William Krist's Blog, page 34

Geo-Economics and Trade: Germany Must Support Open Global Trade

Given how closely the German economy is intertwined with international trade, it is in Germany’s strategic interest to support open, rules-based global trade. Germany must therefore also be a strong advocate within the EU for reform of the World Trade Organization (WTO). At the same time, Germany and the EU need to hold their own in a geo-economic trading environment.

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To read the full report from The German Council on Foreign Relations, please click here.

How economic ideas led to Taiwan’s shift to export promotion in the 1950s

Taiwan was the first developing country to adopt an export-oriented trade strategy after World War II. The factors usually associated with big shifts in policy—a macroeconomic crisis, a change in political power or institutions, lobbying by export interests, pressure from international financial institutions—were not present; it was ideas that were key. In 1954, economist S. C. Tsiang proposed that Taiwan boost export earnings rather than squeeze import spending to deal with its chronic shortage of foreign exchange. He recommended a currency devaluation to establish a realistic exchange rate and a market-based system of foreign exchange allocation to end the inefficient rationing by the government. Four years later, a policymaker, K. Y. Yin, fought for the adoption of Tsiang’s proposal, helping clear the way for Taiwan’s phenomenal growth in trade.

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

Next Steps for U.S. Digital Leadership: Advancing Digital Governance with the Pacific and Europe

Building on a strong domestic agenda, the Administration’s international objectives include ensuring a worker-centric trade policy, rebuilding partnerships with allies, and developing a strategy to address China’s growing technology challenge. Leading on global digital governance must be a key component of this agenda.
 
ALI’s report focuses on next steps to creating a U.S. led global digital governance agenda. As the longer-term process of negotiating a multilateral digital agreement under the World Trade Organization evolves, the U.S. should focus on nearer-term goals in the Pacific and Europe.
 
A new digital agenda starts with the need to identify policies that are worker-centric. The Administration and Congress are working on a new trade agreement model to put workers at the center, and this focus needs to be part of digital agreements. This includes language covering digital inclusion and access to technology, especially to underserved communities, a focus on small- and medium-sized enterprises (SMEs) and protections for online users.
 
Second, the U.S. should negotiate a Pacific Digital Agreement to reestablish U.S. engagement in Asia, building on existing regional agreements, which include open and democratic values. This agreement should include a group of five or six key countries in the region, incorporate new worker-centric language, together with existing high standard language from DEPA, DEA and the U.S.-Japan Agreement, and create new norms on ethical AI, facial recognition, and technologies of the future.
 
Finally, the U.S. should build a coalition of like-minded, technology-democracies to develop a high standard digital governance agenda advancing open and democratic values. The U.S.-EU Tech and Trade Council is a good first step toward this goal. Building this coalition is the most critical element in countering China’s harmful approaches to tech and data governance, and the U.S. has no stronger partner in these values than the EU. However, the two sides will also need to work through digital policy friction, including privacy, taxation, and regulatory approaches like the Digital Markets Act (DMA).
 
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Dr. Orit Frenkel is the CEO and co-founder of the American Leadership Initiative. She has 39 years of experience working on Asia, trade, and foreign policy issues. 
 
Ms. Rebecca Karnak is Director of Digital Projects at the American Leadership Initiative. She is also the Principal and Founder of Woodside Policy LLC.
 
To read the full report from the American Leadership Initiative, please click here. 

Legal Issues with the European Carbon Border Adjustment Mechanism

The European Commission has proposed a carbon border adjustment mechanism (CBAM) as part of its European Green Deal. The CBAM would require importers to purchase carbon emissions certificates for imports that the European Union (EU) determines are not produced under emissions standards similar to those of the EU. The aim is to apply a carbon price to imported products that is equivalent to the carbon price applied to products manufactured in the EU. Although the CBAM may not be implemented for several years, merely proposing it has opened an entirely new front for trade confrontations. The prospect of the CBAM raises numerous issues about its consistency with the rules of world trade.

The immediate questions are: How will other members of the World Trade Organization (WTO) react? Will this proposed action by the European Union set off a chain reaction of similar climate‐​related trade restrictions elsewhere? Or will it provoke a wide outcry of global criticism of green protectionism, leading to a legal showdown in the WTO? The question over the longer term is: How will these proposed restrictions shape the future of both trade and climate policies and governance globally? Without revision and careful application, the EU’s proposed CBAM may be inconsistent with fundamental WTO rules.

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James Bacchus is a member of the Herbert A. Stiefel Center for Trade Policy Studies, the Distinguished University Professor of Global Affairs and director of the Center for Global Economic and Environmental Opportunity at the University of Central Florida.

To read the full report from the CATO Institute, please click here. 

Medical Devices and the Limits of UK Regulatory Autonomy

In his negotiations with the EU, Boris Johnson prioritised the UK’s ability to set its own rules and regulations (at least in respect of Great Britain). Yet more than five years after the UK voted to leave the EU, Johnson’s government is still struggling to articulate its vision for what it wants the UK to do differently from the EU and, more importantly, why. Medical device regulation provides an instructive example of both the opportunities now open to the UK, but also the constraints it will find itself under.

Medical devices are technologies that help diagnose or treat patients, or prevent illness without the use of drugs. They include everything from MRI scanners, hip implants and scalpel blades to smartphone apps that treat depression. The EU is currently struggling to implement a wide-ranging change in how medical devices are regulated – from the 1993 Medical Device Directive (MDD) to the 2017 Medical Device Regulation (MDR). Phased introduction of the MDR was due to be completed by May 2020, but was extended until this year due to COVID-19 pressures. This new regulatory framework is designed to ensure more thorough testing of devices before they can be used on patients, and more rigorous monitoring of performance of devices once on the market. The MDR’s implementation, however, has not gone smoothly.

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

What Railway Deals Taught Chinese and Brazilians in the Amazon

Over the past decade, Chinese investments in Brazil have expanded and diversified considerably, especially ones involving infrastructure. Chinese investors have also diversified geographically. Increasingly, major Brazilian infrastructure projects are being planned or implemented with Chinese backing in environmentally sensitive regions such as the Amazon rain forest and the Cerrado, a large savanna region in Central-West Brazil.

Chinese actors have become directly involved in such projects against a backdrop of sharpening debates about sustainability and other consequences of large-scale infrastructure projects. This is especially true in protected areas such as land populated by Indigenous groups and conservation units. A notable example is the Ferrogrão project, a major railway line designed to cross sections of the Amazon and Cerrado to deliver goods to Brazilian ports.

This paper examines the diverse ways that Brazilian and Chinese actors have learned from each other as they negotiate the terms of these deals. It also explores how these learning processes have been conditioned by intense domestic political debates over these projects in Brazil. Official documents and secondary sources reveal that, rather than a set Chinese way of doing business or a stock Brazilian response, such projects entail dynamic institutional learning. Such learning is shaped not only by the particulars of the Ferrogrão project but also by Chinese actors’ broader engagement with Brazilian infrastructure projects over the past ten years.

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To read the full article from the Carnegie Endowment for International Peace, please click here. 

Data is Disruptive: How Data Sovereignty is Challenging Data Governance

As data has become essential to economic growth, data governance has become critical to modern governance. Yet policymakers are just beginning to learn how to govern various types of data. Under the guise of digital sovereignty, however, some governments are seeking to regulate commercial use of personal data without enacting clear rules governing public sector use of data.

By controlling large volumes of data, officials believe they can gain economic advantage in the digital economy and be better positioned to counter the market power of the giant platforms. But advocates of data sovereignty may be misguided. Researchers cannot yet ascertain if economics of scale and scope in data will yield competitive advantage. However, the hoarding of data by nations or firms may reduce data generativity and the public benefits of data analysis.

In this essay, Professor Susan Ariel Aaronson of George Washington University provides an overview of data governance and trade, and the defensive reactions of governments around the world as data becomes more central in today’s economy – and how trade agreements may facilitate rather than limit restrictions.

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To read the full report from the Hinrich Foundation, please click here. 

Special Drawing Rights Could Help Recover Millions of Export-Related US Jobs, and Create Even More

This paper examines the effect of the COVID-19 pandemic, and the resulting world recession, on American export-related jobs. It argues that an additional, and larger, issuance of Special Drawing Rights — reserve assets at the International Monetary Fund — would help bring those jobs back and create more.

Since the beginning of the pandemic, lockdowns and other containment measures as well as their effects on certain sectors of the US economy, have been the focus of much analysis. Millions of jobs were lost as businesses that focused on, for example, the retail trade and tourism, shuttered.

One less examined aspect of the pandemic has been the effect of declining external aggregate demand on American industries and sectors that depend on exports. Not only were these businesses hurt by containment measures and other effects of the virus in the United States itself, they have faced reduced demand for their goods and services from the rest of the world.

Many low- and middle-income countries have experienced more severe economic crises due to the pandemic than high-income countries, and thus have imported less from countries like the United States. This has led to the temporary loss of millions of export-related jobs in the United States.

This fall-off in demand also means that rate of the return of American export-related jobs — jobs both directly and indirectly involved in the production of exports — is dependent upon a broad economic recovery in the rest of the world.

Special Drawing Rights, which are cost-free for the United States, can help boost global demand for American exports by improving the financial position of low- and middle-income countries. Increased demand for American exports would bring back these export-related jobs back more quickly, as well as put the US economy on a path to creating more export-related jobs over the next five years. The US economy is still down about 6.5 million jobs from its pre-pandemic level of employment, and 9.2 million below the pre-pandemic trend.

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To read the full report from the Center for Economic and Policy Research (CEPR), please click here. 

How COVID-19 Vaccine Supply Chains Emerged In The Midst Of A Pandemic

Many months after COVID-19 vaccines were first authorized for public use, still limited supplies could only partially reduce the devastating loss of life and economic costs caused by the pandemic. Could additional vaccine doses have been manufactured more quickly some other way? Would alternative policy choices have made a difference? This paper provides a simple analytical framework through which to view the contours of the vaccine value chain. It then creates a new database that maps the COVID-19 vaccines of Pfizer/BioNTech, Moderna, AstraZeneca/Oxford, Johnson & Johnson, Novavax, and CureVac to the product- and location-specific manufacturing supply chains that emerged in 2020 and 2021. It describes the choppy process through which dozens of other companies at nearly 100 geographically distributed facilities came together to scale up global manufacturing. The paper catalogues major pandemic policy initiatives—such as the United States’ Operation Warp Speed—that are likely to have affected the timing and formation of those vaccine supply chains. Given the data, a final section identifies further questions for researchers and policymakers.

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

Post Pandemic Covid-19 Economic Recovery: Enabling Latin America and the Caribbean to Better Harness E-commerce and Digital Trade

This report shows that Latin America and the Caribbean faces critical policy challenges going forward. It must accelerate the digital transformation to allow businesses and consumers to adapt to a new normal and leverage pandemic recovery to create stronger economies, and also tackle long-standing barriers to adopting digital technologies and bridging digital divides. These have impeded sustained and equitable economic growth even before the pandemic struck. This crisis should be a wake-up call for governments, the private sector, civil society, and international development partners to come together and take concerted actions to advance on consistent, long-term, and sustainable e-commerce strategies that are at the forefront of national and regional productive development agendas. Just as digital solutions allowed countries to overcome the increased role of distance within the context of the pandemic in shaping consumption and business, they should also be harnessed to increase regional economic integration beyond this emergency situation.
 





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To read the full report from the Inter-American Development Bank, please click here.