudi Arabia is particularly noteworthy. My belief is closer in line with those who believe Qatar acts more as a neutral ground for those wary of Middle East authoritarianism--even if these folks may include Hamas and Hezbollah who have representative offices in Qatar.

There is also the not-so-small issue of broadcast network al-Jazeera, which is widely viewed not just in the region but throughout the world. Its continuous criticism of other GCC countries rankles the others, and I must also point out that Qatar is not entirely faultless in its media coverage. After all, Qatar is just like the rest of them: As yet another absolute monarchy, Qatar is hardly a bastion of democracy. As al-Jazeera viewers would note, Qatar's leaders--who set up the network in the first place--are never criticized.

Having failed so far diplomatically in resolving this dispute--the United States which has bases in Qatar but nonetheless was bashed by Trump as a state sponsor of terror has been of little use--Qatar now turns to international organizations to help its cause:
Qatar has lodged a formal complaint with the World Trade Organisation against the “illegal siege” imposed by four Arab neighbours that have accused the Gulf state of sponsoring terrorism. The complaint, lodged with the WTO’s dispute-settlement body, described the embargo as “unprecedented”, accusing Saudi Arabia, the United Arab Emirates, Egypt and Bahrain of “violating the WTO’s core laws and conventions on trade of goods and services, and trade-related aspects of intellectual property,” the ministry of economy and commerce said in a statement on Monday.

On June 5, the quartet of Arab allies cut off air, sea and land links to their gas-rich neighbour, closing off airspace to Qatar-bound flights, refusing to handle goods bound for the gas-rich state and cutting diplomatic ties. While Qatar has shifted supply chains, bringing in food from Turkey and Iran and using Omani ports, its imports nonetheless slumped 40 per cent in June as the embargo hit home. “The arbitrary measures taken by the siege countries are a clear violation of the provisions and conventions of international trade law,” said Sheikh Ahmed bin Jassem bin Mohammed Al Thani, the minister of economy and commerce. “Furthermore, the illegal siege is unprecedented in the framework of economic blocs.”
The complaint at the ICAO will also mirror the WTO complaints since Qatar has had a very hard time sending and receiving Qatar Airlines and other flights with the likes of UAE closing their airspace to Qatar. While I have little doubt that Qatar's case is a fairly good one against such a wide range of sanctions without apparent cause--especially trade-related ones--you have to wonder: Given that WTO cases are usually resolved over a year's time, will there still be much of a commercial center left of Qatar if things take that long to resolve?

Ultimately, I believe that a diplomatic solution, whoever may broker it, will need to be found. Litigation will only get you so far and may leave a bad aftertaste besides.

Of China, Korean Missile Defense and Makeup Sales

♠ Posted by Emmanuel in , at 7/28/2017 04:03:00 PM
AmorePacific owns several internationally well-known cosmetics brands--especially among PRC buyers.
Whew! That post title is a bit of a mess, but believe me (Trump-style) it is accurate. A few weeks ago, I discussed the potential economic hit to South Korea from deploying the US-sourced THAAD missile defense system. The PRC does not want South Korea to deploy it on the Korean peninsula out of concern that its advanced detection capabilities potentially compromise China's military defenses. I like to think that South Koreans are a sensible sort not prone to provoking the Chinese without any sane reason...but maybe nuclear annihilation at the hands of North Korean crazies is just cause? Some (Chinese) people are being irrational and unreasonable IMHO.

At any rate, aside from the company that provided the land for the deployment of THAAD--Lotte--another Korean firm has had its business activities negatively affected as well to a significant extent. AmorePacific is the umbrella group of several top Korean makeup brands, which are all the rage here in Asia. Let's just say a PRC embargo on all things Korean as a result of the THAAD deployment has hit AmorePacific's bottom line...like a missile attack, in fact:
AmorePacific Corp, South Korea's biggest cosmetic company, reported a 58 percent slump in operating profit in the second quarter on Wednesday, as the once investor-darling bore the brunt of diplomatic tensions with China that dampened demand from Chinese tourists.

Chinese visitors, the largest population of the total tourists to South Korea, fell 66 percent in June from a year earlier, resulting in a significant plunge in the number of customers to domestic duty-free shops. Since mid-March, Beijing has banned travel agencies from selling trips to South Korea following Seoul's decision to deploy a U.S. missile system to counter North Korean threats, despite China's objections.

"Cosmetic giants such as AmorePacific tend to rely on profits produced from duty-free stores," said Cho Yong-sun, an analyst at HMC Investment Securities.
The gist of it is that PRC package tours to Korean have been discouraged by the government, resulting in the droves of Chinese tourists buying makeup at Korean duty-free outlets to drop precipitously. While unfair in many respects, you do have to wonder why such a major cosmetics group is so dependent on a certain type of foreign visitor to account for so much of their revenues.

Amorepacific, diversification would be good for you. 

Is Kaspersky Labs a Security Threat to the US?

♠ Posted by Emmanuel in , at 7/27/2017 04:03:00 PM
Is Kaspersky anti-spyware...or is it Russian government spyware? That's the question for US state & local gov't users.
Arguably one of the best-known Russian companies in the world is Kaspersky Labs, the maker of anti-spyware software. Cheekily, you may say that if anyone knows how to spy on others online, it's the Russians given that the US presidency is currently enmeshed in several investigations involving Russian meddling in the 2016 presidential elections. Forthcoming additional sanctions against Russia (among others) aside, however, the commercial implications of alleged Russian spying are limited.

Consider Kaspersky, though. Given its line of business and the country it hails from, it's become something of a hot potato for government procurement Stateside in the anti-spyware arena. Given that the putative head of the US federal government is the president, you may be amused to note that it's the federal government and not local or state governments who have provided guidance against buying Kaspersky's stuff. From the Washington Post:
The federal agency in charge of purchasing, the General Services Administration, this month removed Moscow-based Kaspersky Lab from its list of approved vendors. In doing so, the agency’s statement suggested a vulnerability exists in Kaspersky that could give the Russian government backdoor access to the systems it protects, though they offered no explanation or evidence of it. Kaspersky has strongly denied coordinating with the Russian government and has offered to cooperate with federal investigators.
This action has left state and local governments in a quandary whether to follow suit in avoiding Kaspersky-branded products which some believe may open a backdoor for Russian state spies into US government activities:
The GSA’s move on July 11 has left state and local governments to speculate about the risks of sticking with the company or abandoning taxpayer-funded contracts, sometimes at great cost. The lack of information from the GSA underscores a disconnect between local officials and the federal government about cybersecurity.
Interviews suggest that concerns in recent months from Congress and in the intelligence community about Kaspersky are not widely known among state and local officials, who are most likely to consider purchasing the Russian software. Those systems, while not necessarily protecting critical infrastructure, can be targeted by hackers because they provide access to troves of sensitive information.
Meanwhile accusations and denials are coming up think and fast among the company and its critics:
James Lewis, a cybersecurity expert at the Center for Strategic and International Studies in Washington, said “it’s difficult, if not impossible” for a company like Kaspersky to be headquartered in Moscow “if you don’t cooperate with the government and the intelligence services.”

Kaspersky has worked to protect its image since the GSA decision. It said this month that it would be willing to turn over its software source code to federal investigators.
The gist of it all is that there is no evidence that Kaspersky Labs is in cahoots with Russian spies, or even that there is an alleged "backdoor" for these spies to exploit. Unless proven otherwise, this instance really is as fine as you'll get of "guilt by association"--flimsy circumstantial evidence of [i] a Russian firm [ii] marketing anti-spyware or even [iii] operating in Moscow are enough to label it guilty as charged.

I personally find Kaspersky cumbersome so I don't use it. However, you'd think there would have to be a higher burden of proof to conclusively order its discontinuance of use in US government offices than what has been provided thus far.

Twin Peaks Revival and Critiquing Anti-Globalization

♠ Posted by Emmanuel in at 7/18/2017 05:26:00 PM
Dr. Amp throws the finger [x2!] at global capitalism.
After embarking on a fairly lengthy discussion of how Donald Trump should be a hero and not a hate figure of the anti-globalization movement amid violent protests at the recently-concluded G-20 meeting in Hambug, here is something a bit more lighthearted. I've been watching the return of the seminal show Twin Peaks to television after a 25+ year hiatus. Its off-kilter blend of melodrama, tragicomedy, horror, and science fiction has always been appealing to me.

However, what caught my attention in the context of anti-globalization was Dr. Jacoby--he of the different colored glasses--sliding further into madness in the revival. He's turned into some sort of crazed conspiracy theorist who goes by the name of Dr. Amp, selling sh_t shovels to dig ourselves out of the filth of modern life:


Instead of having to listen to the likes of Naomi Klein repeat the same old global corporate takeover shtick, why not have essentially the same message delivered in an entertaining way? I'd rather hear the Dr. Jacoby version any day...at least it's amusing in a self-deprecating (instead of self-important) manner. All the same, this satire points out the shortcomings of this genre of foolishness:
  1. Conspiracy - there are vast, unseen forces working against us in so many ways. Once more, the level of coordination implied usually is not demonstrable that there are several actors out just to get the rest of us.
  2. Logical inconsistency - going back to the point about Trump, anti-globalization arguments do not usually benefit from having parts that fit together. For instance, if globalization is providing employment to workers in poorer countries "stealing jobs", would they be "better off" if there were no global economic integration and everything consumed in rich countries was made in the US/Europe/Japan/ANZ, etc.? If anti-globalization activists are presumably concerned about the welfare of poor people (especially workers) elsewhere, then why deny them a living wage by "Making America Great Again" and reshoring virtually all manufacturing operations?
  3. Profit motive - Selling $29.99 "sh_t shovels" is the entire point of Dr. Jacoby's operations. Yes, he is interested in making money. If you were, say, Naomi Klein, and believed that your work contained the wisdom to right the wrongs caused by capitalism, then why not distribute it for free instead of charging us money and enriching some multi-billionaire like Amazon's Jeff Bezos?
Bottom line: As I've said before, most of these anti-globalization types are in it for the money too. The only difference between them and most of those whom they criticize is that they simply don't admit doing so by adopting self-righteous rhetoric.

Go ask Dr Amp.

Shouldn't Anti-Globalization Activists [Heart] Trump?

♠ Posted by Emmanuel in at 7/07/2017 01:07:00 PM
G-20 Hamburg protests: why the hate for anti-globalization champion Trump?
For years, anti-globalization protesters have gone out to all sorts of notable economically-related gatherings worldwide, be they G-7, G-8 or G-20 summits; World Economic Forum gatherings; World Bank and IMF meetings; WTO ministerial conferences, and so on and so forth. The boilerplate accusation is that world leaders betray the interests of the common people in favor of a faceless global capitalist class. To this, the common people must stand up for what they believe in. So far, nothing is new here.

What's interesting with the emergence of Donald Trump in world politics is that he espouses much of the same rhetoric: the [American] working class has been hurt by globalization, and therefore globalization should be rolled back to protect the common people from the ravages of world trade. As such, it's always struck me how vehemently opposed anti-globalization campaigners are to Trump when he's actually done much more to stop further economic integration than all of them combined. From single-handedly dooming the Trans-Pacific Partnership to oblivion to refusing to agree that trade protectionism is to be avoided during economic summits, he should be the man of anti-globalization writer Naomi Klein's dreams. But alas, he is not. This Canadian who likes meddling in Yanks' affairs just cannot stop blathering about how awful Trump is. (It's a form of globalization I don't appreciate when some foreigner thinks she's "active" in US domestic politics.)

There are, of course, all sorts of wrinkles here. Coming from the left, the anti-globalization vision of eliminating world trade is complemented by replacing it with folks being self-sufficient in small, sustainable communities. Meanwhile, the Trumpian vision is instead a triumph of American industry making everything that those in the United States wish for and more--to the exclusion of considering everyone else's welfare. Another line of argument is that Trump is only masquerading as a champion of the working class and is actually globalizer in disguise.

Then you also have a panoply of leftist causes that are the exact opposite of what Trump champions. These include climate change, racial tolerance, and so on. But, if you really think about it, Trump may be the one who is *really* anti-globalization in outlook here if the criteria is sheer isolationism. Consider:
  • You don't want international cooperation on climate change since, well, it involves representatives of different nations discussing things. A global elite should not be dictating what the free peoples of the world do to their piece of the planet;
  • You don't want tolerance of other people with different creeds, colors, or races. If the opposite of "globalist" is "nationalist," then you cannot have a nation-state which when it is largely indistinguishable from all others.
Abhorrent as those ideas may be, they're arguably more consistent with extricating ourselves from the rest of the world. In this sense Trump is the true anti-globalist, whereas those championing all sorts of progressive causes are not, really.

If anti-globalization means going it alone no matter what everyone else thinks, Trump is its best representative.

Anti-globalization activists should therefore celebrate Trump's arrival, full stop, wherever in the world he shows up. The attention he brings to the cause is unrivaled--especially compared to a ragtag group of anarchists and flunky writers like Klein.

After Trump Killed TPP, is Japan-EU FTA Imminent?

♠ Posted by Emmanuel in ,, at 7/05/2017 04:03:00 PM
EU Trade Commissioner Cecilia Malmstrom and Japanese Foreign Minister Fumio Kishida may have an FTA soon.
Given its recent efforts to join the ill-fated Trans-Pacific Partnership (TPP), Japan actually has an effective grand total of zero [0] FTAs involving more than one country. Yes, it does have one with ASEAN, but it's actually on top of a series of bilateral "economic partnership agreements" with each Southeast Asian member country (except for later accession countries Cambodia, Laos and Myanmar). TPP was to be Japan's first real foray into a plutilateral FTA, but Trump put paid to that.

Yet, emboldened by its adventure negotiating TPP and wanting more than the status quo, Japan is contemplating a deal with the EU. In fact, it may be inked as soon as tomorrow at a Japan-EU summit prior to the Hamburg G-20 gathering on Friday. The largest bugaboo with Japan and multilateral deals has always been agriculture. Why does Japan have so many bilateral deals with ASEAN member countries? It was largely to devise agricultural protections specific to each trading partner.

What's interesting about the mooted Japan-EU FTA are twofold: Once more, it would be Japan's first honest-to-goodness plutilateral FTA. Second, this deal would involve another entity known for agricultural protectionism in the EU. Is the latter an insurmountable obstacle? We will soon find out...
The European Union and Japan expect to commit to signing a free trade deal on Thursday, the EU said, in what both see as a push back against a feared U.S. turn toward protectionism under President Donald Trump.
Confirming on Tuesday that Japanese Prime Minister Shinzo Abe would meet heads of EU institutions in Brussels on the eve of a G20 summit with Trump and other world leaders in Germany, the European Council said: "Leaders are expected to announce a political agreement on the EU-Japan free trade agreement."
That would be short of a final accord ironing out all the commercial intricacies between two of the world's biggest economies and EU officials said on Tuesday that some key issues still needed to be settled before Thursday's EU-Japan summit.

However, confirming Abe's attendance is a sign of confidence that a deal will be ready for his signature and also puts pressure on trade negotiators to secure at least outline agreements on opening up each other's markets, including in the trickiest areas such as Japanese cars and European farm produce.
This Eurasian activity contrasts with the proclivities of a certain American stinker:
Both sides, having seen Trump pull back from free trade relationships, are keen to show they remain committed to removing barriers they say hamper growth.

"It is important for us to wave the flag of free trade in response to global moves toward protectionism by quickly concluding the free trade agreement with Europe," Abe told ministers at a meeting on Tuesday about the EU negotiations.

"This agreement is also important for our growth strategy. We will negotiate with all our energy until the very end to achieve the best deal for Japan."

Abe will meet European Council President Donald Tusk, who speaks for the 28 EU national leaders, and European Commission President Jean-Claude Juncker, the bloc's executive head.

Juncker's Trade Commissioner Cecilia Malmstrom was in Japan at the weekend and said after her talks that she was "quite confident" that a broad agreement could be announced on Thursday. EU officials had said that Abe would only visit Brussels if both sides were certain that the political agreement would be signed.

Malmstrom said: "You can do good, fair, transparent and sustainable trade agreements where you win and I win, and not the American view, which seems to be, 'You lose and I win'."
Abe, Tusk and Juncker will go on to Hamburg on Friday for the G20 summit
Take that, Trumpie! Europeans and Japanese do not take the trade realm as a winner-takes-all arena. As I mentioned, agriculture has been a sticking point for the Japanese negotiators:
European officials have been pushing for a reduction in Japanese tariffs on cheese and agriculture imports that are as high as 30 percent in return for phasing out tariffs on Japanese autos and auto parts.

This tradeoff initially met strong resistance, because some politicians want to protect Japan's dwindling dairy industry. However, Malmstrom expressed confidence that both sides have overcome this problem and can reach a deal.

"We've made meaningful progress, but there are still important points remaining," Kishida told reporters.
Some perspective is useful here. Actually, the Japan-EU deal has been under negotiation for nearly half a decade. My guess is that Trumpism was a spur to it. While the US has begun looking inward, many other countries still see free trade as beneficial. Although there are of course longstanding sticking points like the ever-bothersome agriculture, those committed will find a way to work around such obstacles. In order not to foster a wider climate of protectionism, some gesture was necessary.

So, here we are. By contrast, the Trump administration may announce steel tariffs hitting several G-20 countries in time for the Hamburg meeting. Same gathering; entirely different messages.

Can Ivanka Trump Stop Pop From Cutting US Aid?

♠ Posted by Emmanuel in ,, at 6/28/2017 04:47:00 PM
Would Ivanka Trump be complicit if tens of thousands died due to starvation arising from US foreign aid cuts?
To say Donald Trump hates poor foreigners is an understatement. He's definitely bigoted, but apparently it matters less if you're a Muslim [a] from a wealthy nation with [b] Trump-linked business interests. After all, the 9/11 attackers were mostly from Saudi Arabia and the UAE, but they go off scot-free in a world where, well, money talks. Although the world is fixated on the fate of his travel ban on folks from Iran, Libya, Somalia, Sudan, Syria and Yemen (countries which account for a grand total of zero terrorist fatalities in the US) less is said about the ongoing famines in many of these countries and their near-neighbors.

You see, the Trump administration has been mulling drastic cuts to US foreign aid going to all these poor, ungrateful, Trump-hating coloreds (or is their hatred partly due to the US planning to cut so much aid?) to spend on things like a multi-billion military expansion and a Great Wall of Trump on the US-Mexico border. However, note that Congress ultimately decides what to spend on the US federal budget and not the president.

Meanwhile, some hope that his moderate[-ish] daughter/adviser Ivanka Trump will persuade The Donald to not make such drastic aid cuts--at least that's what some aid agency officials think in the face of massive ongoing famines elsewhere:
The head of the UN World Food Programme has said he is hopeful Ivanka Trump will lobby her father into a U-turn on cuts to humanitarian aid in the face of an urgent cash crisis that is imperilling hundreds of thousands of lives.

David Beasley, a former Republican governor of South Carolina who supported Donald Trump’s campaign for the presidency, said Congress and the Senate had already defied the new president to ringfence $980m (£764m) for famine relief this year.

Beasley said he believed Trump would now rethink his policy of stripping down funding of peacekeeping and humanitarian aid for 2018, due in part to the president’s “savvy” daughter, with whom he posed for photographs following a meeting earlier this month.
Even now, the US is the biggest UN contributor, even if its aid contribution is among the least in GDP percentage terms for OECD nations:
The US is the biggest contributor to the UN, paying 22% of its $5.4bn core budget and 28.5% of the $7.9bn dedicated to peacekeeping. Trump has said that such contributions are unfair, and has been seeking to cut spending on US diplomatic and humanitarian efforts by a third...

In relative terms the US is one of the least generous countries when it comes to foreign aid: spending for 2015 stood at just 0.17% of gross national income, compared with Britain’s 0.7%.
The projected aid requirements this year are certainly staggering:
Speaking on a visit to Brussels, where he met leaders of the EU and the Belgian government, Beasley said he needed an injection of $1bn in the coming months to save the lives of 600,000 children. “While the European Union and Belgium have been tremendous supporters, the needs at this time are just extraordinary,” he said. “We are facing the worst humanitarian crisis since the second world war.

“Some 30 million people don’t know where their next meal is going to come from in just four of the countries facing famine, and 1.4 million are literally on the brink of starvation as we speak. “If we do not receive the resources, the food that we need in the next few months we are talking about the possibility of 600,000 dying. If we receive the funds, we can avert famine and minimise the chance of death.”
What does Trump care? More to the point, why would Trump care about colored people unable to afford Trump-branded gold courses or hotels who hate his guts? My guess is that aid proponents are wasting their time lobbying Trump. Besides, Trump can propose the most vicious cuts to US foreign aid, but it's ultimately the congress that decides how much to allocate in the federal budget. Given that fact, I'd be lobbying congresspersons instead of this guy. It's a waste of time IMHO.

And yes, Ivanka Trump does not escape responsibility, try as she might to portray herself as a "non-political" actor.

UPDATE: Don't forget her futile attempt to get The Donald to stay in the Paris Agreement. Progressive causes are lost on him...even if his daughter tries to persuade him.

Hong Kong Expat Banker, Endangered Species

♠ Posted by Emmanuel in at 6/25/2017 05:51:00 PM
I remember when most Lan Kwai Fong bar hoppers were Westerners. No more.
A brace of articles came out recently reflecting the changes wrought on employment in Hong Kong's financial services industry. Once upon a time, it was fairly common to come across Westerners plying their trade in the Far East. In particular, the self-deprecating acronym FILTH was used by British expatriates meaning Failed in London, Try Hongkong. The underlying assumption here, of course, was that it was easier to find a job in the less competitive environs of Hong Kong than in the City of London.

With the world's economic center of gravity shifting towards Asia, the inferiority complex of bankers working in Asia is increasingly becoming less warranted. There is more business to be drummed up in Asia today than in, say, post-Brexit UK. So while Hong Kong remains a financial gateway to still-burgeoning mainland China and beyond, London is primed to become a gateway to...nowhere in particular:
For years, the territory’s Chinese, and even its China-savvy expatriates, derisively called indulged Brits FILTH, which stands for Failed In London, Try Hong Kong. Expats who might have never worked in the City, Europe’s financial hub, could walk into good jobs and cut deals in the soft-carpeted confines of the Hong Kong Club or over a pint at the Captain’s Bar in the Mandarin Oriental.

Now FILTH is in terminal decline, its fate seemingly sealed by cost-cutting throughout the financial industry. John Mullally, an executive recruiter, said that as recently as 2010, expatriates from Britain and the rest of Europe, plus those from the U.S. and Australia, landed 40 percent of his finance job placements. Today, that figure is 15 percent. “On a weekly basis I get quite a few senior bankers that 15 years ago would have picked up a job straightaway, but today they’re really struggling,” said Mullally, who runs Robert Walters Plc’s banking practice in Hong Kong.
Moreover, why should banks and insurers pay extra to hire Westerners--relocation costs, housing costs, living costs, and the rest of it--when they are increasingly unsuited to the China-influenced business climate? Having neither the ability to speak Mandarin nor the connections (guanxi) to Asian business networks, what justifies the added expense? You might as well hire the folks from around Asia and groom them for the future:
At Citigroup Inc., Chinese students will account for the majority of university graduates the firm intends to hire full time in Hong Kong next year, according to James Mendes, the U.S. bank’s Asia-Pacific head of recruitment. For the past two years, JPMorgan Chase has hired more than 40 percent of its full-time graduates and interns for Hong Kong from local universities, a number the bank expects to increase as it ramps up business in the region.

Private banks are also looking for China-skilled staff to help them capture a slice of the country’s burgeoning wealth. Bank of Singapore Ltd., a unit of Oversea-Chinese Banking Corp., for example, hired 20 Mandarin-speaking relationship managers in Hong Kong this year.

Scarce, too, for expats are perks like generous housing allowances and memberships to such elite clubs as the Royal Hong Kong Yacht Club, which, unlike most Hong Kong institutions, has retained its “royal” association -- or, for Americans, the American Club. The value of a typical expatriate middle-manager package in Hong Kong fell to a five-year low in 2016, according to a recent survey by consultancy firm ECA International. Still, that’s $265,500.
The new breed is the Western-educated Asian banker with his or her feet in both worlds:
“Young junior bankers without language skills are so rare these days,” said Quinlan, 33, who now runs his own financial consulting firm.

Most global banks have tried to bring in Chinese power brokers. Many of these bankers are not only bilingual but also bicultural -- products of elite Western universities who can move seamlessly between China and the global Wall Street. Many also bring deep connections to China’s leadership and state-owned enterprises. Now mostly in their 40s and 50s, they include Morgan Stanley’s Wei Sun Christianson and Credit Suisse Group AG’s Janice Hu.
Reuters chimes in that the ongoing changes reflect that more and more of the share of business--initial public offerings and the like--coming from the mainland. So, hiring more bankers from the mainland is also a predictable trend:
A flood of Chinese bankers is changing the social fabric of Hong Kong, as they rapidly expand their footprint in one of the world's premier financial centers, even as Beijing struggles to tame the former British colony politically. Twenty years after Hong Kong's handover to Chinese rule, scores of mainland professionals are filling the elite financial ranks of Hong Kong, while a series of lay-offs at Western banks has led to an exodus of expatriates.
The largest increase in mainland staff over the past decade has come in investment banks, with 80 percent seeing an increase of at least 20 percent, according to a 2015 Financial Services Development Council survey. It has a much better environment than Beijing where I used to work," said Hong Hao, a managing director at BOCOM International, who has lived in Hong Kong for five years. "The food is good, and the tax rate is also good." Tax rates in Hong Kong are around 15-17 percent, while they can be as much as 45 percent in mainland China.

Chinese initial public offerings (IPO) dominate the Hong Kong market, the world's largest IPO market in 2016 when mainland offerings represented 80 percent of all new listings, according to Thomson Reuters data.
Hong Kong's financial services industry accounts for 18 percent of the territory's economy, compared with just 10.4 percent in 1997 when the city returned to Chinese rule.
If Asia butters Hong Kong's bread more and more these days, then the days of FILTH becoming ever more numbered is to be expected.

Will Automation End Asia's 'Old' Development Path?

♠ Posted by Emmanuel in at 6/22/2017 12:33:00 PM
Is this an endangered scene for countries like Bangladesh? What would its consequences be?
There is much hand-wringing going on about automation lessening the need for human workers and the unemployment that may occur as a result. In the West, scare stories about robots making humans redundant in any number of industries are all the rage as even skilled work that relies on think power becomes vulnerable to the rise of machines. This may or may not occur in the future, but whatever it holds for us, it's a narrative that's helping sell scare stories in the meantime.

Now, a Bloomberg article argues that it's not just folks in rich countries who should be worried, but also those in developing countries such as those in Asia. Given the rate at which automation is progressing, it may not be very long until even those at the bottom of the wage ladder will become increasingly redundant too. That is, previous technological advances were not so great as to overturn what we will call the 'Asian development model' here of gradually progressing the value-added ladder by starting with the manufacture of the most labor-intensive goods. In short, machines (capital) could not compete with lowest-paid labor in generating cost efficiencies...until now.

Take, they say, the example of the newest Chinese factories relying more on automation than on sweat:
Jinsheng’s factory covers almost 15 million square feet, more than five times the floor area of the Empire State Building, but it needs only a few hundred production workers for each shift. “Textiles used to be a labor-intensive industry,” said Pan Xueping, the chairman and chief executive officer, in a September speech in Urumqi, Xinjiang’s capital. “We are at a turning point.” Instead of moving production to whatever nearby country has the lowest wages, he added in an interview a day after the speech, “the industry can achieve a human-free factory.”

Pan’s company is at the vanguard of a trend that could have devastating consequences for Asia’s poorest nations. Low-cost manufacturing of clothes, shoes, and the like was the first rung on the economic ladder that Japan, South Korea, China, and other countries used to climb out of poverty after World War II. For decades that process followed a familiar pattern...
Even the nuances of garment manufacture requiring a human eye and touch may no longer forestall the move to more automation, with potentially dire political-economic consequences for Asia's developing countries at the bottom rung of progress:
The transformation looks like it will happen fast. The International Labor Organization (ILO) estimates that mass replacement of less-skilled workers by robots could be only two years away. Overall, more than 80 percent of garment industry workers in Southeast Asia face a high risk of losing their jobs to automation, according to Chang Jaehee, an ILO researcher who studies advanced manufacturing. Chang recalls presenting her findings to a government official in a country in the region that she declines to name. The official’s response? If she’s right, the result could be civil unrest.
If this story is true, then why stop at setting up highly automated factories in Asia? Why not move them back to the West or 'reshore' in contemporary parlance if labor costs become an insignificant factor?
As automation accelerates, it’s not just Asia that could see its industrial trajectory affected. If the cost of labor is no longer a major factor, there’s no reason manufacturers can’t relocate production to where the bulk of their customers are: North America and Europe, where wages for decades have been too high to support textile production. Remove most of the workers from the equation, along with the costs and delays of round-the-world shipping, and making clothes or shoes in Dallas or Düsseldorf instead of Dhaka starts to look like a compelling idea.
I don't necessarily buy this story since automation has been in progress for centuries. Do we expect a quantum leap in the near future? The real (narrower) question here is whether technological advances can overcome advantages of low-cost labor combined with human intuition in garments manufacture.The answer will have significant implications, obviously.

Pointless Trip? UK Trade Minister Seeks FTA in US

♠ Posted by Emmanuel in , at 6/18/2017 04:03:00 PM
Why send a Brexiteer (code word for isolationist) to negotiate a bilateral FTA with Trump's America?
Things are smacking of desperation in the UK as Prime Minister (as of this moment) Theresa May is not only vulnerable for calling an election when her party's majority was squandered, but also for coming into Brexit negotiations with a weakened position as a result. It is thus quizzical that she recently dispatched her trade minister to the United States. Recall that this is a new position after the UK left negotiating trade deals to the EU for decades.

It's being reported as a mission to scope the level of support for a UK-US FTA in the future:
Britain's International Trade Secretary Liam Fox said he would meet U.S. trade leaders in Washington on Sunday to talk about the possibility of signing a free trade deal between the two countries soon after Britain leaves the European Union... 


Britain starts formal Brexit talks with the other 27 EU countries on Monday, and is due to leave the bloc in March 2019.

Fox will meet U.S. Trade Representative Robert Lighthizer, as well as the U.S. Chamber of Commerce, trade policy organizations and business representatives.
The mission may be as described, but its viability has certainly been undermined by the current political turmoil in the UK. What's more, the Trump-era US trade stance isn't exactly very promising given the aforementioned lout's conviction that trade is a zero-sum game. Consider, then:
  1. For how much longer will the May government survive? Even if she is replaced by another Conservative politician, there is no guarantee s/he will retain the services of Fox or pursue an FTA with the US as a priority;
  2. Given Fox's precarious position as trade minister, what confidence will his American counterparts have in him representing UK interests even in the medium term?;
  3. How palatable will deliberately lopsided bilateral trade deals favoring the US be for others? The UK will be an early test case for others contemplating one with the US. It's the guinea pig;
  4. Given that Brexit isn't even a sure-fire thing given the amount of paperwork that the now-weakened May government needs to push through parliament over a protracted period of time, why would Fox's American counterparts be comfortable assuming that March 2019 is an appropriate target date?
  5. If the UK has been complaining about the EU's bullying ways all these years, how favorably will it respond to an even more demanding counterparty in the US--the world's largest economy (with its greater political-economic clout)?
None of these five questions have clear answers, leading me to believe that the trip was very, very exploratory and nothing more.