Trans-Pacific Partnership: Not a Great Deal for Asia

Kevin P. Gallagher

The American Prospect has a new special report titled “Pacific Illusions” that exposes the limits of the Obama Administration’s Trans-Pacific Partnership (TPP)—a proposed trade deal between the United States and eight other Pacific-rim countries.  The report features articles by Clyde Prestowitz, Lori Wallach, Jeff Faux, yours truly, and others.  This is a must read for anyone thinking about US trade policy and/or economic development.  Below are the first few paragraphs of my article that shows how the TPP will harm the development prospects for nations such as Malaysia and Vietnam. Read the full article at the link below, and be sure to check out the full report!

Not a Great Deal for Asia

The Trans-Pacific Partnership could end up hurting the broader economic interests of both the U.S. and smaller Asian nations.

The Trans-Pacific Partnership is best understood as President Barack Obama’s extension of the Bush-era doctrine of “competitive liberalization.” Frustrated with pushback at the World Trade Organization by nations like China, Brazil, India, and South Africa, the United States seeks a coalition of the willing to import a commercial framework that rewards private firms at the expense of the common good. That policy regime is ailing in the U.S. and gets worse when exported.

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What do the new World Bank poverty statistics really tell us?

Robin Broad and John Cavanagh, guest bloggers

Now here is what sounds like a New York Times headline to celebrate: “Extreme Poverty in Developing World Is Down Despite the Recession, Report Says.”[i] That report would be a 6-page World Bank briefing note, the press release for which is titled: “New Estimates Reveal Drop in Extreme Poverty 2005-2010.” Echoes The Economist: “For the first time ever, the number of poor people is declining everywhere.”

If it were only that easy.  Let us dig into what the World Bank’s new briefing note really tells us and ask two questions: Do the statistics really show a fall in extreme poverty across the world?  And, what policies lie behind the changing poverty figures?

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The lessons of Fukushima, one year later

Martin Khor

It’s been a full year since Japan’s triple disaster of earthquake, tsunami and nuclear meltdown, and the reverberations are still being felt.

The tsunami of 11 March 2011 caused around 19,000 deaths (16,000 known dead, 3,000 missing), and 320,000 were made homeless. The nuclear disaster alone created 100,000 nuclear evacuees, a new tern created to describe those who had to leave their homes to escape radiation.

The lesson, only still partially learnt in Japan itself, and hardly learnt yet in other countries, is that natural disasters can come in different and unexpected forms, and governments must put aside considerable resources and facilities to prepare for and manage them.

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South Africa’s Carbon-Tax Debate Disappoints

Patrick Bond
(also available in Portuguese at INESC)

To be sure, it’s a difficult period for imposing new environmental taxes, given ongoing financial sector power over public policy. With the entry of European Union airlines into the region’s fast-collapsing Emissions Trading Scheme, a group of non-European countries led by the Chinese is revolting against paying higher air fares to and from Europe.

There are bad and good arguments about carbon taxation here. According to a China Daily report, “Europe’s compulsory charges are set to have great impact on China’s aviation industry, and more profound influences may be found in the export sector. China therefore strongly opposes the EU’s unilateral action, viewing the EU’s move as violating the United Nations Climate Change Framework Convention and related regulations of the International Air Transport Association.”

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Taming the liquidity tide

Kevin P. Gallagher

In Germany this week Brazilian president Dilma Rousseff rebuked industrialised countries for creating a “liquidity tsunami” of speculative capital that is bubbling currencies, stock and bond markets across emerging markets and the developing world.  To stem the tide, her government extended a tax on speculative inflows of capital into Brazil.

A new task force report entitled Regulating Global Capital Flows for Long-Run Development, released this week, argues that regulating flows to tame the liquidity wave are justified more than ever in the wake of the global financial crisis.  Countries have more flexibility to deploy such measures given the new consensus in the peer-reviewed academic literature and at the IMF that capital account regulations have been effective tools to prevent and mitigate financial crises.  In this new environment Brazil, Indonesia, Taiwan, Peru, Thailand, South Korea, and many others have regulated flows.

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Is Import Substitution Still Possible?

Matías Vernengo

For a very long time Import Substitution Industrialization (ISI) was seen as a four-letter word. The notion was that ISI had led to extensive inefficiencies and that the debt crisis of the 1980s was its last breath. The old ideas about comparative advantage were back with a vengeance, and the prescription was for trade liberalization, encapsulated in the Washington Consensus. Export orientation was promoted, since it was widely believed that an emphasis on exports would force integration into world markets, more efficient allocation of resources, and that external markets would impose discipline by eliminating uncompetitive firms.

The problem with the conventional wisdom is that the ISI period corresponds to a high growth phase for most developing countries, one in which they caught up with the developed world despite the fast growth in the latter, which would not have been possible if ISI-driven growth did produce tremendous inefficiencies on an economy wide scale.

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Undernutrition and Overnutrition: Who is Feeding Whom?

Jennifer Clapp

We live in a world today where one billion people– that is one in every seven people on the planet – are undernourished. At the same time, more than one billion people are overweight, including some 300 million people who are obese. Both undernutrition and overnutrition are forms of malnutrition, and both harm human health and impose enormous costs on society. Transnational food corporations are intimately involved both in feeding the overnutrition crisis through their investment in the global snack food industry and in their investment in new food products to treat the crisis of undernutrition.

The twin problems of overnutrition and undernutrition were highlighted by the UN Special Rapporteur on the Right to Food, Olivier de Schutter, in the presentation of his latest report to the UN Human Rights Council yesterday: “The Right to an Adequate Diet: the Agriculture-Food-Health Nexus.” At first blush these two trends – undernutrition and overnutrition – seem to be quite opposite from one another. Yet there are a number of connections between them and they exist side-by-side in many countries.

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New Data Confirms Food Crisis Model: Warns of coming price spikes

Timothy A. Wise

Today, researchers at the New England Complex Systems Institute (NECSI) released new modeling results they claim demonstrate the predictive validity of their food price model. Last September, they released a detailed report showing that US ethanol expansion explained the underlying secular rise in food prices, while financial speculation explained the two price spikes, in 2007-8 and 2010-11. (See my post on the study.) The Institute, which performs mathematical modeling to reveal social and political trends, has now extended its model to January 2012. With no modifications, the model still fits food price trends, predicting to a high degree of accuracy the bursting of the food price bubble last year.

In our recent report on the food crisis and a recent article in Economic and Political Weekly, Sophia Murphy and I argued that the international community has thus far failed to address the underlying causes of the food crisis. As the NECSI report highlights, those causes include biofuels expansion and price volatility stemming from excessive financial speculation and the lack of adequate food reserves.

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Hitting Them Where They Drive: Will rising gas prices prompt action on commodity speculation?

Timothy A. Wise

There’s nothing like a food riot to focus the attention of a developing country government. And perhaps there’s nothing like a gas-price spike to get the attention of US policymakers, particularly in an election year.

As oil prices jumped to $108/barrel and US gas prices inched toward the politically toxic $4.00/gallon, welcome attention is being focused on speculation in oil futures markets. Forbes reported last week that as much as one-quarter of the price of crude could be attributed to a surge in speculative capital, which now accounts for four of every five dollars on oil futures markets. Citing data from Goldman Sachs, they estimated this was costing US drivers $.56/gallon, a hefty 18% hike in the price at the pump.

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Yuan diplomacy

Kevin P. Gallagher

When no one was looking, China became the largest source of finance for Latin American governments. Indeed, in the past few weeks Chinese government-sponsored banks have extended $1bn to Ecuador and are discussing another $1bn to the Inter-American Development Bank.

This presents a great opportunity for Latin America, but also brings new risk. If the region can seize upon the new opportunities that come with Chinese finance they could come closer to their development goals, and pose a real challenge to the way Western-backed development banks do business.

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