Karel De Gucht, New EU Trade Commissioner

♠ Posted by Emmanuel in , at 12/02/2009 02:24:00 PM
I have an endearing fondness for all things EU--even (or perhaps more especially) their tendency to name rather anonymous Eurocrats to important posts. This, of course, leaves it up to the likes of yours truly to figure out this Euro Trivial Pursuit (attention Hasbro: here's a free gift idea from the IPE Zone). Anyway, with the selection of Baroness Catherine Ashton to become the first High Representative of the European Union for Foreign Affairs and Security Policy (what a mouthful), a vacancy has emerged as to who would be her successor at the Trade desk. Ashton was certainly a mystery to me at first; I fumblingly described her as the EuroPalin. At least us inhabitants of the Empire knew who Peter Mandelson was when he was temporarily exiled to Brussels--not that others are exceedingly happy about his return.

So, who exactly is Karel De Gucht? More importantly, what qualifications does he have for pushing through long-stalled multilateral trade deals and other minutiae involving such things as zeroing and sanitary and phytosanitary standards? The EU site has yet to reflect his accession to his new post as of the start of December; there's also a brief bio that at least suggests his career path is not totally alien to what he'll be doing. (Yes, he;s a lawyer by training.) Mr. De Gucht was foreign minister and deputy PM in Herman Von Rompuy's government before the latter assumed his new post as the first European Council president. As you can see, our man was more recently appointed the European Commissioner for Development and Humanitarian Aid. The merry-go-round in Brussels thus ends with his selection as the new trade commissioner.

Is he up to the job? We'll see; the USTR has extended his welcome but there's still very little on what he'll be doing. As usual, stay tuned.
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Times are a-Changin': EU Supersedes EC at WTO

♠ Posted by Emmanuel in , at 12/02/2009 02:05:00 PM
I was scanning through the WTO website and found one of the more immediate manifestations of the EU's Lisbon Treaty coming into effect (hooray!) The entity formerly known as the European Communities (EC)--the EU's executive arm--has now been replaced in WTO documentation. From here on it, it's the EU. Yes, it's a small thing perhaps, but still worth noting. From the WTO blurb:
Since 1 December 2009 “European Union” has been the official name in the WTO as well as in the outside world. Before that, “European Communities” was the official name in WTO business for legal reasons, and that name continues to appear in older material.

The EU is a WTO member in its own right as are each of its 27 member states — making 28 WTO members altogether.

While the member states coordinate their position in Brussels and Geneva, the European Commission — the EU’s executive arm — alone speaks for the EU and its members at almost all WTO meetings and in almost all WTO affairs. For this reason, in most issues, WTO materials refer to the “EU” (or previously the legally-official “EC”).

However, sometimes references are made to the specific member states, particularly where their laws differ. This is the case in some disputes when an EU member’s law or measure is cited, or in notifications of EU member countries’ laws, such as in intellectual property (TRIPS). Individual EU members speak in committee meetings or sponsor papers, particularly in the Budget, Finance and Administration Committee.

Sometimes individuals’ nationalities are identified, for example the nationalities of WTO committee chairpersons.
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WTO Honcho Pascal Lamy Enters Blogosphere

♠ Posted by Emmanuel in , at 12/02/2009 10:03:00 AM
In case you missed it, and there's terribly little coverage of it in any event, WTO has restarted the long-delayed Doha round with another ministerial in Geneva. I'll have more shortly on the ministerial, but please do note that WTO Director-General Pascal Lamy is doing his own blogging at the meet. Whatever your opinion of him, I think he's a bit of a free trade fundamentalist in linking any number of this world's problems with lowering tariffs, he's definitely worth a listen to given his stature. Our man Pascal's certainly an irrepressibly optimistic fellow despite doomsayers second-guessing him. Presumably, he's also a bit miffed with a wiseguy blogger who has slandered him by implying that he's been ingesting banned substances.

Ah well, all's fair in love and WTO war. Welcome, Director-General Lamy, to the blogosphere.
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China Lashes Out at Its European Currency Critics

♠ Posted by Emmanuel in ,, at 11/30/2009 04:14:00 PM
There's this saying that those who are reflective begin to ponder their actions when many begin to complain about them. Then again, there's another saying about there being a genius in the midst when the dunces start gathering against him. Which of these two it is in the case of new complaints by the European Union against China on the never-ending trade front is likely somewhere in between.

Tensions have been building up between the European Union and China for quite some time now. For one thing, China re-pegging the dollar and the dollar in turn depreciating against the euro means that the single currency has borne the brunt of a lot of largely non-existent global reblancing in currency terms. That is, old Europe has become the pressure release valve in a world where the Middle East and Asia are still busy propping up the greenback. Then there's also the not-so-negligible matter of the EU engaging in a tariff-slapping frenzy against our PRC friends. Add these up--perceived Chinese intrasigence on the currency front and EU activism on the trade measures front and you have a recipe for trouble.

It is thus unsurprising that things have blown up at an EU-China summit in Beijing as neither side is in much of a mood to give in. We begin with Shoeful Wen Jiabao, who has previously described China's economy as "unbalanced, unstable, uncoordinated, and unsustainable. In giving the PRC's European critics a tongue lashing, he seems to hew to the party line of gradual revaluation when circumstances permit (nevermind that the RMB has been stuck at the same level since June 2008) and, er, keeping things as they are--unbalanced, unstable, uncoordinated, and unsustainable. From the FT:
China’s premier Wen Jiabao on Monday lashed out at the growing number of countries pressuring Beijing to strengthen its currency, making it clear that European officials made little headway in their efforts over the past two days to persuade the country to allow the renminbi to appreciate.

Speaking at the conclusion of an EU-China summit in the eastern Chinese city of Nanjing, Mr Wen said: “Some countries on the one hand want the renminbi to appreciate, but on the other hand engage in brazen trade protectionism against China. This is unfair. Their measures are a restriction on China’s development.”

The premier repeated the standard form of words Beijing uses to describe its currency policy. Mr Wen said: “We will maintain the stability of the renminbi at a reasonable and balanced level ... maintaining the basic stability of the renminbi exchange rate has benefited China’s economic development and benefited world economic recovery.”
The EU's representatives didn't even bother to counter Shoeful Wen's tirade:
Mr Wen’s candid tone contrasted with the conciliatory note struck by European leaders who addressed the same press briefing. They did not mention the renminbi after Monday’s talks, and abruptly cancelled a press briefing in which they would have faced uncomfortable questions about Mr Wen’s aggressive tone.

Speaking on Sunday, after senior eurozone officials met Premier Wen and other Chinese policymakers, European officials made clear they had made little progress with Beijing. Jean-Claude Juncker, Luxembourg’s prime minister, who chairs eurozone finance minister meetings, said “I can’t say I am more optimistic than I was before I came here” about China’s plans to strengthen its currency.

José Manuel Barroso, European Commission president, who met Premier Wen for a private dinner on Sunday night, said: “The Chinese reiterated their position on the matter … They are telling us exactly what they told President Obama – exactly the same.”
Being cynical old me, I predict this latest outburst and non-reaction from the Chinese will likely set the stage for the US and China joining forces to engage in China-bashing actions. Certainly, that's the conclusion the FT article would suggest giving its framing of the outburst. The advantage here is that it becomes harder to single out a party as unfairly picking on China when many express similar concerns about currency undervaluation. Heaven knows, they already have a blueprint for beginning the beguine.

BTW: Chinese official media has articles on trade missions being opened (a traditional gesture for appeasing critics during economic summits and the like) and this not being cause for the outbreak of trade war.
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LSE Students: Proto-Commies or -Capitalists?

♠ Posted by Emmanuel in at 11/26/2009 03:45:00 PM
Whenever you log into your computer here at the London School of Economics, there pops up this message board thingamajig with current goings-on: announcements, seminars, conferences, events, job fairs...you know, the regular stuff of school life. As most people know, LSE was founded by Fabians, folks with a socialist disposition. Among the notables who have worked at this august institution is no less than William Beveridge, the man commonly known as the founder of the modern welfare state. If you want to debate states and markets, you know where to go.

As with many big name institutions, however, ideals often give way to the lure of dreaded wonga [British slang for money]. Given the institutions reputation and the generally high calibre of its graduates, many denizens of high finance have come a-callin' to the LSE for recruitment. In past years, LSE has been a big lure for financial firms seeking investment bankers. You know, "God's work." However, I was glad to note in the pop-up message that our students may not have yet lost every ounce of idealism. We have to honour the Fabians, dammit. Have a look at the header and note what our kids regard as an appropriate university for twinning:

Yes, the Islamic University of Gaza. I wonder what the [politically incorrect Z-word]-loving Yankcrusaders would make of that. There's even a Facebook webpage looking for supporters that it's an "Israel hating" action. Even if I'm zero percent inclined to join a union at this point in time, I find it heartening that ours is the only institution that still retains a weekly Union General Meeting. After all, a university is about diversity. Here is the text of the motion if you're interested:
Union believes:

1. Any government that gives one group of people it governs rights over another based on race, religion, ethnicity, or nationality is morally wrong and anti-democratic;
2. Israel is an Apartheid state;
3. Apartheid is racism and we should oppose it;
4. Equality and human rights should be upheld;
5. Israel should be a state for all its citizens and stop discriminating against the indigenous Palestinian population;
6. The Palestinians have the right to return to their homeland and receive just compensation and Israel should implement all international law that it is currently violating;
7. The Occupation is illegal and it should end immediately;
8. Palestinians should have free access to their holy sites including the Al-Aqsa mosque and the Church of the Holy Sepulchre.

Union resolves:

1. Establish an LSE SU campaign to lobby the school and NUS to divest from Apartheid Israel and companies that a) provide military support for or weaponry to support the occupation b) facilitate the building or maintenance of the illegal “annexation” wall or the demolition of Palestinian homes or c) operate on illegally occupied land and within Jewish-only settlements, with the goal of maintaining the divestment, in the case of said companies, until they cease such practices, and, in the case of Israel, until Israel stops its regime of apartheid and the oppression and colonization of Palestinians;
2. Actively support and work with Palestine solidarity organisations such as “Jews for Justice for Palestinians” (JfJfP) , BRICUP , Zochrot , ICAHD , and PSC that campaign to stop Apartheid and racism in Israel;
3. Affiliate our Union to the “the international campaign to end the siege on Gaza” and engage in education campaigns to publicize the injustice of Israeli apartheid.
Whew, that's pretty racy stuff from our kiddos. Shouldn't they be learning about IS-LM models or something? I guess I'm somewhat relieved that further down the message board we have more normal fare largely devoid of activism and idealism:



Office slaving for a law firm may not quite be as exciting, but hey, it still lands food on the table. And that's not something to be taken lightly in this day and age. It's too bad the former Patrice Lumumba Peoples' Friendship University in Moscow has set an even worse example for the comrades. Business courses? For shame. Still, it may be worth proposing to the LGU for twinning for old time's sake. Dreams die hard around here.

UPDATE: Comrades, we are now twinned with the Islamic University of Gaza.
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Asia Moving Up World University League Tables

♠ Posted by Emmanuel in at 11/23/2009 07:15:00 PM
A while ago, I featured a World Bank publication concerning how to create institutions of higher learning. While there are still strenuous debates about whether creating universities with high international standing should be a goal for developing countries, there is no doubt that many Asian ones have made significant strides in competing with the best of the best in the world. Singapore has always been notable in that its highly educated workforce has been the envy of the region if not the world in propelling development via "human capital."

There is, however, a rapidly rising newcomer to the scene that you all know of - China. Aside from placing three universities in the Times Higher Education Top 100 (if you include Hong Kong, that is), the PRC has made it an objective to become a destination for students--an importer of them instead of an exporter. Talk about the only area where the Chinese are keen on more imports save for Western "dual use" technologies! [also the previous post on that point] While I still have some reservations about the Times' methodology, there is no doubting the expenditures Asian countries are putting into education for both national development and to attract fee-paying foreign students. Interesting stuff; perhaps the changing balance of educational prestige will help signal the advent of the long-awaited Pacific century:
The top universities of the Asia Pacific region – Australian National and Tokyo - have been prominent in these rankings since they were first released in 2004. This year they are in 17th and 22nd place respectively, a rough level from which they have varied little between the years.

The real story about Asian universities, however, concerns the lower reaches of the rankings. In September 2009, the European Union warned that India and China are likely to become the world’s leading research powers by 2025. The World University Rankings suggest that these, and other Asian nations, are already building university systems to support this transition.

Japan’s postwar rise to economic success, based on innovation and exports, has long been the model for other Asia Pacific nations. In the 2009 World University Rankings we find 11 Japanese universities, a total which is unlikely to grow substantially.

Many other Asian universities now have plans to enter these rankings. China has six universities ranked this year and there are five more in Hong Kong, which we count as a separate entity while it retains its status as a Special Administrative Zone of China. At the moment, China’s top two institutions, Peking and Tsinghua, are at 49 and 52 in the rankings, while its other universities are more modestly ranked. By contrast, the University of Hong Kong is in 24th position, making it an altogether more serious world player.

China is now expanding its entire education system rapidly, from primary schools to research centres. It intends to become an importer rather than an exporter of students, threatening the business plans of many universities around the world that depend on Chinese students. In our work on these rankings, we have encountered big increases in the amount of research being published by Chinese academics. Not all of it is world class, but over time it is likely to improve, as is teaching quality in Chinese universities. There is certainly a stark contrast between China’s placing here and the very modest showing by India. No mainstream Indian universities appear in our top 200. As in 2008, India is represented by only two of the Indian Institutes of Technology.

Other Asian nations, lacking the sheer scale of China, seem to be taking a more tactical and less brute-force approach to expansion. South Korea has had a recent spurt of high-technology growth which is reflected in the success of its universities in these rankings. Seoul National has long been a major world institution. It is joined this year by Yonsei, a major private university. Perhaps more importantly, two science and technology-based institutions in Korea, KAIST and Postech, have risen sharply in position this year. This is a common theme across Asia, with higher places for Tokyo Institute of Technology and Hong Kong University of Science and Technology (HKUST).

Many other Asian nations, such as Taiwan, regard it as a priority to have at least one university in the THE – QS World University Rankings. (National Taiwan University is up 29 places this year to 95). For this reason, there will be enthusiasm in Malaysia over the reappearance of the University of Malaysia at place number 180. But Malaysia still lags far behind its smaller neighbour Singapore, which has made high technology, such as nanotechnology and robotics, a national priority. Heavy investment in these areas is part of the reason why the University of Singapore is a world leader, 30th in our rankings, and Nanyang Technological University also shows well at 73.
Now, if only the writer mentioned my alma mater, things would be absolutely hunky-dory.
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Out Now: America's Blueprint for Bashing China

♠ Posted by Emmanuel in , at 11/19/2009 05:04:00 PM
As you can probably tell, I pretty much got it right when I said that nothing much would come from Obama visiting China. Trade, human rights, climate change...there wasn't much assent between these two budding antagonists. Most of the interaction was highly scripted and the broadcast limited. So much so that I didn't even bother to post since I found nothing newsworthy. As Morrissey once sang, "Why do I smile at people who I'd much rather kick in the eye?" applies equally to both parties outside the dog-and-pony shows of diplomatic meetings.

However, something has just come out that is far more interesting and possibly broader-reaching as far as the mock-happy relationship of these two in concerned. Every year, the US-China Economic and Security Review Commission comes out with its report to Congress that typically bashes China over trade, human rights, and its relations with Taiwan. This year is no different. My colleague here at the LSE from the PRC Foreign Ministry says he regularly interacts with this body and downplays the aggressive tone often taken in the report.

Anyway, the rather large 5 MB, 367-page (wow, that should satisfy the reading interests of the most avid China-basher) report is available for download. I'll take it home and have a read to see if there's anything of interest. Meanwhile, here are 10 of the (count 'em!) 42 recommendations that are deemed particularly actionable:
- Employing World Trade Organization trade remedies more aggressively. The Commission recommends that Congress urge the administration to employ more aggressively all trade remedies authorized by World Trade Organization rules to counteract the Chinese government’s practices. The Commission further recommends that Congress urge the administration to ensure that U.S. trade remedy laws are preserved and effectively implemented to respond to China’s unfair or predatory trade activities.

- Responding effectively to China’s currency manipulation. The Commission recommends that Congress urge the administration to press China to allow the RMB to become flexible and responsive to market forces, thereby contributing to the correction of global economic imbalances. The Commission further recommends that Congress consider legislation that has the effect of offsetting the impact on the U.S. economy of China’s currency manipulation.

- Evaluating the impact of China’s value added tax. The Commission recommends that Congress urge the United States Trade Representative to evaluate the use of selective value added tax rebates by China and their trade-distorting effect and determine what steps, if any, should be taken to address the issue.

- Reporting on the implications of Chinese subsidies to the U.S. clean energy sector. The Commission recommends thatCongress urge the Department of Energy, in consultation with other appropriate agencies, to report to Congress on the impact of Chinese subsidies and other elements of China’s industrial policy on U.S.-based companies manufacturing clean energy products.

- Ensuring adequate funding to limit China’s antiaccess capabilities. The Commission recommends that Congress assess the adequacy of planning and resourcing of Department of Defense programs that would limit China’s antiaccess capabilities. In particular, Congress should focus on antisubmarine warfare and ballistic missile defense programs. Congress should also assess the adequacy of funding and resources for the Department of Defense’s Pacific Command.

- Meeting the rising challenge of Chinese espionage. The Commission recommends that Congress assess the adequacy of resources available for intelligence, counterintelligence, and export control enforcement programs to ensure that U.S. government agencies are able to meet the rising challenge of Chinese human intelligence and illicit technology collection.

-Ensuring adequate funding to respond to computer exploitation and computer attacks. The Commission recommends that Congress assess the effectiveness of and resourcing for law enforcement, defense, and intelligence community initiatives that aim to develop effective and reliable attribution techniques for computer exploitation and computer attacks.

-Encouraging China to draw down the number of forces opposite Taiwan. The Commission recommends that Congress urge the administration to take additional steps to encourage the People’s Republic of China to demonstrate the sincerity of its desire for improved cross-Strait relations by drawing down the number of forces, including missiles, opposite Taiwan.

-Assessing the adequacy of U.S. export control policy in Hong Kong. The Commission recommends that Congress examine and assess the adequacy of U.S. export control policy for dual-use technology as it relates to the treatment of Hong Kong and the PRC as separate customs entities. The Commission further recommends that Congress urge the administration to consider ways to collaborate more closely with the authorities in Hong Kong in order to prevent the transshipment of controlled technologies from Hong Kong into the PRC.

- Monitoring the role of U.S. companies in Internet censorship. The Commission recommends that Congress continue to monitor and assess the development and progress of industry and other efforts to create and implement an effective code of ethics and best practices related to the operations of U.S. hightech firms in China and other authoritarian countries where Internet content and activity are controlled and monitored by the government.
Again, my opinon is that the severity of US sanctions at China will depend on how bad things get Stateside. Readers probably know that I consider America a prime example of How to Run Your Country Into the Ground and Screw Over Future Generations. At this point in time, there is no surer fire way of guaranteeing misery for your citizens than following America's benighted example. While the report does mention that the US-China trade imbalance to date is down about seventeen percent from last year, don't expect that to be a major hindrance to more China-bashing measures as the US deservedly reaps more of what it has sowed. As they say, garbage in, garbage out--and China will inevitably be on the receiving end of more of this sort of thing as the nearest available scapegoat.
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...And Now for Weak Dollar Policy

♠ Posted by Emmanuel in at 11/19/2009 04:37:00 PM
I am somewhat surprised that regional Fed presidents would go against the grain in not objecting to a characterization of the US following anything but a strong dollar policy, but here it is. Dallas Federal Reserve President Richard Fisher didn't go into the rigmarole of stating that the US had such a policy. Nor did the Philly Fed President Richard Plosser.

However, we begin with last Monday when the foreign exchange markets were somewhat surprised that the Fed chairman mentioned the dollar's value when it's traditionally been the Treasury secretary's role to do so. Here was Bernanke addressing the Economic Club of New York:
We are attentive to the implications of changes in the value of the dollar and will continue to formulate policy to guard against risks to our dual mandate to foster both maximum employment and price stability. Our commitment to our dual objectives, together with the underlying strengths of the U.S. economy, will help ensure that the dollar is strong and a source of global financial stability.
In any event, the statement was greeted with a yawn as Bernanke didn't mention any intention of raising interest rates to support the godforsaken and wretched greenback. Today, however, we get news of Dallas Fed President Richard Fisher and his Philly counterpart Richard Plosser confirming what is evident to practically all:
Federal Reserve officials on Thursday downplayed the consequences of the falling U.S. dollar, underscoring that deflation is still a threat, especially with commercial real estate prices falling. Dallas Fed President Richard Fisher said in an interview with Market News International that the weakening dollar, which hit a 15-month low against major currencies on Monday, is only one of the factors the Fed watches when setting policy.

"You pay attention to this," Fisher said in reply to a question about the effects of a weaker dollar. "On the other hand, in terms of its inflationary input, unless it becomes disorderly, a depreciating dollar -- a gradually depreciating dollar -- doesn't necessarily add an enormous inflation impulse." Fisher will become a voting member of the Fed's policy-setting committee in 2011...

Philadelphia Fed President Charles Plosser, answering journalists' questions after a speech in Singapore, was also not worried about dollar weakness. "There's no particular reason you wouldn't expect the dollar to go back to where it was before the panic set in -- that is essentially all it has done at this point. I don't view that as anything particularly of concern," he said. Plosser will also in 2011 become a voting member...

In the MNSI interview, Fisher acknowledged there are what he called "trade-offs" between the Fed's policy of keeping interest rates very low for an extended period and a strong dollar [my emphasis].
Such refreshing candor. Maybe the Yanks can be more honest about going from "benign neglect" to "abject molestation" of the dollar. Now, if only we could get B-B-B-Bennie of the Feds and Tim "Deficits Still Don't Matter" Geithner to sing from the same hymn sheet. You can say I'm a dreamer, but I'm not the only one.
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Obama's Quite Pointless ASEAN [Mis]Adventures

♠ Posted by Emmanuel in , at 11/16/2009 04:37:00 PM
And so it has come to pass: the American president made his way to Singapore in order to enlighten its leaders in the ways of peace, freedom, and democracy. However, things haven't gone as convincingly as they could've been IMHO. Let's go about things in order.

First was Obama getting together with the heads of the ASEAN member countries, including Thein Sein of Myanmar--the man chosen by the military junta to be its prime minister. This meeting provided the US with an opportunity to reaffirm its joining of the Treaty of Amity and Cooperation (TAC)--which it signed on to rather late but did so anyway during the Obama administration. Somewhat expected is US approval of ASEAN's efforts to establish a human rights body in the region. Again, not all members are participating but the US views it as a welcome move and invites the organization to visit America to get better ideas about this process. Here are some choice quotes from the joint statement of the 1st ASEAN-US Leaders' Meeting:
7. The President of the United States also expressed U.S. support for the establishment of the ASEAN Intergovernmental Commission on Human Rights, which demonstrates the commitment of the ASEAN Member States in the promotion and protection of human rights. The United States invited the members of the Commission to visit the United States in 2010 to consult with international experts in this field. The United States also supported the Human Rights Resource Centre for ASEAN, a track 2 initiative, with a university in Jakarta as the hub of the Centre and including a network of universities throughout ASEAN.
Then it gets to the funner stuff about Myanmar and human rights:
10. The Leaders of ASEAN welcomed the high level dialogue and the policy of the United States to engage with the Government of Myanmar, as indicated by the recent visit of U.S. officials to Myanmar. We expressed our hope that this effort, as well as ASEAN’s, would contribute to broad political and economic reforms and the process will be further enhanced in the future. We also underscored the importance of achieving national reconciliation and that the general elections to be held in Myanmar in 2010 must be conducted in a free, fair, inclusive and transparent manner in order to be credible to the international community. We called on the Government of Myanmar to help create the conditions for credible elections including by initiating a dialogue with all stakeholders to ensure that the process is fully inclusive. We also reiterated our continued support to the good offices of the United Nations Secretary-General in the democratization process in Myanmar. We also noted the Joint Communiqué of the 42nd ASEAN Foreign Ministers Meeting in Phuket, 20 July 2009.
Being cynical old me, the human rights stuff isn't as important as economic matters as the US seeks to shore up its political-economic authority in the region as China is asserting its influence. The important thing to keep in mind is that the US now poses no real objections to Myanmar's presence in forming a free trade area (preferential trade area, to be exact) with ASEAN. That in itself is, of course, a climbdown from the Bush administration:
13. We were pleased to note that economic relations between ASEAN and the United States continue to be strong and dynamic. We applauded the sizeable increase in trade and investment between ASEAN and the United States over the past several years. Two-way goods trade reached $178 billion in 2008, and, ASEAN is host to U.S. foreign direct investment of $153 billion, making it the favoured U.S. investment destination in Asia. We stressed the need to further enhance economic cooperation and partnership through new initiatives under the ASEAN-U.S. Trade and Investment Framework Arrangement (ASEAN-U.S. TIFA), to be agreed upon by the ASEAN Trade Ministers and the United States Trade Representative. We tasked the officials to initially focus on trade and customs facilitation. We also welcomed the meeting of ASEAN Finance Ministers and the U.S. Secretary of the Treasury on 12 November 2009 in Singapore as another element of broader engagement of ASEAN and the United States.
Bloomberg adds some colour on the latter point:
His [Obama's] predecessor, George W. Bush, scrapped a meeting with the bloc two years ago after Myanmar’s junta crushed the biggest anti-government protests since 1988. “That the meeting took place at all” was “very significant” given U.S. concerns over Myanmar, said Singapore’s Prime Minister Lee Hsien Loong, whose country hosted the gathering after the annual Asia-Pacific Economic Cooperation summit.

Obama said he reaffirmed at the meeting that Myanmar should release detained opposition leader Aung San Suu Kyi along with other political prisoners. Myanmar expressed appreciation for Obama’s decision to engage and said little else, Malaysia’s Prime Minister Najib Razak told reporters yesterday.

“We expected a bit more, but it was not forthcoming,” Najib said. “We hope this problem of national reconciliation and principles of democracy as a system to be adopted in Myanmar will become a reality sooner than later.”
Next up, we cover Obama's China visit which is still in progress.
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China Overdose: PBoC Hints at Refloating Yuan

♠ Posted by Emmanuel in , at 11/12/2009 05:14:00 PM
OK, this Sinocentric focus is getting a bit too much even for my tastes. (The fine fellow working next to me, BTW, is from the PRC foreign ministry. The LSE is, if nothing else, the real deal.) However, since keeping IPE Zone readers better informed than your average blog reader is one of my goals--ignorance and stupidity always gnaw--I thought I should relay the following news. US administration officials has been making noises about asking China to follow "currency flexibility"--official speak for letting the renminbi or yuan revalue. Since June of 2008 to the present time, the PRC has maintained its currency at the $1/6.83 yuan level. (Clink on above chart for larger image.) This, of course, contradicts China's stated adoption of a "managed float" in July of 2005 from a hard peg. Take a trip down memory lane and view this blog post by Cynic's Delight.

What exactly is a "managed float"? An old IMF description says "a managed float, in which a country’s monetary officials will occasionally intervene in international currency markets to buy or sell its currency to influence short-term exchange rates." That sounds about right, although some "managed" or "dirty" floats are less subject to official machinations than others. In China's case, I think it's "we let it revalue somewhat when political pressure is being applied by foreign devils but re-peg it when the pressure's off." Now is the time when the Yanks are bellyaching once again, so what you see is what you may get. From the Times of London:
China moved yesterday to head off a currency row with President Obama by hinting that it would allow the renminbi to rise after keeping the exchange rate on ice for 16 months. Mr Obama has said that he would raise the issue of the Chinese currency, widely seen as undervalued, when he visits Beijing next week. The cheapness of the renminbi is one reason that Washington has slapped duties recently on steel, tyres and other Chinese imports.

The People’s Bank of China, the central bank, did not say explicitly that it would allow the renminbi to start to climb again — but conspicuously it omitted to repeat its well-worn language on the subject, which in Beijing’s opaque system can be interpreted as equivalent to a policy change.

In its third-quarter monetary policy report, the central bank departed from its mantra of keeping the yuan “basically stable at a reasonable and balanced level”, which it has repeated at every opportunity for more than a year. Instead, it hinted at a shift from an effective dollar peg that has been in place since July 2008, pinning the currency at about 6.83 yuan to the dollar.
Some traders are voicing doubts, however:
Yet not everybody was convinced that yesterday’s statement foreshadowed an imminent policy shift. Peng Wensheng, of Barclays Capital, said: “I think it probably reflects increasing capital inflow pressure on the currency. But I think it is unlikely they will make any move in the near term. The language is somewhat different from before, that’s true.” He was unsure that a change was around the corner, even with Mr Obama due in town. “Usually, when they say something and when they do something — the timing is uncertain, I should say.
Note that the foreign exchange markets are pricing in further revaluation in non-deliverable forwards (NDFs). Since the yuan is not freely traded, NDFs are the means by which traders bet on the yuan's direction without actual delivery of renminbi on the maturity date. Trust me. Unlike a certain financial yellow journalist, I actually know a thing or two about this. Anyway, from Alibaba:
The yuan rose slightly against the dollar in benchmark offshore one-year non-deliverable forwards (NDFs) on Thursday as the overseas market expected the yuan may appreciate after the Chinese central bank said it will consider major currencies in guiding the yuan, dealers said.

In a departure from past language, the central bank said on Wednesday it would improve the yuan exchange rate mechanism based on changes in capital flows and fluctuations in the values of major currencies when guiding the value of the yuan. "The wording change in the central bank's report hints that the central bank will allow the yuan to appreciate sooner or later," said a dealer at an Asian bank in Shanghai. "So, that has guided the overseas market's increased expectations for yuan appreciation."

Offshore, benchmark one-year dollar/yuan NDFs hit 3-week lows at 6.5850 bid on Thursday compared with Wednesday's close of 6.6075. Twelve-month yuan appreciation implied by NDFs, which moves inversely with the forwards, rose slightly to 3.67 percent measured from the Chinese central bank's daily mid-point, compared with 3.32 percent implied at Wednesday's close.
We'll see...
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