A Summary of Rich Country Foreign Aid in 2007

♠ Posted by Emmanuel in Development at 4/05/2008 01:00:00 AM

Out now is the OECD's report on changes in the level of official development aid (ODA) from the 22 countries that make up the development assistance committee (DAC) in 2007. Followers of Jeffrey Sachs and Bono may be sad that they still haven't found what they're looking for in terms of meeting the Gleneagles Summit targets, let alone that of the 0.7% of national income target for ODA set by the United Nations so long ago. In fact, ODA proceeds fell in real and nominal terms in 2007. Here is the press blurb from the OECD:

Overall, most donors are not on track to meet their stated commitments to scale up aid and will need to make unprecedented increases to meet the targets they have set for 2010.

With the end of exceptionally high debt relief, total official development assistance (ODA) from members of the Development Assistance Committee (DAC) fell by 8.4% in real terms in 2007 to USD 103.7 billion, according to provisional data reported by members. This represents a drop from 0.31% of members’ combined gross national income in 2006 to 0.28% in 2007.

The fall was expected. ODA had been exceptionally high in 2005 (USD 107.1 billion) and 2006 (USD 104.4 billion), due to large Paris Club [official lending] debt relief operations for Iraq and Nigeria. Debt relief grants diminished in 2007 to USD 8.7 billion as the Paris Club operations tapered off.

Excluding debt relief grants, DAC members’ net ODA rose by 2.4%.

Bilateral aid to sub-Saharan Africa, excluding debt relief, increased by 10% in real terms. This represents an improvement on the recent rate of increase. But it is clear that donors still face a real challenge to meet the Gleneagles G-8 summit projection to double aid to Africa by 2010.

Let us have a look at some relevant charts. First, the US is still the largest single donor by overall amount. It is followed by Deutschland:

Next, here is the chart of ODA contributions as a percentage of gross national income (GNI uses the same formula for what used to be called GNP: GDP + net factor income from abroad). As usual, the Nordic and Benelux countries set the pace:

Those who are interested or specialize in ODA will no doubt be interested in looking at the other charts posted in a PDF file. Meanwhile, the OECD has this to say about the future prospects for increasing ODA. Apparently, they are not very sanguine:

At the Gleneagles G8 and UN Millennium +5 summits in 2005, donors committed to increase their aid. The pledges made at these summits, combined with other commitments, implied lifting aid from USD 80 billion in 2004 to USD 130 billion in 2010 (at constant 2004 prices). While a few countries have slightly reduced their targets since 2005, the majority of these commitments remain in force...

Overall, most donors are not on track to meet their stated commitments to scale up aid; they will need to make unprecedented increases to meet their 2010 targets. The OECD has completed the first comprehensive survey of donors’ future spending plans to 2010 and the results will be published early in May. While the findings are still to be finalised, the preliminary conclusions that emerge are that donors have programmed around an additional USD 11 billion so far into their planned annual spending by 2010, on top of the extra USD 5 billion for country programmes that they delivered in 2005. This shows that efforts to increase aid are being factored into some donors’ forward plans, but it still leaves about USD 34 billion in 2004 dollars – about USD 38 billion in 2007 dollars – to be programmed into donor budgets if the commitments made in 2005 to substantially increase aid by 2010 are to be fully met.

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Will Kiwis be First in Inking a China Trade Deal?

♠ Posted by Emmanuel in China,Trade at 4/05/2008 12:41:00 AM

The article below from TIME has the perfect metaphor for countries in both the developed and developing worlds courting trade favour with the "it" girl (or country) of the moment: China. In trade terms, China is the country with the most cold hard cash as evidenced by its unimaginably huge stash of $1.65 trillion in forex reserves. We are living in a material world, indeed. What we have here is the case of New Zealand being at the front of the cue to sign bilateral deals with China. You may say that New Zealand has been the most persistent suitor of the PRC. As such, New Zealand would be the first OECD country to ink a bilateral deal with China. Experience has made China rich and now they're after her. Some boys kiss me, some boys hug me, etc. The deed may be done as early as 7 April:

New Zealand natural's ice creams go down a treat in China. The popularity of flavors like Chocolate Ecstasy and Green Tea has helped the company build 43 outlets in the People's Republic in two and a half years. But a 19% tariff on imported ice cream takes a giant lick out of the profits. "It's an awful margin that just goes to the Chinese government rather than allowing us to make a better return," says CEO Shane Lamont. When 150 New Zealand trade officials and businessmen take off for Beijing this weekend, Lamont's hopes of seeing an end to that tariff will fly with them.

After almost four years and 15 rounds of what Wellington's ambassador to China Tony Browne calls "a very detailed, very complicated, very elaborate negotiation," New Zealand is on track to become, on April 7, the first developed nation to sign a free-trade pact with the market the whole world is courting. "It's a bit like getting the first date with the best-looking girl on the block," says Stuart Ferguson, chairman of the New Zealand-China Trade Association: in this case, ahead of suitors Australia, Norway and India. Details are a closely held secret, but the deal is expected to give Kiwis gradual relief not only from tariffs but from the red tape that bedevils their efforts to get products into Chinese stores. "Everybody is holding their breath in the fervent hope that there are no glaring holes in it," says Ferguson. "But from what I understand there should be no disappointment."

For tiny, remote New Zealand (pop. 4.3 million), finding ways to sell more goods overseas is a constant concern. "Exports have basically flatlined for the past 25 years as a share of the economy," says David Skilling, head of think tank The New Zealand Institute. China and New Zealand are both members of the World Trade Organization, but bilateral trade deals are seen as a way to further open export markets. New Zealand would like to follow Australia's lead and sign one with the U.S., but a deal with China is just as pressing. Lopsided tariff barriers — China's go as high as 38%, while New Zealand has almost none — and agrarian Kiwis' growing dependence on Chinese machinery, electronics, clothing and furniture are tilting the scales ever more steeply in Beijing's favor. New Zealand's trade deficit with China is its biggest with any nation: $2.7 billion, up fourfold since 2001.

The deal will be "beneficial for all of us," Prime Minister Helen Clark told New Zealanders last week, though her careful phrasing suggested the benefits might fall short of early hopes: "I am confident that we got the very best deal we could." Dairy and timber exporters are expected to profit most, but manufacturers like white-goods maker Fisher & Paykel and fashion house Icebreaker also stand to gain from easier access to China's low-cost factories as well as to its fast-growing middle class. The projected $300 million annual income boost from the free-trade agreement "is obviously worth having," says Skilling. But "given that our total exports are about $NZ40 billion [$32 billion] a year, it's pretty small." The real action, he says, will lie in the "dynamic effect" of a bigger Kiwi presence in China and "the signal that, Hey, China is an increasingly important market for us."

Since the People's Republic already enjoys near-free trade with New Zealand, its financial gains will likely be small. Wellington negotiators have said the Chinese were keen on access to agricultural technology and easier entry for niche workers like chefs and acupuncturists. But for Beijing, the deal's key value is as a trial run. Free-trade agreements are part of China's global push for the status and influence of a big power. The negotiation with New Zealand, says the Trade Association's Ferguson, will serve as "a template for bigger, more complex deals" — a pilot project where errors won't cost too much in money or "face."

Six of New Zealand's eight political parties support the deal, but polls show that fewer than half of voters do. Critics fear a flood of cheap goods and farm produce, and point to China's poor record on the environment and human rights. United Future party leader Peter Dunne is boycotting the Beijing signing ceremony in protest at China's crackdown in Tibet, but says abandoning the pact would be "a classic case of cutting off your nose to spite your face."

Whatever the deal delivers, NZ Natural is determined to keep a high profile in the People's Republic. "We're very committed," says Lamont. "We do see a long-term future there." The same goes for his country. For better or worse, Chocolate Ecstasy — and Kiwi exporters — are in China to stay.

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Total SA: The PRC's Latest Investment Horrowshow?

♠ Posted by Emmanuel in China,Energy,Europe at 4/04/2008 02:38:00 AM

Being a cynical old git, I have portrayed China's efforts to invest its vast reserve holdings as one disaster after another. If there ever was a better example of a me-too investor that's always behind the curve, it's the PRC's state minders. First it bought lots of dollar-denominated Treasuries and is second or most likely already first in the international league tables for holding Uncle Sam's debt papers. Unfortunately, China's rapid accumulation of IOUs has coincided with the marked fall of the dollar--at least against other industrialized countries' currencies. To gain better returns while still maintaining rapid accumulation of US assets, China then went for agency debt from Fannie Mae and Freddie Mac only to retreat again after being buffeted by subprime. To "diversify" further, the China Investment Corporation (CIC) SWF then went for the Blackstone Group's IPO. Unfortunately, the investment went sour almost immediately when Blackstone's stock fell markedly as funding for private equity deals became hard to get in the aftermath of subprime. There's also the CIC's $5B investment in Morgan Stanley which isn't doing too well right now as the stocks of American investment banks continues to fall.

Notice a pattern here? China's investment timing has been rather poor in a "buy at or near the peak" sense. It's all so very horrorshow: my motor-psycho nightmare freak out inside of me. The Financial Times now notes that China has invested in France's Total SA. Setting aside the usual protectionist pressures from the French--remember, these are the folks who brought the world "yogurt protectionism," whatever that is--it will be interesting to see if this Chinese official investment turns sour like the rest of the lot. To me and probably many others, official Chinese interest is the ultimate sell signal. In fact, I'm thinking of setting up my own hedge fund. Its strategy? Short anything China buys into. Anyway, the article is also interesting in that it details internal conflicts between the State Administration of Foreign Exchange (whose acronym of SAFE is anything but given its past investment record) and the newly set up SWF, the CIC:

The body that manages the bulk of China’s $1,650bn in foreign exchange reserves has bought a 1.6 per cent stake in France’s Total, the fourth-largest oil group, in a sign of its more aggressive approach to investing the funds under its control. China’s State Administration of Foreign Exchange, or Safe, which operates under China’s central bank, began building its stake, valued at €1.8bn ($2.8bn), several months ago, according to a person close to the company. It is understood that this has been done with the full knowledge of the oil company and representatives of Safe are likely to have met Total’s team, the person said.

News that France’s biggest company by value has drawn the interest of Chinese funds is likely to revive a debate over economic patriotism in France, a phrase coined by Dominique de Villepin, the former prime minister, after rumours of a possible bid for Danone by PepsiCo of the US sparked a national outcry.

In China, the revelation of Safe’s purchase will heighten tensions between it and the China Investment Corporation, the country’s sovereign wealth fund established last September, with $200bn of funds under its control. Safe’s more aggressive investment posture after the establishment of the sovereign wealth fund has caused divisions at the top of the Chinese government because of concerns that two agencies could be competing in what Beijing recognises as a geopolitically sensitive area. The CIC’s attempts to establish itself in the global investment community as a transparent and independent investment entity, a challenge given the focus both on China and sovereign funds generally, is being damaged by Safe’s assertiveness, according to officials in Beijing. Safe usually invests most of its funds in low-yielding securities, such as Treasury bonds and mortgaged-backed securities, but the falling US dollar has also put pressure on it to diversify its portfolio. China added more than $100bn in funds to its reserves in the first two months of this year alone, all of which come immediately under Safe’s control.

Nicolas Sarkozy, the French president, has said that state-owned funds are welcome to invest in France as long as they are transparent and that French companies can invest freely in their countries. Total says it is used to having state funds as investors and even welcomes them. “These funds are no different from other shareholders,” the company said. “In fact, Total actually welcomed this development as these public investors helped to create a stable long-term shareholder base.”

Safe is the only Chinese public fund to have taken a meaningful stake in Total. The group already has sovereign investors from Norway and the Middle East among its shareholders. According to Total’s latest accounts, 88 per cent of its shareholder base is accounted for by institutional investors. About 8 per cent is held by individual entities. The biggest single shareholder in the oil company is Albert Frère, the Belgian entrepreneur, with 5.3 per cent, while employees own 4 per cent. Safe could not be reached for comment.

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How I Stopped Worrying & Learned to Love Subprime

♠ Posted by Emmanuel in Casino Capitalism at 4/04/2008 01:20:00 AM

Here are the elements of a b-movie plot: In the wake of the subprime implosion, mortgage lenders the world over are reeling. Noticing the widespread fear and loathing of mortgage lenders, unscrupulous British traders decide to spread malicious rumors about a large UK lender to benefit by shorting its stock. Sounds properly conspiratorial, eh? Well, er, actually, I am making none of this stuff up. The British regulatory body the Financial Services Authority (FSA) is investigating claims that a British hedge fund profited by spreading malicious rumors that HBOS, the UK's largest mortgage lender, was experiencing liquidity problems a la Northern Rock. The hedge fund then made out big, or so the story goes. This story didn't get much attention in the US since it came out over Easter. As I was cleaning out past bookmarks, though, I came across it again and thought you mind find it interesting. Indeed, hedge fund managers are out to profit from subprime through means both fair and foul. From the Daily Telegraph:

A hedge fund based in London set up a "dirty-tricks unit" to manipulate share prices and get illicit information on companies in an attempt to make millions on the stock market, an insider has revealed. As the official hunt began for the rogue traders who tried to bring down Britain's biggest mortgage lender, HBOS, The Daily Telegraph can reveal a whistle-blower's account of how a multi-billion pound fund allegedly used illegal tactics to drive down stock prices. Private detectives were allegedly employed to hack into executives' emails and telephone records.

Front companies were set up to allow the hedge fund traders to pose as independent researchers or journalists. Negative information on companies was then distributed to leading investment banks in the hope that rumours would spread and some share prices would fall. The hedge fund, which cannot be named for legal reasons, stood to make millions from "short-selling" the shares as they fell in value. The allegations — made in a sworn statement seen by The Daily Telegraph and which has been sent to financial regulators — will add to growing concern over the activities of rogue traders in the City.

The Financial Services Authority, the City regulator, has begun a criminal investigation to find the trader who allegedly made £100 million from the 17 per cent slump in HBOS shares on Wednesday. The shares fell after "malicious" rumours were spread in the City about the bank, sparking fears that the price had been illegally manipulated — a move described as "the modern day version of bank robbery". FSA investigators are seeking emails sent to traders that are thought to have prompted widespread selling of HBOS shares. They claimed the bank was experiencing difficulties.

It has emerged that the rumours are thought to have originated in the Far East, with Singapore named as the most likely source. Nick Leeson, the notorious rogue trader responsible for the collapse of Barings Bank, also operated in Singapore. The accusations about the hedge fund form the most detailed account yet of the illicit activity carried out by the London office of a major international hedge fund. Such tactics are also thought to be used by other hedge funds.

The sworn statement containing the allegations is understood to have been sent to the FSA last year although it is not known what action the regulator took. The document alleges that:

- Employees of the hedge fund ordered an American-based private detective to hack into the corporate email systems of two firms in which the hedge fund had an interest.

- A bogus firm — with a phoney internet address — was established to allow employees to pose as independent researchers and approach company executives to garner information on their firms' future financial prospects. The firm was also used to gain access to industry conferences.

- A false website — with a bogus address — was also registered to allow hedge fund traders to pose as journalists. The offices of American politicians were approached by people claiming to be journalists to obtain information about potential new laws banning internet gambling that would hit British firms.

- Jurors and their families in a sensitive legal case into whether a firm had exclusive patent rights in which the hedge fund had invested were "tapped up". Money was allegedly paid to jurors' families for information about jury-room deliberations.

- Hedge fund staff gathered "sensitive" negative information on firms in which they had an interest in the share price falling. This information was distributed to leading investment banks whose experts were encouraged to take a dim view of the prospects of the company's shares. A German "media consultant" was also used to disseminate information.

- A safe containing large amounts of cash was installed in the hedge fund's office. Money was paid to "sources" providing valuable inside information. On one occasion, an anonymous informant was paid $50,000.

The hedge fund at the centre of the allegations has offices in London's West End and traders spent their staff Christmas party on a luxury cruise. It was set up by former senior executives from a blue-chip investment firm. However, from 2005, the "dirty-tricks unit" was staffed by former corporate investigators and investigative journalists hired from newspapers.

Pressure is growing on the FSA to clamp down on the worst excesses of the hedge fund industry after a series of scandals culminating in the attempt this week to start a run on HBOS. The hedge fund "dirty tricks unit" exposed today was set up in London but operated around the world. It is alleged that this was to avoid tougher regulatory controls in New York.

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Tesco's US Invasion is Delayed for Now

♠ Posted by Emmanuel in Marketing at 4/03/2008 12:20:00 AM

Here's my summary of what has happened with Tesco's planned invasion of the US retail market via its "Fresh & Easy" chain: It came, it saw, it didn't conquer. According to the Telegraph, Tesco has called a ceasefire on its expansion in the US due to lower-than-expected performance Stateside. How much of this lack of success is attributable to economic slump? Surely, now is not the most opportune time to introduce a new retail concept in the States. OTOH, it may also be due to the puzzling inability of the world's retail titans in breaking some international markets. Recall, if you will, that Wal-Mart closed shop in Deutschland under fierce competition from the likes of German discounters ALDI and LIDL.

Honestly, I thought the American effort of Tesco would fare better given that the British retail giant spent a very long time studying the US market before setting up shop. Who would have guessed that even Tesco would not have an easy time? Is it due to opening during a downturn in the economic cycle or is the business model off? We'll have to wait and see.

Tesco has halted the rollout of Fresh & Easy, its chain of US convenience stores, while it reviews the performance of the fledgling business. The move will spark renewed speculation about the performance of Britain's biggest retailer in the world's largest consumer spending market. Tesco is understood to have called a three-month halt to the expansion of Fresh & Easy last week after opening almost 60 stores since last autumn.

Amid claims that Fresh & Easy has missed internal sales targets, analysts have questioned whether US consumers have been left unimpressed by the format, which Sir Terry Leahy, Tesco's chief executive, has pledged will make significant inroads into the US.

Tesco, which insists that the start-up is on track, has earmarked more than £250m for investment in Fresh & Easy. Leahy has staked his £10m-plus long-term bonus on the success of the venture, arguing that Fresh & Easy could eventually be as big as the core UK business.

But having opened 59 stores in just four months Tesco has halted the rollout of new stores in order to "make improvements and allow the business to settle down. We've given ourselves a little bit of time to kick the tyres, smooth out any wrinkles, and make some improvements that customers have asked for," wrote Simon Uwins, marketing director of Fresh & Easy, on his company blog last week.

"In nine months, we've gone from a project team of 200 people to a business employing nearly 2,500 people. We've learnt a huge amount about running the operation, and talked to thousands of customers about what they like about Fresh & Easy, and where they would like us to improve," he added.

Uwins stressed that the roll-out of new stores would resume in three months following the review. "Improving the operation and the shopping trip is what we do every day … but the next three months will allow us to accelerate this process, before we restart what's been described as an opening programme on steroids," he wrote. Jeff Adams, the US-born chief executive of Tesco's Lotus business in Thailand, is relocating to the US to work alongside Tim Mason, the chief executive of Fresh & Easy.

Two weeks ago Mike Dennis, a City analyst with Piper Jaffray, claimed that research among US suppliers had suggested first-half sales at Fresh & Easy could be $30m (£15m), compared with the $100m the broker had expected. "The issue is very weak footfall," wrote Dennis in his research note titled Miles Off Target.

Tesco executives dismissed the research as baseless and reiterated that Fresh & Easy was performing in line with expectations. "We have been very pleased," said one senior Tesco source.

Over the past decade Leahy has transformed Tesco from what was the UK's number two supermarket chain into one of the largest retailers in the world. With almost 1,500 stores outside the UK Tesco has gone head-to-head with the likes of Carrefour and Wal-Mart in Asia and Europe. However, the US has been widely seen as the most ambitious move by Leahy.

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Does ClintBama Feel Bill Clinton's Trade Gain?

♠ Posted by Emmanuel in Election 2008,Trade at 4/03/2008 12:17:00 AM

Bloomberg suggests no--it's mostly pain. If you buy the rhetoric both these candidates have adopted so far, then yes, there is little counterevidence I can offer that they are receptive to trade. The article further suggests that many of the trade works of St. Bill will be undone, including the much-derided NAFTA. However, Obama has been accused of affecting an anti-trade stance while on campaign which may not hold true if elected. I've said ditto for Missus Clinton. Really, it's hard to tell if either of these two will call a "time out on trade" or pull similarly retrograde stunts. It's so very uncertain. In voting, there is no money-back guarantee.

This article also introduces two wrinkles that protectionists should consider. Passing all sorts of restrictive trade measures may limit US access to Canadian tar sands which constitute a large source of future energy in this time of rising fuel prices. There will be no shortage of takers for fuel from those tar sands aside from unappreciative Americans. Nose...face...spite, etc. There's also one on how backing away from trade may mean an even worse performing US economy since export growth driven by the weak US dollar has been a boon as the country flirts with recession:

Memo to Canada, Mexico and China: While trade bashing is a time-honored tactic in Democratic nomination races, this election is different and U.S. policy is in for an overhaul if Barack Obama or Hillary Clinton wins the White House.

Competing in states that have suffered manufacturing-job losses, Obama and Clinton are vying to sound the toughest on trade, with both promising to slow new deals, renegotiate existing ones and punish China. Specific promises and union pressure may force them to honor those pledges once in office, and undo much of former President Bill Clinton's trade legacy.

``Both have given themselves less wiggle room and boxed themselves in,'' said Claude Barfield, a trade expert at the American Enterprise Institute in Washington. ``There are all kinds of ways when you're president to get out of campaign promises, but it's going to be tougher this time.''

Before the March 4 Ohio primary, the two Democrats ratcheted up their attacks on globalization, telling the state's economically stressed electorate that increasing imports and unfair trade accords were to blame for their distress. The candidates are using similar rhetoric as they campaign for Pennsylvania's April 22 primary and Indiana's May 6 contest.

Clinton, 60, and Obama, 46, are offering concrete details of how they would alter trade accords. Each has made a pledge to renegotiate the 14-year-old North American Free Trade Agreement to incorporate stronger labor and environmental standards. They both oppose pending deals with Colombia and South Korea.

Those promises may require a Democratic president to reverse the U.S.'s pro-trade stance, experts said, further imperiling trade agreements now awaiting Congress's approval as well as the Doha round of World Trade Organization talks. In addition, Canada and Mexico are warning they would seek better terms if Nafta is reopened.

Perhaps the biggest threat is to the relationship with the U.S.'s second-largest trading partner, China. Both candidates have co-sponsored legislation to impose sanctions if China continues to intervene in currency markets and keep the yuan low to boost exports.

``That would be the big enchilada, here, or maybe the big egg roll,'' said Doug Irwin, an economic historian at Dartmouth College in Hanover, New Hampshire. ``China could be a huge target.''

While altering the relationship with China would have a much bigger impact on the U.S. economy, economists said, the candidates have focused on denouncing Nafta, which has more resonance with manufacturing workers. Until recently, neither candidate had a strong anti-trade stance. Both said they supported the Peru agreement, which came up for a vote in Congress last year. That changed early this year. ``I have been a critic of Nafta from the very beginning,'' New York Senator Clinton, whose husband secured congressional approval of the treaty, said at a February debate in Cleveland.

``We should use the hammer of a potential opt-out'' from Nafta ``as leverage to ensure that we actually get labor and environmental standards that are enforced,'' Illinois Senator Obama said at that forum...

At the same time, unions have renewed their emphasis on trade. ``This is a top priority for us,'' said James Hoffa, president of the Teamsters Union. ``There certainly was a lot of anger and disappointment in the labor movement over Nafta,'' said Thea Lee, policy director at the AFL-CIO, a federation with 10 million members. ``We're keeping detailed records of the statements made during the campaign season, and we plan on holding all of the candidates accountable.''

The consequences could be significant, particularly for U.S. energy users. Under Nafta, the U.S. has priority access to Canadian oil. Canada is now indicating it may attempt to repeal that provision in a renegotiation, allowing countries such as China to tap into its oil reserves, the largest outside the Middle East.

The candidates ``may want to be careful what they wish for,'' said Kevin P. Gallagher, professor of international relations at Boston University. ``Once you decide to renegotiate a treaty, the whole thing is up for grabs and the line in the sand for the Canadians is going to be energy.''

Mexico would seek better provisions on work visas or passes to allow Mexican trucks on American roads. Mexican farmers want new protections from U.S. imports. ``Far from having favored us, Nafta has sharpened our problems,'' Cruz Lopez Aguilar, head of the National Confederation of Farm Workers, told the Mexican Senate in March.

Exports, the last remaining pillar of U.S. economic growth, would be hurt by an anti-trade turn, said Robert Lawrence, a professor of international trade at Harvard University's Kennedy School of Government in Cambridge, Massachusetts. ``Our economy is being held up by export growth,'' Lawrence said. ``If ever there was a bad time to delay trade negotiations and market-opening measures, it's now.''

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Off to PSA 2008 @ Swansea

♠ Posted by Emmanuel in Service Announcement at 4/01/2008 02:43:00 AM

Dear readers, I may be posting sporadically until Thursday as I am off to the Welsh seaside town of Swansea for the 58th Annual Political Studies Association conference for 2008. It will be held, appropriately enough, at the University of Swansea. Once again, there should be some interesting papers presented that I may comment on in the future as the hoi polloi of the British political science set congregate. If you're going, I hope to see you there!

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No April Fool's: Dems Ask Bush to WTO-Bash RoW

♠ Posted by Emmanuel in Trade at 4/01/2008 01:56:00 AM

Members of the US House of Representatives Ways and Means Committee are asking the Bush administration to whack practically every trading partner of the United States with threats of trade sanctions. To their "logic," things go like this:

1. The US trade deficit is humongous;
2. This massive deficit has much to do with everyone playing unfair in trade;
3. The US Trade Representative (USTR) under Bush has brought only 3 cases a year to the WTO while the Clinton administration brought an average of 11 a year;
4. To reduce the trade deficit, the USTR should bring a lot more cases against these trade villains.

As no big fan of the Bush administration, I can at least say that their stance on trade has not been excessively retrograde. It is sad to see that nothing much has changed as their complaints still single out the insularity of the Japanese auto market and the alleged undervaluation of the yen, never mind that it has fallen below 100 to the dollar. Maybe if American auto exports weren't of oversized gas guzzlers ill-suited for use in Japan and often left-hand drive to boot they'd have made some progress by now. Understandably, this congressional bellyaching is just for show as finding fault with everyone else is not exactly the path to improving US relations with the rest of the world now that it is held in contempt by so many. Actually, there are legitimate grievances together with a lot of nonsense mixed in with this laundry list of complaints. To the USTR's credit, it looks like it only goes after those it can realistically win.

Perhaps those Democrats would be better off doing more introspection about why US exports have lost competitiveness in many areas instead of bellyaching about how unfair everyone else is. Deal with it, America: world trade ain't for wusses and crybabies. If you don't make stuff the rest of the world wants, no amount of trade litigation will make them buy it from you. In fact, excessive belligerence would only make things worse. You can read the [pathetic] Ways and Means Commitee letter to Bush, and Reuters offers a summary:

Democratic lawmakers urged President George W. Bush on Friday to file new trade complaints against China, the European Union, Japan, Canada, Mexico and others at the World Trade Organization. "Unfortunately, during the last seven years, this administration has mismanaged America's trade policy. We urge you to take important steps to remedy this situation," House of Representatives Ways and Means Committee Chairman Charles Rangel and other panel members said in a letter to Bush.

The lawmakers said the U.S. Trade Representative should begin preparing WTO cases against China and Japan for "currency manipulation" which they said undercuts U.S. exports. They also called for action against Chinese steel subsidies and Japanese regulatory and other non-tariff barriers that block imports of U.S. autos and auto parts.

The list also included a possible case against the European Union for blocking imports of high-tech goods such as digital signal converters for analog TVs. Trade officials have already said they are considering action on that. The lawmakers also proposed action against Mexico, Canada and France for failing to protect U.S. intellectual property rights and said Washington should insist Russia make much more progress in that area before being allowed to join the WTO. The letter was published shortly before the U.S. Trade Representative's office released its annual report to Congress on foreign trade barriers…

"We filed a number of very strong cases with the World Trade Organization to combat barriers to the free and fair trade of American goods and services, including four cases against China in the past 14 months," [the USTR] said in a statement.

But in what has also become an annual exercise, Democrats complained the administration has not insisted other countries live up to their international trade obligations. They said the Bush administration brought fewer than three WTO cases a year in its seven years in office compared to 11 a year from 1995 to 2001. One result, they said, was the rise in the U.S. trade deficit to $711.6 billion last year from $375.4 billion in 2000, former President Bill Clinton's last year in office.

Administration trade officials say they have filed cases at the WTO when other, quicker efforts to resolve disputes fail.

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Coke Ain't It With Beijing's Ongoing Tibet Flap

♠ Posted by Emmanuel in China,CSR at 4/01/2008 01:28:00 AM

Instead of dealing with the Pepsi Challenge, Coca-Cola is dealing with the Ultimate Corporate Social Responsibility Challenge as Tibet activists demand that major Olympic sponsors petition the Chinese government to reopen Tibet. This is an especially sensitive time for the PRC with the ongoing torch relay set to ignite protests wherever the torch goes. Like the Pied Piper, the torch has lots of baggage that goes with it. Talk about a political risk scenario for corporate sponsors of the Games. What will happen to the image of these sponsors if a hard crackdown occurs in Tibet in the run-up to the Games? Safe to say that they might think twice about saying Tibet, Darfur, etc. are beyond their control as they do below. It will be particularly interesting to see what happens as the torch passes through Tibet. I won't be surprised if activists redouble their efforts then. From BusinessWeek:

Coke, along with Chinese computer company Lenovo and South Korean electronics giant Samsung, has spent millions of dollars (the companies won't disclose the exact amounts) to sponsor the relay. Lenovo designed the torch and provided free laptops to Olympic officials. Samsung plans to pass out Samsung flags in all 134 cities along the route. Coke nominated 100 environmental activists to serve as torchbearers.

However their marketing strategies took shape before the latest violence in Tibet, where dozens of people have died since anti-Chinese protests started on Mar. 14. So instead of winning uncritical publicity, corporate sponsors have come under attack. Human Rights Watch issued a statement on Tuesday, Mar. 25 urging Coke, Lenovo, and Samsung to pressure Beijing to reopen Tibet and calling for the torch relay to avoid the region unless the Chinese government agrees to an independent investigation into the recent unrest. Tibetan activists are also planning protests in London, Paris, San Francisco, Mumbai, and other cities when the Olympic torch relay passes through and are also calling for the corporate sponsors to withdraw…

When it comes to corporate targets, the activists are focusing their pressure on Coke because they say they hold the Atlanta-based soft drink company to higher standards. A group of 153 Tibet organizations sent a letter to Coke Chairman and Chief Executive Officer E. Neville Isdell demanding that the company withdraw its sponsorship of the relay and lobby the International Olympic Committee (IOC) to cancel the leg of the relay passing through Tibet and via Mt. Everest. "You cannot, as a responsible American company, leave American values at the border in exchange for access to a lucrative market," says Jacob Colker, campaign manager for International Campaign for Tibet, a Washington (D.C.)-based organization that works to promote human rights and democratic freedoms in Tibet. "It's not acceptable, and it's not appropriate. They need to really consider this sponsorship of the torch relay, especially if it continues to go through Tibet."

So far, Coke and the other sponsors have taken the position that the problem in Tibet is an issue to be resolved by the government and is outside their responsibilities as corporate sponsors. In an interview in Beijing, Coke spokesperson Christina Lau would not comment when asked by BusinessWeek about Tibet and the torch relay.

However in a statement issued by the company last week, Coke spokesperson Kerry Kerr said: "While it would be an inappropriate role for sponsors to comment on the political situation of individual nations, as the longest-standing sponsor of the Olympic movement, we firmly believe that the Olympics are a force for good. We remain committed to supporting the torch relay, which provides a unique opportunity to share the Olympic values of unity, pride, and inspiration with people all over the world."

The other sponsors say they have no plans to dial down their marketing for the Beijing Olympics in response to the outcry over Tibet. "As a private organization, Samsung is not in a position to influence politics," says Kwon Gye Hyun, vice-president and head of global sports marketing at Samsung Electronics. Bob Page, manager for Lenovo's Worldwide Olympic Games Project, agrees that Lenovo's role is not to advise governments on policy. The situation "needs to be resolved at a regional level by governments," he says. "It's not the role of an Olympic sponsor to advise any government on political policy."

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US Dollar: Currency Non Grata in Amsterdam

♠ Posted by Emmanuel in Europe at 4/01/2008 01:18:00 AM

Woe betide visitors to Amsterdam who try to exchange their dollars for something more useful and which might actually hold some value in the near future--the euro. This video clip from Reuters explains how small volume money changers have started to "just say no" to Americash semitrash. Travelers checks? Same banana, it seems, as banks expect greenbacks to plunge like Greg Louganis strapped to an anvil. (Sorry, I can't embed the clip so you'll have to visit their site). The US dollar is definitely subprime.

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