William Krist's Blog, page 54

Globalization Comes to the Rescue: How Dependency Makes us More Resilient

A new consensus is growing across the European Union – and other parts of the world too: that globalization has gone too far. The argument goes as follows: as an exchange for higher efficiency and lower prices, Europe has sacrificed its ability to take care of itself and protect its own citizens. The Covid-19 crisis has revealed how much Europe depends on the rest of the world for products like medical goods and medicines. Therefore, if Europe does not want to live through another shortage of essential supplies, the lesson of the Covid-19 crisis is that the EU has to produce these products itself.

This conclusion may sound intuitive but it is fundamentally wrong. Europe is not overly dependent on the rest of the world because most trade in the EU is done within its own borders. New evidence presented in this paper shows that there were only 112 products, making just 1.2% of the value of EU total imports, for which the four largest suppliers were non-EU countries as compared to more than two thousand products for which the four largest suppliers were from EU member states. And while not every product is equally important in the face of a global pandemic, there is not a single Covid-19 related good for which all EU imports only came from non-EU countries.

This paper debunks the idea that the EU is too reliant on other countries. Instead, our analysis shows that imports from the rest of the world make every EU member state more resilient by diversifying its sources of supply.

Because of their geographical location and economic integration, if there was to be a shock like a pandemic, a plague, or a nuclear disaster, groups of EU countries are likely to be hit simultaneously. Having sources of supply outside the EU is therefore critical to reduce Europe’s vulnerability to these shocks. Europe’s recent experience has shown that international trade is a strength, not a weakness, and the EU was blessed to be able to tap into the manufacturing capacity of the rest of the world to buy urgently needed medical goods from abroad during the hardest months of the pandemic.

Preparing for future crisis like Covid-19 is extremely complex. Nobody knows which type of shock will come after Covid-19, which economic activities will be impacted, or what kind of goods will be needed to protect our citizens. Yet, any debate about the merits of re-shoring should be based on figures and not on narratives. This paper analyzes EU imports on more than 9,000 products and concludes that Europe should not build its resilience by the mandatory re-shoring of economic activities. That is the opposite of diversification. Besides, reshoring will increase costs and hit citizens in the poorest countries the hardest.

An economy that is served by multiple firms across multiple locations is more resilient to random shocks than one where goods are produced by fewer firms in the same location. While re-shoring may bring the illusion of control, in reality, the EU will be more vulnerable and dependent on fewer and larger companies. This is why globalization and the EU’s reliance on the rest of the world is what makes the EU more resilient.

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Oscar Guinea is a Senior Economist at ECIPE.  Florian Forsthuber is a Trainee at the European Central Bank.

To download the full paper, please click here.

2020 List of Goods Produced by Child Labor or Forced Labor

Purpose of This Report

The U.S. Department of Labor (USDOL or the Department) has produced this ninth edition of the List of Goods Produced by Child Labor or Forced Labor in accordance with the Trafficking Victims Protection Reauthorization Act (TVPRA), as amended. The TVPRA requires USDOL’s Bureau of International Labor Affairs (ILAB or the Bureau) to “develop and make available to the public a list of goods from countries that [ILAB] has reason to believe are produced by forced labor or child labor in violation of international standards” (TVPRA List or the List; 22 U.S.C. § 7112(b)(2)(C)). It also requires submission of the TVPRA List to the United States Congress not later than December 1, 2014, and every 2 years thereafter (22 U.S.C. § 7112(b)(3)).

The Frederick Douglass Trafficking Victims Prevention and Protection Reauthorization Act of 2018 expanded ILAB’s mandate to require the TVPRA List to include, “to the extent practicable, goods that are produced with inputs that are produced with forced labor or child labor” (22 U.S.C. 7112(b)(2)(C)).

The TVPRA directs ILAB “to work with persons who are involved in the production of goods on the list … to create a standard set of practices that will reduce the likelihood that such persons will produce goods using [child labor or forced labor],” and “to consult with other departments and agencies of the United States Government to reduce forced and child labor internationally and ensure that products made by forced labor and child labor in violation of international standards are not imported into the United States” (22 U.S.C. § 7112(b)(2)(D)–(E)).

Asking the Right Questions to Trace Labor Abuses in Global Supply Chains

What do product quality control measures have in common with efforts to eliminate child labor? In a word: traceability. In the case of product safetyrelated issues, traceability is crucial as quality control experts and operations managers race to link the faulty product to the source. Just as in identifying the origin of defective products to limit harm, the world also has sought to trace the origins of various goods and products as a way to combat child labor and forced labor in those supply chains by asking the right questions: “Who made this and under what conditions?”

Global supply chains have created tremendous prosperity for our society as a whole, lifting millions out of poverty and providing livelihoods for many more; however, problems remain. Violations such as child labor, forced labor, and human trafficking have persisted as supply networks have continued to grow ever more complex. The latest global estimates highlight that 152 million children remain in child labor and 25 million adults and children toil under conditions of forced labor, including in global supply chains that crisscross our globe. (1) Many businesses at all stages of the supply chain, including major global brands, acknowledge these abuses. Businesses can play a critical role in improving working conditions for workers around the world – and many companies have recognized the economic benefit of doing so. These global conditions and the motivations of companies and governments to rectify these injustices have led to an increasing array of research on global supply chains with ILAB playing a pivotal role. ILAB is a leading voice and advocate through its support of research, tools, and technical assistance to aid those who seek to clean up global supply chains, and partnership with the private sector remains essential to matching these aspirations to reality. 

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To read the full report click here. 

Priorities for a Technology Foreign Policy for India

Across the world, state behaviour is increasingly being shaped by a desire to acquire, secure or manipulate emerging technologies or the supply chains that produce them. This emerging friction will continue to accelerate as ‘techno-nationalism’ increasingly underpins industrial and trade policy choices. The United States (US) and China—the largest poles of innovation, technology and finance in the international system—are the primary drivers of this new moment. Countries from Asia, Africa, Latin America and Europe are also increasingly concerned about their sovereign powers over emerging technology ecosystems and their implications on social, political, economic and strategic relations.

At the same time, international rules and institutions that manage the global technology system remain largely in a state of flux. Multilateral negotiations on state behaviour in cyberspace are fractured; international negotiations relating to lethal autonomous weapons often end in stalemates; e-commerce regulations are mired in debates around equity and security; standard-setting organisations have become a new frontier for exerting geo-economic influence; and methodologies for how to quantify the digital economy are still unsettled, even as data flows have replaced traditional goods and services as the driver of globalisation.

These headwinds will have an impact on India’s ambition, as laid out by the Ministry of Electronics and IT, to grow its digital economy to US$ 1 trillion by 2025. This, even as the country seeks to ride on the wave of growth that will be enabled by IoT, quantum computing and AI. With massive investments flooding into emerging technologies across the board, the global market for AI alone is expected to reach US$ 169,411.8 million in 2025. It is no surprise then that Indian companies are amongst the early adopters of AI, behind only China and the US. A second,  perhaps more exigent concern in the minds of Indian policy thinkers, would be managing India’s demographic dividend, when India’s working age population will be at its peak—a pattern that is projected to end in 2055.

Many of these new entrants to India’s workforce will turn to technology-linked jobs, including coding, those related to the gig economy, or in startups. Indeed, India has already emerged as a data labelling giant: homegrown platforms like iMerit and Playment cater to an extensive list of international clients. iMerit alone generated US$6.58 million in annual revenue in 2018. Moreover, with nearly 390 million internet users (with another 40 million predicted to be added every year for the next decade), India’s connected populations present many opportunities for homegrown applications.

Amidst this global and domestic scenario, the Ministry of External Affairs (MEA) announced the establishment under its wing of the New, Emerging and Strategic Technologies (NEST) division that will engage in ‘tech diplomacy’. The NEST division is tasked to provide policy guidance on how India can shape international rules related to emerging technologies, navigate competition over strategic supply chains to capture a larger share of global technology flows, and align India’s as yet discordant domestic technology policies with international regimes that are straining under complex geopolitical and institutional pressures. This brief identifies five thematic domains and five organisational processes that demand attention.

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Trisha Ray is a Junior Fellow at the Observer Research Foundation Cyber Initiative.

Akhil Deo is aJunior Fellow at the Observer Research Foundation Technology and Media Initiative.

To download the full paper, please click here. 

Trade and Development Report 2020

Foreword

Covid-19 has served as a reminder that we live in a closely interdependent world that brings opportunities but also carries dangers. It has, just as importantly, shed light on a whole series of pre-existing conditions – from heightened inequality, to unsustainable debt and rampant environmental destruction – that were left unaddressed after the Global Financial Crisis. The world at the end of 2019 was, in truth, a good deal more fragile than many were willing to acknowledge.

As a result, Covid-19 obliges us to think carefully about what makes for healthy and resilient communities, at the global level as much as the local level and take to heart the lessons we have learned in the last decade.

This year is shaping up to be a very difficult year for the global economy. With many countries unprepared to respond to a health pandemic, lockdown seemed to be the only plausible way to protect lives and preserve health systems. Doing so triggered an economic crisis that spread as quickly as the virus itself. Data for the first two quarters of this year show output contracted more sharply than in 2008-2009, and in some cases registering the steepest drop on record. Estimates for the year point to a generalized global recession matching the Great Depression of the 1930s.

Next year will likely see a rebound. However, it will be uneven within and across countries and uncertainty will persist. Unemployment will be on an upward trend, more and more companies will be facing the threat of bankruptcy; supply chains will be fragile; confidence will be shaken; demand will be weak. Debt levels across the world, in both the public and private sectors, will have risen significantly from the historically high levels registered before the crisis. In this condition, the wrong policy steps – and ignoring the experience of the last decade – could trigger further shocks which would not only derail recovery but could usher in a lost decade.

These threats are greatest in the developing countries where the ability to respond to the crisis, on both the health and economic fronts, has been hampered by years of austerity combined with massive debt servicing, high levels of informality and policy space constricted by the rules we’ve chosen to manage globalisation.

To date, the international community has not matched its expression of concern with commensurate support and action. Multilateralism was already under stress before the crisis, but Covid-19 has highlighted the need for frank discussion and bold proposals that match the ambition shown when the global system was founded. This year’s Trade and Development Report argues that the global economic crisis caused by Covid-19 throws up a stark choice: continue misguided policy choices or collectively chart a new path that leads from recovery to a more resilient, more equal and more environmentally sustainable world in line with the ambition of the 2030 Agenda for Sustainable Development.

Neither path is preordained. Building a better world is a matter of conviction and collective action. The lives of future generations and of the planet itself will depend on the choices we all take over the coming months.

Mukhisa Kituyi

Secretary-General of UNCTAD

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Mukhisa Kituyi, of Kenya, became UNCTAD’s seventh Secretary-General on 1 September 2013. After serving an initial four-year term, he was reappointed by the General Assembly in July 2017 for an additional term that began on 1 September that year.

To download the full report, please click here. 

Losing Ground: the United States, Free Trade Areas, and the World Trade Organization

WASHINGTON, DC – April, 2018  Over the past twenty-five years US production and export of goods and services have flourished while technological innovation and competition from imports have reduced employment in some US manufacturing industries. In response to the undoubted problems of some industries and to concerns about the US deficit in traded goods, the […]

Trump, Trade Wars, and the Forgotten Man

WASHINGTON, DC – April, 2018–In a tweet that reads like “Newspeak” from Orwell’s 1984, President Trump declares: “Trade wars are good, and easy to win.” In truth, of course, both assertions are dangerously wrong, though emblematic of the president’s contempt for the system of trade rules built under American leadership out of the wreckage of war […]

On the Current State of the World Trading System

WASHINGTON, DC – April 4, 2018–My object today is to sort through the noiseof the current tempest over trade and to assess fundamentally where matters stand, how we came to be where we are at present, where the opportunities and challenges lie, and how best to proceed.The promise of Buenos AiresWhat I would most like […]

The Dark Matter of Trade

CAMBRIDGE –March 28, 2018–Donald Trump has argued that trade wars are easily won by the country with the deficit, because the other party has more to lose. But just as trade has moved from goods to services and on to knowledge, so may trade wars, with a tariff on steel answered by a tax on […]

BRICS-Plus: Alternative Globalization in The Making?

MOSCOW–July, 2017 –Against the backdrop of waning integration impulses in the developed world, the largest developing economies are forging ahead with new initiatives directed at revitalizing regional integration. China in particular appears to exhibit activism in building new development institutions (Asian Infrastructure Investment Bank–AIIB), mega-regional projects (‘One Belt One Road’) as well as new economic alliances […]

The Broken Multilateral Trade Dispute System

INTRODUCTIONWASHINGTON, DC – February 7th, 2018 – The World Trade Organization (WTO) came into existence on January 1, 1995, twenty-three years ago. One significant new feature of the global trading system was a WTO dispute settlementsystem that provided both the opportunity for appeals from panel decisions and made the final decisions (whether by a panel […]