This week a group of 141 economists from 40 countries established the World Economics Association (WEA) in order to fill an important gap in the international economics community–”the absence of a truly international, inclusive, pluralist, professional association.” The WEA is committed to global democracy and plurality of economic thought, method and philosophy. Triple Crisis bloggers Jayati Ghosh, Kevin Gallagher, C.P. Chandrasekhar, and Stephany Griffith-Jones are among the founding members.
Economic Partnership Agreements: The last nail in the coffin for LDC industrialization and development
The so-called Economic Partnership Agreement (EPA) being negotiated between EU and ACP countries can have more devastating impacts on industrialization and development of low-income countries than the 5 per cent rules imposed on colonies during the colonial era. It will lock the Least Developed and other low-income (ACP) countries in production and exports of primary commodities and at best in some labour-intensive industries and assembly operations.
The EPA is supposed to be a reciprocal free trade agreement between unequal partners-i.e. between countries with little or no industrial base and European countries which are already industrialized. While EPA does not provide any gain in market access for ACP countries, it restricts their policy space further. In fact, they are threatened that if they do not ratify the contract, their preferential market access to the EU will be withdrawn. Even if they do ratify EPA, their preferential market access will be lost in 5 to 10 years anyhow, while non-LDCs try to preserve their preferential market access.
Food insecurity means few would mourn the death of Doha
Triple Crisis blogger Jayati Ghosh published the following opinion article in the Guardian on one reason why developing countries are skeptical about saving the Doha trade talks– the WTO agreement on agriculture left developing countries exposed to volatile food prices.
Officials at the WTO and leaders of several governments have launched what is said to be a “last-ditch effort” to save the Doha development round of trade negotiations from what is seen as imminent collapse. Will it collapse? And does it matter if it does? Or in other words, what is the likelihood of such a deal, and how much would it benefit developing countries? The brief answers are: low and very little.
So far, the finger-pointing for the failure has been directed either at the US (in which domestic politics suggests little appetite for external trade negotiations), or the newly significant large emerging economies such as China, Brazil and India (that are less willing to accept what are seen as unequal terms), or the overall impact of the “Great Recession” (which has made more countries wary of trade openness that could undermine domestic production and employment).
One aspect that is less talked about is the impact of the WTO Agreement on agriculture and food security in the developing world. The apathy or even downright cynicism in such quarters towards a new trade deal can be understood if we examine this. Basically, many developing countries are now more food-insecure than ever before, and at least part of that can be related to recent trade patterns.
Doha Goes on Life Support
The impasse continues in the WTO’s Doha negotiations, to the point that even the relentlessly optimistic Secretary General Pascal Lamy, after another deadline-driven search for concessions, admitted that there is no movement and little basis for an agreement. Doha is on life support while he and the WTO leadership assess what can be salvaged from ten years of trade negotiations.
Life support is not a cure for what ails the Doha Round. As crisis after crisis roils the global economy, the WTO has drifted toward irrelevance. New market-access demands from the U.S. and other developed countries may make political sense at home, but they do nothing to make the Doha agenda compatible with its initial promise of development. Leave Doha on life support or pull the plug, but we should all use the crisis to remember why development matters and why a multilateral trading system is important to a complex global economy facing multiple crises caused not by too little liberalization but by too much.
Can low carbon growth save us from catastrophic climate change?
Climate policy may have fallen off the US legislative agenda but the evidence that the planet is on a path to catastrophic climate change keeps mounting. In early May, the international Arctic Monitoring and Assessment Program found that temperatures in the Arctic in the last six years were the highest since measurements began in 1880. Arctic sea ice is melting significantly faster than projected by the UN International Panel on Climate Change (IPCC) in 2007 and, along with melting ice sheets and glaciers, points toward a sea level rise of 35-63 inches by 2100.
Most people know by now that cutting emissions of greenhouse gases, especially carbon, is the only way to back off from a global warming “tipping point”– maybe around 2 degrees Celsius (4 degrees Fahrenheit)—that could trigger chaotic climate change. We are already nearly halfway there—the earth has already warmed by 0.75 degrees Celsius– and going strong. Under a “business as usual scenario (BAU),” carbon emissions will double by 2050 over current levels. Given the inertia in the climate system—carbon is very long-lived in the atmosphere–and the momentum of the fossil-fuel-based global economy, is it possible to reduce emissions enough and in time?
Growth of Limits
Ralf Fücks, president of Triple Crisis co-sponsor and partner the Heinrich Boell Foundation, published the following opinion article in Die Zeit on the question of whether continued economic growth is sustainable given current natural resource consumption and population growth.
Nearly 40 years after the famous study by the Club of Rome entitled Limits to Growth, our unease about economic growth is returning. The nuclear disaster in Japan has also raised the question of whether the danger at which industrial society puts itself requires radical change. Without a doubt, our current growth model is not sustainable. It overburdens the ecosystems people depend on. What conclusion are we to draw from this insight? Should we bid farewell to growth or take a giant leap into an ecological modernity in which economic growth and consumption of natural resources are decoupled? Does the ecological vision mean prosperity without growth or growth in line with nature?
Trading Away Financial Stability in Colombia: Capital Controls and the US-Colombia Trade Agreement
Triple Crisis blogger Kevin P. Gallagher published the following Latin American Trade Network (LATN) policy brief on the Obama Administration’s revised US-Colombia Free Trade Agreement (FTA), which is the subject of today’s Senate Finance Committee hearing and will be sent to Congress this session alongside revised FTAs for Panama and South Korea. Gallagher demonstrates that the FTA has not been reworked to ensure that Colombia has the ability to prevent and mitigate financial crises.
The United States-Colombia Trade Agreement between the United States and Colombia was signed before the global financial crisis. As Congress and the President convene to rework the agreement, it will be important to ensure that the agreement is designed so that it given both nations the flexibility to put in place macro-prudential regulations to prevent and mitigate financial crisis.
As the treaty now stands, a number of actions that Colombia has successfully deployed in the past to prevent and mitigate treaties in the past would be deemed actionable under the agreement’s chapters on financial services and investment.
The global financial crisis has demonstrated that sound regulations are needed to stem the ability of speculative capital to create financial bubbles that burst and then leave ordinary Americans and Colombians worse off.
Riding the Commodities Roller Coaster: Look, Ma, no hands!
Ma, why do we have futures markets?
We have them because there are all sorts of goods that people know that they will need to buy or sell in the future, say six months from now, and they want to be sure they can buy them at a certain price. Economists call this “hedging” against the risk that the price can change in a way that you may not be prepared for.
Which kinds of goods are these?
There can be futures markets in almost anything. They first started with agricultural commodities like rice and wheat, because no one could know exactly what the harvest would be like and so it helped some people to choose a price to buy or sell at in advance. Now futures markets cover not just agricultural commodities but also minerals and oil and metals, and also lots of other goods. And even some services!
So these futures markets stabilize prices?
Financial Reform: Whatever Happened to the Stiglitz Commission?
At the onset of the financial crisis the United Nations put together an all-star group of global economists and economic policy-makers, chaired by Nobel Laureate Joseph Stiglitz, to assess the causes and consequences of the financial crisis and to make a set of recommendations to make sure such a crisis never happens again. The commission’s report was published with great fanfare and fed into a 2009 UN conference on the financial crisis that was met with little fanfare outside the UN system. After the conference the UN focused primarily on the global climate crisis and the Copenhagen meetings in 2010. The UN is only now beginning to pick up where it left off on global finance. This summer the UN is to decide whether it should implement one of the Stiglitz’ Commission’s core recommendations: form a panel of experts modeled after the Inter-governmental Panel on Climate Change (IPCC). It should.
Did environmentalists kill climate legislation?
Climate legislation, even in its most modest and repeatedly compromised variety, failed last year. And there won’t be a second chance with anything like the current Congress. What caused this momentous failure?
Broadly speaking, there are two rival stories. It could be due to the strength of opposing or inertial forces: well-funded lobbying by fossil fuel industries, biased coverage by increasingly right-wing media, the growth of the “Tea Party” subculture and its rejection of science, dysfunctional institutions such as the U.S. Senate with its filibuster rules, and the low priority given to climate legislation by the Obama administration.
Or it could be because environmentalists screwed up and shot themselves in the foot.