Ben Muse

Friday in Geneva

As this sample of headlines suggests, there wasn't much progress today:

• Global trade talks stalled and on verge of collapsing. (James Kanter, International Herald Tribune);
• Lamy warns WTO talks face crisis (Richard Waddington and Sophie Walker, Reuters);
• WTO round on the ropes as ministers launch talks (Richard Waddington and William Schomberg, Reuters);
• WTO: Global trade talks at a crisis (Bangkok Post);
• WTO talks appear to be heading for failure (The Hindu);
• WTO nations at loggerheads over trade barriers (Jonathan Fowler, Mail and Guardian online, S. Africa);
• Divisions continue to hamper trade talks (AP via Boston Globe);
• WTO talks in crisis as US rejects farm suppport cuts (Shada Islam, Monsters and Critics);
• WTO talks fail to make breakthrough (Richard Waddington and Sophie Walker, Reuters).

Negotiators and trade ministers have been unable to break into the iron triangle of subsidy, ag tariff, and industrial goods tariff concessions.

The E.U. Trade Commissioner, Peter Mandelson, made some interesting comments about the "EU 'landing ground'" at an informal Trade Negotiating Committee (TNC) meeting this morning: Mandelson sets out EU “landing ground” for farm/manufacturing deal (June 30) - according to the abstract:

In it he sets out what the EU believes constitutes a realistic “landing zone” for the Doha negotiation on farm tariff cuts, trade-distorting farm subsidies and industrial tariff cuts.  He urges all sides to show further flexibility. Insisting that the EU will try to get as close as possible to the G20 proposal for farm tariff cuts, he says that the same level of ambition must also apply for US domestic trade-distorting farm subsidy cuts which must come down – not as far as to the $12 billion ceiling demanded by developing countries but “considerably”. Mandelson argues that a “real cuts for real cuts” scenario demands that such an agreement is completed by the G20 advanced developing countries offering
a formula for industrial tariff cuts with a coefficient of “15, not 20”.

For context, let me start by quoting WTO Director-General Pascal Lamy's comment on his perspective about the key to an agreement:

"If I was looking for a magic number . . . I would probably look around 20." He said this would mean the US adopting a $20bn ceiling for farm subsidies, developing countries cutting industrial tariffs to no more than 20 per cent and adoption of the G20's suggestion on farm tariffs.

The G20 proposal was an average cut of 54%, so Mandelson appears to be saying that, given conessions by its negotiating partners, the EU could move from its current offer of 39%, towards (but not to) 54%. 

This industrial tariff coefficient refers to the coefficient in a simple Swiss formula, which relates the original tariff to the new tariff.  The formula is:

New tariff = (C*"Old tariff") / (C+"old tariff"), where C is this coefficient of 15 or 20.  The larger the coefficient, the smaller the tariff reductions.

Internal conflicts are making it complicated to interpret the EU negotiating posture.  The Kantor story (Global trade talks stalled and on verge of collapsing.) in the list above, is very good, and provides details on the EU's difficulties:

Thursday in Geneva

This was the first day of the latest Doha Round meeting of the WTO trade ministers.  Today was meant to be a day for informal contacts between ministers and delegations, a day for coalition groupings to meet and discuss their plans.

A lot of discussion in recent days has focused on the so-called "triangular" approach to an agreement.  This involves (1) a reduction in U.S. agricultural subsidies, (2) a reduction in E.U. tariffs, and (3) a reduction in developing country industrial tariffs. 

On the 28th, WTO Director-General Pascal Lamy characterized this:

"If I was looking for a magic number . . . I would probably look around 20." He said this would mean the US adopting a $20bn ceiling for farm subsidies, developing countries cutting industrial tariffs to no more than 20 per cent and adoption of the G20's suggestion on farm tariffs.

The G20 agricultural tariff proposal is a 54% average reduction:

The US has proposed a 67 per cent average cut in farm tariffs, well above the EU's original 39 per cent offer and the 54 per cent suggested by the Group of 20 emerging market nations, including India. But two groups of nations with heavily protected farmers - the rich G10, including Japan and Switzerland, and the poorer G33, including India and Indonesia - have demanded exemptions for a range of products.

(Head of WTO outlines terms for possible Doha accord , Alan Beattie, Frances Williams and,Delphine Strauss, Financial Times, June 28)

A G6 meeting today between the key participants, the U.S., E.U., Japan, Australia, Brazil and India, doesn't appear to have been productive.  As reported in The Age (Deadlock continues in global trade talks , June 30):

The Doha Ministerial today

In yesterday's (June 28) Trade Negotiations Committee briefing, WTO Director-General Pascal Lamy indicated that Thursday "is left open for members to consult among themselves as many of their ministers and other delegates arrive in Geneva."  (Lamy outlines schedule for ‘moment-of-truth’ meetings , WTO, June 28)

The most detailed information I have on what might happen today, and why it may be important, is from this Martin Khor story Sequencing the WTO "Ministerial" and Scenarios of the Stages it has to Clear (Third World Network, June 27):

Lamy's plan

Pascal Lamy, the WTO Director-General,  described a preliminary schedule for this week's Doha Round negotiations today at an informal meeting of the WTO's Doha Round Trade Negotiations Committee (this is the committee established to oversee the Doha Round negotiations for the WTO).

The WTO web site has a press release,  and links to the text of his remarks and audio from the press conference that followed the meeting: Lamy outlines schedule for ‘moment-of-truth’ meetings (WTO website, June 28).

Here's the plan:

How Thomas Midgley Died

J.R. McNeill thinks Thomas Midgley's death says something about his accomplishments in life:

Think carefully about how you spend your time

From the Political Theory Daily, this link: All work and no play: New study shows that, in the long run, virtue is regretted more than vice.

This week's Doha Round ministerial meeting

In a couple of days WTO trade ministers will gather to see if they can get the Doha Round trade negotiations moving.   

This week's object is to reach an agreement on sets of general principles or "modalities" for agricultural reform and industrial tariff reform.  The remainder of the year would then be barely enough time to fill in the details.

Two items the past week describe the mechanics of a meeting like this:

NY/NJ Port Security

Christian Becker (Homeland Security Watch) says the June 19 issue of the New Yorker has a good article on port security in New York and New Jersey: New Yorker story profiles port security in NY/NJ  (June 15) 

The author, William Finnegan, pays special attention to the relationship between organized crime and port security.

The article itself isn't on line.  Becker links to, and has a short extract from, a question and answer session with Finnegan.  Becker's excerpt from the Q&A describes a case in which an Al Qaeda operative tried to develop a relationship with a textile importer, in order to facilitate the delivery of explosives to a US port in a container.

Beer and battleships

In the early 1920s, the State Department began to review proposed U.S. loans in foreign countries to make sure these didn't undercut U.S. diplomatic objectives.

Before "the wheels came off"

"Lexington Green," over at Chicago Boyz, looks back to the world of early summer, 1914: The Old Globalization .

A 50-50 chance for Doha

The Australian Trade Minister, Mark Vaile, thinks the Doha Round has a 50-50 chance: Bush move gives Doha new life.  (Tim Colebatch and Orietta Guerrera, The Age, June 24):

The Bush Administration's recent efforts have been helpful, but:

What does the Doha Round have to offer?

The European Commission offers links to five studies of potential benefits from the Doha Round: Doha Round: Some Recent Economic Studies.

Links incude Anderson and Martin (World Bank); Polaski (Carnegie institute); Hertel and Keeney (Purdue University); CEPII (Paris leading institute in international economics); Copenhagen Economics; IFPRI (Washington based institute), Swedish National Board of Trade; Australian Productivity Commission, along with brief commentary.

Bhagwati & Ikenson

Jonathan Dingel went to yesterday's Cato Institute trade policy forum with Jagdish Bhagwati and Daniel Ikenson.  He reports over at Trade Diversion: Bhagwati & Ikenson on unilateral liberalization . 

Among other things, he provides an interesting insight into Bhagwati's perceptions of the difference between the approaches of former USTR Portman,  and our new USTR Schwab. 

One more time...

Another Doha "do or die" meeting of WTO member trade ministers next week (Are Doha doldrums doomed to deepen? , David Loyn, BBC News, June 19).  This may really be it, one way or the other.

Zoellick profile

Robert Zoellick has resigned as Deputy Secretary of State to take the "Vice President - International" position with Goldman Sachs: Zoellick takes senior post at Goldman (Edward Alden, Financial Times, June 19)

Zoellick, of course, was the first of Bush's three USTRs.  Tom Barry profiled Zoellick for the CounterPunch newsletter when Zoellick moved from USTR to Deputy at State: Robert Zoellick: a Bush Family Man .  My own political philosophy is way different from Barry's, but the profile is interesting.  Here's a selection from the discussion of Zoellick as USTR:

Bush weighs in on Doha Round

Last Thursday, President Bush weighed in on the importance of moving the Doha Round negotiations along - and appeared to indicate a willingness to make compromises if they were needed for a significant agreement.

Are there large potential benefits from a U.S.-S. Korea FTA?

What's potentially at stake in the U.S. - Korea FTA negotiations?  Economically, a lot for Korea, somewhat less for the U.S.

What young people need to know about WWI

"Lexington Green," over at Chicago Boyz asks,  "So, How Would You Teach a Course on World War I?" (June 1, 2006) and then describes a twelve week program of of topics and related readings.  The  audience will be "moderately smart" undergraduates, who are "not very knowledgeable about history."  This is a wonderful post on this topic.

A number of thoughts spring to mind, especially Lord Acton's timeless dictum, "study problems, not periods". So, World War I should be taught as a tangle of problems within a framework of known facts (names, dates, locations and events, which WILL be on the test)...

... the theme of the class:  This is where it all went wrong.  ["You cannot understand the modern world without understanding something about WWI."  - this quote is out of sequence, but I think it goes to his theme - Ben]

He'll spend one class on the collapse of "globalization I":

Chinese law and East Asian logistics

Here are two blogs for economists with an interest in Asia:

A primer on FTAs

Robert McMahon provides a primer on free trade agreements (FTAs) in this Council of Foreign Relations "Daily Analysis": Trading Places (June 13).  Numerous links.

Try the link that takes you to the transcript of the day in March 2005 when Paul Blustein moderated a Council discussion between Columbia trade economist Jagdish Bhagwati and then WTO Director-General candidate Pascal Lamy. 

This is a little dated now; we know how the Hong Kong WTO ministerial meetings came out, for example.  But its still worth while, and given that neither Lamy or Bhagwati could be dull if they tried, it has good entertainment value:

CFR Senior Fellow Jagdish Bhagwati, one of the most prominent critics of such deals [FTA deals - Ben], told a Council meeting last year that Washington was taking a heavy-handed approach to such negotiations. "You get a little country by itself in a bilateral negotiation, then you can ram anything down its throat," he said. "Those guys will sell both their grandmothers to be able to sign on to such an agreement."

Experts Pessimistic About Doha Round

Trade professionals aren't optimistic about the success of the Doha Round.

Andrew Stoler of the Institute for International Business, Economics & Law at the University of Adelaide surveyed 100 trade professionals "negotiators, policy-makers and experts from both developed and developing countries located in Geneva and key capital cities around the world..." in late May and early June:

U.S.-So. Korea FTA negotiations underway

The U.S. and South Korea held the first negotiating session on the proposed free trade agreement last week.  The staff at the International Centre for Trade and Sustainable Development (ICTSD) Bridges Weekly Trade News Digest report:

What should you look for in a USTR?

In March 2005, Lionel Barber, the U.S. managing editor for the Financial Times, interviewed former United States Trade Representatives (USTRs) Carla A. Hills and Charlene Barshefsky, before a Council of Foreign Relations audience:  U.S. Priorities in Trade  (2005 Corporate Conference, March 10, 2005)

What, he wanted to know, should you look for when you're choosing a USTR:

World Market for Counterfeit Goods

This week's Progressive Policy Institute "Trade Fact of the Week" is on world trade in counterfeit goods:

...The International Chamber of Commerce in Geneva believes worldwide sales of counterfeit goods is $650 billion a year, including local sales of counterfeit goods as well as exports. Assuming this figure is roughly accurate, the counterfeit business is equal to nearly half of America's $1.3 trillion in goods and services exports; all of the $600 billion in Latin America or Japanese exports; or half the global energy trade.

Link: Worldwide Market for Counterfeit Goods: $650 billion.  Entertaining, educational, and lots of links.

Congress cuts additional funding for port security

Congress apparently cut additional funds for shipping container security from a funding bill this week:

Nearly $650 million to increase scrutiny of containers shipping into Seattle and every other U.S. port was stripped out of a national security funding package moving through Congress this week in a move critics say makes the country more vulnerable to terrorist attacks.

Opponents of the $648 million for port security said it was too expensive and needed to be cut to satisfy President Bush's request that the supplemental budget for things such as the Iraq war and Hurricane Katrina reconstruction be brought under control. (Kristen Millares Bolt, Congress drops financing for increased port security Seattle PI, June 8)

I learned about this from Menzie Chinn at Econobrowser  His interesting post, The economic impact of a disruption to container trade, is about a recent CBO report on the costs of potential disruptions to container movement.  He supplies a link, and key text from the report.  His summary:

Did it make sense for Congress to cut the spending on port security? It depends upon the probabilities you ascribe to the various scenarios, when you think these events might occur, and your coefficient of relative risk aversion.

This is certainly interesting in light of the big Dubai Ports World debate this past winter (Countdown to controversy: Dubai Ports World).   What is the appropriate level of port security we should aim for?  It's not free, and we give up other valuable things, including other types of security, when we increase it.  What is the best combination of inputs to achieve it?  (Kash is right ).

Happy Birthday RTAA!

FDR signed the Reciprocal Trade Agreements Act (RTAA) 0n June 12, 1934.  The text of the RTAA is at the end of this post.

Pascal Lamy will answer your questions

Pascal Lamy, the WTO's Director General, works hard to provide a human face to the organization.

The WTO web site shows 12 speeches by his predecessor in the first nine months of his term, from Sept 2002 through May 2003.  The site shows 26 by Lamy.  That's certainly a crude measure, which doesn't take account of the different background situations the two faced.   It does suggest an uptick in efforts to communicate the WTO message to a broader public.

Lamy has also been exploiting less traditional communication tools.  Next Friday he will be a special guest on Daniel Altman's new globalization blog: Next week's special guest: Pascal Lamy (June 9 - Altman is the International Herald Tribune's globalization correspondent and his new blog operates from the IHT website: Managing Globalization):

Schwab: Doha-lite no good

A Doha-lite agreement, without significant agricultural liberalization by important U.S. trade partners, is a non-starter for the U.S., says new USTR Susan Schwab:

Where do we go after Doha?

We might not get aggressive multilateral liberalization out of the Doha Round.

Later this month, the Cato Institute Center for Trade Policy Studies is putting on a forum, with Jagdish Bhagwati and Center staffer Dan Ikenson, on why unilateral liberalization may make post-Doha sense as a strategy to advance U.S. interests:

We have a USTR

Today the Senate approved Susan Schwab as the next United States Trade Representative: Senate approves Schwab to be US trade chief� (Reuters, June 8).

Rob Portman (former USTR), Susan Schwab (our new USTR), and Pascal Lamy, (WTO Director-General)  WTO photo.

Schwab has spent a career wrestling with trade issues, as a legislative staffer, in the executive branch, in business, and in academics.  Her positions have required administrative ability.  She's filled the Deputy USTR position since she was appointed along with USTR Portman in November 2005, and has been Acting USTR for several weeks.  She'll be right on top of the issues in the Doha Round, and other negotiations.

This is the third Bush Administration USTR (the others were Robert Zoellick and Rob Portman).  This is one position the Bush Administration always fills with able persons.

New Home Depot Remittance Service

Christine Bowers, over at the World Bank's Private Sector Development Blog, describes a new Home Depot service to make it easier for immigrant workers in the U.S. to send money home to their families: Home Depot does remittances (June 7).

Its MiCash card comes in packages of two, one for the worker in the U.S. and the other for his or her family back home. Users load money onto the card at ATMs or participating Home Depot stores (all in the metro DC area so far), and recipients can use a variety of ATM networks to withdraw the remittances in local currency.

This is a natural for Home Depot since their "...parking lots across the U.S. are well-known gathering places for laborers hoping for a day’s wages on a light construction or other job..."

Bowers has more details, and links.

U.S.-South Korea FTA negotiations

Jeffrey Schott, Scott Bradford, and Thomas Moll have a timely new working paper on Negotiating the Korea–United States Free Trade Agreement (Institute for International Economics Policy Brief 06-4, June 2006).  The abstract:

The Bernanke music video

Every Breath Bernanke Takes

The Washington Post reports the video was prepared by Columbia Business School students, teasing their dean, former Council of Economic Advisors chair, R. Glenn Hubbard, about his own ambitions to be Fed chair (A Fed Wannabe Feels Students' Sting. Lampoon is a hit on the net. Nell Henderson, Washington Post, April 27):

Just check out the music video created by Columbia Business School students lampooning their dean's disappointment at not being chosen to succeed Alan Greenspan as Federal Reserve chairman.

That's what Fed staff across the country were doing yesterday, eagerly e-mailing the video's Internet link to share the sight: The school's dean, R. Glenn Hubbard -- or rather, a tall, thin, bespectacled, nerdy Hubbard look-alike in a suit and tie -- playing the guitar and singing lyrics of lament to the tune of the Police's hit "Every Breath You Take"

Thanks to Peter Muse for the heads-up.  Thanks to Mahalanobis for the link to the background story.

Paul at Truck and Barter provides a survey of more educational on-line economics videos:  One million dollars or all the world's knowledge of economics?   (Thanks to Greg Mankiw for the information about the Truck and Barter post0.

Revised May 4, May 29.

Lamy's Doha plan

Pascal Lamy has a plan to get a Doha agreement.  Here (as reported recently in Bridges) it is: