William Krist's Blog, page 29

Why America Needs a National Competitiveness Council

The issue of faltering U.S. international economic competitiveness, especially in advanced industries and vis-à-vis China, is finally gaining attention in Washington, D.C. The Senate passed the U.S. Innovation and Competitiveness Act (USICA); and after passing a multitrillion-dollar infrastructure bill and the Build Back Better Act, House leadership has indicated a willingness to also move on USICA. Hopefully, going into 2022, the federal government will have more competitiveness tools at its disposal than it does now. But a one-time infusion of resources is not enough: The federal government needs to formulate and implement a coherent U.S. advanced industry competitiveness strategy.

Mustering the political will and ensuring administrative capabilities to generate and implement a robust and broad-based national advanced technology competitiveness strategy are not easy. One way to facilitate both is for the federal government to create a national competitiveness council composed of leaders and experts to provide not only advice to the government but advocacy for a discrete set of high-priority policies. But unless crafted and operated carefully, the risk is that such a body would simply repeat what so many other commissions and groups have done in the past: operating in the realm of generalities, failing to identify the most critical policy interventions and not using their influence to get those interventions fully funded and over the “finish line.” This report first briefly discusses the state of U.S. “competitiveness” and what the term means, and then how such a council could be formed and subsequently operate to be successful.

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To read the full report by the Information Technology & Innovation Foundation, please click here.

China’s Changing Perspective on the WTO: From Aspiration, Assimilation to Alienation

Twenty years after it became a Member of the WTO, China’s image in popular perception has shifted from the biggest success story of the world trading system to its biggest challenge. In the past few years, tons of research have been conducted on what other WTO Members should or could do to deal with the China challenge, but not much attempt has been made to understand the Chinese perspective on its WTO Membership. Focusing only on the China challenge without understanding the Chinese perspective is rather problematic as it treats China as a passive object rather than an active subject, one with significant economic and political clouts in the world trading system today. This paper fills the research gap by providing the first systemic review of this important yet ignored question, which in my view, would be the key to address the China challenge. The paper argues that the Chinese perspective on the WTO has changed from viewing it as the symbol for its aspiration to integrate into the world economy, to trying to assimilate the Chinese economic system with that of the market-based multilateral trading system, to increasing alienations with the core values of WTO in response to the attacks on its economic system. The paper concludes with lessons drawing from China’s changing perspective, especially on how to manage the China challenge in the multilateral trading system.

China’s Changing Perspective on the WTO: From Aspiration, Assimilation to Alienation

To read the full report by Henry Gao, please click here.

Economic Development In Africa Report 2021

Over the past decades, regional integration in Africa has not involved a purely trade liberalization agenda, but rather been based on a pillar of collective self-reliance or, in current terms, been a step towards a peaceful, prosperous and integrated continent. The African Continental Free Trade Area is expected to be a game changer for development ambitions in Africa. The design of the Agreement Establishing the African Continental Free Trade Area reflects an explicit commitment to create a framework for deeper socioeconomic integration and improved cooperation that enables trade, investment and the mobility of people, to support industrialization and the development of a dynamic services sector. Such achievements could ultimately generate decent jobs and increase revenue and thereby contribute to inclusive growth on the continent. A greater emphasis on deeper intraregional trade, cross-border investments in infrastructure and fostering “made in Africa” trade and industrialization policies is key to the continent’s future prosperity and resilience to global financial, food-related, climatic and pandemic-related shocks. For the African Continental Free Trade Area to be a game changer, countries in Africa need to adopt policies that enhance consistency between trade measures, diversification objectives and inclusivity. Unless this is accomplished, the Free Trade Area may be restricted to a trade liberalization agenda and thereby not fulfil the hopes and aspirations of the people of Africa. If effectively implemented, the African Continental Free Trade Area can help address challenges emanating from the excessive reliance in Africa on the supply of primary commodities and goods embodying limited value added to world markets.

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To read the full report by UNCTAD, please click here.

The cost of Brexit: September 2021

In September 2021, UK goods trade was 11.2 per cent, or £8.5 billion, lower than it would have been if the UK had stayed in the EU’s single market and customs union.

for many months the cer’s cost of Brexit model has found that UK goods trade is between 11 and 16 per cent lower as a result of leaving the single market and customs union. Using the data for September 2021, the model puts the cost at 11.2 per cent.

Last month, the UK’s fiscal watchdog, the office of Budget responsibility (oBr), asked me to update my cost of Brexit model with the August 2021 data for october’s ‘economic and fiscal outlook’. The reduction in the UK’s total goods trade – imports plus exports with the eU and the rest of the world – was 15.8 per cent, compared to a modelled ‘doppelgänger UK’ that did not leave the single market and customs union in January.

in an update using the September data, the Brexit hit was a little lower: Britain’s imports from outside the eU and exports to the eU both ticked up, while total trade was down in the countries that make up the doppelgänger – largely the US, Germany, iceland and Greece (see chart 1).

The doppelgänger is a subset of countries selected from a larger group of 22 advanced economies by an algorithm. That algorithm finds the countries that, when combined, create a doppelgänger UK that has the smallest possible deviation from the real UK data until December 2019, before the pandemic struck.

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To read the full report from the Centre for European Reform, please click here.

Responding to Trade Coercion: A Growing Threat to the Global Trading System

As geopolitical tensions have increased in recent years, international trading relationships have become more politicized. Coercive trade practices – including quotas, anti-dumping measures and/or phyto-sanitary barriers – have emerged as one of the more concerning expressions of this trend. These actions work to harm trade partners economically in effort to apply political pressure as part of a broader diplomatic dispute. This presents a serious threat to the integrity of the rules-based trading system.

Currently, existing trade instruments are unable to adequately address this growing concern. The World Trade Organization (WTO) is slow to respond, in the absence of a functioning appellate body, and coercive trade practices can be difficult to identify and quantify, allowing for many cases to go unreported. It will be critical for governments to find alternative tools for dealing effectively with trade coercion.

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To read the full report, please click here. 

Latin American Economic Outlook 2021

The Latin American Economic Outlook 2021 (LEO) sets out policies for a strong, inclusive and sustainable recovery in Latin America and the Caribbean (LAC). This overview summarises the main results of the report. The LEO first assesses the dramatic socio‐economic impacts and policy responses to the coronavirus (COVID‐19) crisis and the extent to which the pandemic has exacerbated existing development traps in the region. The report then builds on this assessment to explore the key foundations for the recovery: i) strengthening public finances to support productive investment and social spending, as well as a more sustainable model of financing for development; this will require implementing holistic, sequenced and consensual fiscal policies; ii) developing stronger social protection systems and improving quality of public services, building on lessons learned from social policy innovations during the crisis; iii) designing a regional productive strategy to increase competitiveness and formal jobs, and explore the potential of further regional integration; and iv) building consensus across all actors in society on the reforms needed for the recovery and for inclusive and sustainable development, through a renewed social contract that is fair, legitimate and stable, and that puts citizens’ well‐being at the centre of policy making. At the international level, the LEO explores the important role renewed international partnerships can play to facilitate the recovery through mission‐driven partnerships.

Latin American Economic Outlook 2021

To read the full report by the OECD, please click here.

America and International Trade Cooperation

As of late 2021, the path of U.S. trade policy remained uncertain. Early signs from the Biden administration suggest the United States is in a transition period. The trade war that the Trump administration initiated with China in 2018 remained mostly unresolved, with bilateral ties having further soured, rendering future trade cooperation even less appealing politically. But there are other issues at play. First, the pandemic has presented pressing issues for international cooperation, including how to accelerate manufacturing and trade in COVID-19 vaccines to prioritize global public health. Second, after four years of U.S. neglect, tackling climate change is likely to be reasserted as a priority during Biden’s presidency, also with potential trade implications. And third, domestic politics after a tight election remain paramount, with the new administration signaling a commitment to a “worker-centered” trade policy.

Despite the flux, and even after candidate Joe Biden campaigned against the Trump administration’s trade strategy, one result was clear—there was unlikely to be a simple reversal of the Trump administration’s trade policies. Many are likely to linger, as the new administration focuses its international engagement deliberately and modestly.

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To read the full report from Aspen Economic Strategy Group, please click here.

Pacific Overtures – Biden Trade Policy

Chronic underinvestment in the multilateral trading system in the WTO era by its largest members has led to a world in which much of the action in creating rules for international trade has shifted away from multilateral arrangements. The leading edge in trade negotiations has not been in Geneva but in agreements like the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). China’s and Chinese Taipei’s applications to join TPP elevate the potential for that agreement becoming a forum in which key trade issues are decided that affect an increasing part of global trade. The application of the United Kingdom to join CPTPP makes that agreement no longer regional but proto-global. That is one possibility. Another, quite different outcome, is that rather than strengthening CPTPP, inclusion of additional diverse parties will dilute its substance.

One important key to the future shape of the world trading system is America’s trade policy. What can be discerned of it for the Biden Administration?

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To read the full report from The Peterson Institute for International Economics, please click here.

Digital Trade: A Board of Trade Report, November 2021

Digital trade presents huge opportunities for the UK. Just as Great Britain led the world in the first industrial revolution in the 1700s, we now have the chance to play a leading role in the digital revolution.

Digital technologies have already revolutionised the way companies do business – enabling them to reach a wider consumer base, trade more efficiently and cost-effectively, and to connect and grow their workforce across different regions of the world, sharing the benefits of prosperity. They have also been at the heart of how many of us have accessed services, purchased goods, kept in touch with loved ones or entertained ourselves over the last year, as the pandemic has illustrated just how important access to digital trade has become.

Digital trade is rapidly becoming the dominant form of trade. It has allowed British businesses selling goods or providing services to take what were previously local markets to a global scale. British companies providing innovative, high-quality digital services are continuing to expand around the world, from music streaming, video games and our award-winning creative industries to our strong legal and professional services sector. This is fundamental to our prosperity – in 2019, the digital sector alone contributed approximately £151 billion to the British economy, employing almost 5% of the national workforce.

Yet we cannot be complacent and simply wait for these opportunities to come to us. The road to our digital future is littered with potential barriers, whether in the form of poor digital infrastructure, the rising tide of digital protectionism, or the persistence of paper-based systems from the past. The international order has so far struggled to keep up with the pace of change, with the global rulebook on digital trade still largely unwritten. Digital trade needs champions who will make the case for a free, open and competitive international digital economy underpinned by common rules on digital trade that promote growth and the free flow of data, while also protecting businesses and individuals.

My vision is for the UK to be one of those champions and a global leader in digital trade, building a global network of next-generation trade deals that drive productivity, jobs, and growth in all areas of the country, and across all sectors of the economy. We are already the second-largest services exporter in the world, meaning that we are ideally positioned to take advantage of this new way of doing business. We have highly competitive, world-leading digital and services sectors, the third highest rate of technology investment globally, exceptional talent, and a wide range of innovative businesses and start-ups using digital technologies to develop new products and sell them to worldwide markets. Digitalisation of global trade can also help turbocharge our goods exports, worth £372 billion in 2019. Our leadership can help ensure that digital trade enhances prosperity, uplifts communities, and empowers women not only in the UK but globally, including in developing countries.

Embracing the opportunities that digital trade offers will keep us at the forefront of the technological revolution, ensuring we lead the way in digital trade and capitalising on the benefits this can provide for Britain, for our trading partners, and for the world.

The Rt Hon Anne-Marie Trevelyan MP

President of the Board of Trade and Secretary of State for International Trade

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To read the full report from The U.K. Board of Trade, please click here.

Assessing the State of Digital Skills in the U.S. Economy

An increasingly digitalized global economy requires ever-more digitally skilled workforces for nations to remain productive. Unfortunately, domestic and international assessments of digital skills show the United States is lagging its competitors.

The global economy is increasingly digitalized. Oxford Economics estimated that in 2016 the digital economy accounted for 22.5 percent of global gross domestic product (GDP). Going forward, analysts at the research firm IDC have estimated that as much as 60 percent of global GDP will be digitalized (meaning largely impacted by the introduction of digital tools) by 2022. Countries that wish to successfully compete in the global digital economy must cultivate workforces possessing the requisite digital skills so that industries, enterprises, and even individuals can thrive in the digital environment. This report explores the state of digital skills across the U.S. economy, examining what they are, why they matter, the current extent of workforce digitalization, and how the United States fares in international digital skills comparisons. It concludes by providing a brief overview of some of the best practices and programs being introduced by nonprofit, academic, and corporate organizations to deepen the U.S. digital skills base and suggesting policy recommendations to further foster U.S. digital skills development.

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To read the full report from the Information Technology & Innovation Foundation, please click here.