Ben Muse

"Potential Challenges to U.S. Farm Subsidies in the WTO"

The Congressional Research Service (CRS) has recently updated a report on Potential Challenges to U.S. Farm Subsidies in the WTO (Randy Schnepf and Jasper Womach, April 26).  From the summary:

The Administration's trade treaty with Congress

Here is a link to the text of the agreement, and to abstracts provided by the Administration, and the Ways and Means Committee: The content of changes in U.S. trade negotiating policy (Ben Muse, May 11).

I.M. Destler of the Peterson Institute has prepared a very helpful working paper on the recent negotiations between the Administration and Congress over the appropriate provisions for FTAs: American Trade Politics in 2007: Building Bipartisan Compromise (May 2007).

So. Korea releases text of Korea-U.S. FTA

So. Korea released the text of the Korea-U.S. FTA agreement Friday morning in Seoul: S. Korea publicizes full text of FTA with U.S., criticism expected (Yonhap News, April 25):

The Economics of Privateering

From Alex Tabarrok: The Rise, Fall, and Rise Again of Privateers (The Independent Review, Spring, 2007).  Abstract:

Privateers—private ships licensed to carry out warfare—helped win the American Revolution and the War of 1812 but fell into disuse after the federal government made it hard to monitor their performance. Like the government’s use of private military companies in today’s hotspots, privateering was an instance of the “contracting out” of security services, not the full privatization of security, and thus operated in the context of incentives and constraints established by the government.

The subject matter reminds me of Jonathan Karpoff's article on public vs. private organization of Arctic exploration - covered in this post: How to organize an Arctic, or Antarctic, expedition (Oct 20, 2004).

Exchange rate miscellany

On the 9th, three House subcommittees held a joint hearing on Hearing on Currency Manipulation and Its Effect on U.S. Businesses and Workers.  The link has the announcement and written testimony of the witnesses.

Monitor the work of "Open CRS"

If you are a fan of Congressional Research Service reports, and are frustrated by policies that limit their distribution, you are probably a fan of the Open CRS Network and its efforts to make these reports more readily available.

You may be interested in this new gadget/widget for Google home pages that lists new CRS reports as they become available through OpenCRS: OpenCRS: Recently Added Reports .

Dingel on "IP in PTAs"

Jonathan Dingel links to a recent New Yorker piece by James Surowiecki on intellectual property provisions in U.S. bilateral trade agreements in general, and in the U.S.-South Korean agreement in particular: IP in PTAs (May11).  Dingel supplements this with a link to a very useful 1999 seminar paper on TRIPS and the WTO by Arvind Panagariya .  Two good links!

CFIUS Reform moves through Senate Banking Committee

The papers say that the Senate Banking Committee has settled on its version of a bill to reform the process the U.S. uses for security vetting of foreign investments.  The reforms center on defining the processes that should be followed by the interagency Committee on Foreign Investment in the U.S. (CFIUS): Senate moves forward on Cfius overhaul (Jeremy Grant, Financial Times, May 16).

$20,000 prize for the best essay on "Private Sector Development: Creating Markets, Transforming Lives"

The World Bank's International Finance Corporation (IFC), and the Financial Times (FT), are offering US$20,000 for the best 4,000 word (max) essay on "Private Sector Development: Creating Markets, Transforming Lives. (all entries are due by this September 30).

The content of changes in U.S. trade negotiating policy

Last Fall Democrats took control of Congress.  For several months, the Administration and Democratic Congressional leaders have been "negotiating" changes in U.S. negotiating guidelines.  Yesterday, they announced that they had reached an agreement.  Here is the text of the agreement posted at the House Ways and Means Committee web site: Peru & Panama FTA Changes .

CFIUS reform is coming up in the Senate

Peter Kaplan reports that the Senate is getting ready to take up the reform of the process by which the U.S. conducts security reviews of foreign investments  (Committee on Foreign Investment in the US, or "CFIUS" reform): Senators plan new bill on foreign takeover reviews (Reuters, May 10).

It sounds like this comes up next week:

Connecticut Democrat Dodd and Alabama Republican Richard Shelby said the bill was set for a committee vote on Wednesday.

The House took action earlier this year and I think they did a reasonably good job (CFIUS Reform: We Might Get Lucky - Ben Muse, Feb 19; House passes CFIUS reform legislation - Ben Muse, Mar 1).  Kaplan writes that the Senate may take a different approach:

The bill is meant to be a compromise between CFIUS reform passed by the Senate last year and a more business-friendly version passed by the House in February, one source said...

The Senate version of the CFIUS reform bill approved last year drew opposition from business groups because it would have required CFIUS to notify members of Congress of pending takeovers before making a recommendation on them.

In a related story, Ian Swanson reports that the Administration released a statement today to reassure foreign investors that they were welcome - despite last year's Dubai Ports World debate, and ongoing efforts to reform the CFIUS process: Bush invites foreign investment, vows balance with national security.  (The Hill, May 11)

IT and FTAs

Abbe Brown, Andres Guadamuz, and Jordan Hatcher, of the University of Edinburgh, have written a working paper on the information technology (IT) issues dealt with in the recent FTA between the U.S., several Central American countries, and the Dominican Republic (DR_CAFTA): The Impact of Free Trade Agreements on Information Technology Based Business .

This is a survey or scoping paper, introducing a wide range of information technology issues as they were handled in the DR-CAFTA, and identifying topics ripe for further research.  Various sections look at e-commerce, intermediary liability, intellectual property, internet domain names, copywrite law, measures to inhibit efforts to circumvent "technologies ... to restrict unauthorised access to works subject to copyright," competition law, and telecommunications.

The authors preface the survey of issues with brief discussions of the legal context of FTAs, and the specific background to the DR-CAFTA. 

The report is a product of the  AHRC Research Centre for Studies in Intellectual Property and Technology law in the School of Law at the University of Edinburgh, Scotland.  Brown, Guadmauz and Hatcher have been reporting on the project through the Free Trade Blog, which focuses on "the impact of FTAs on IT-based business, with a focus on the DR-CAFTA agreement."

This will be interesting:

We anticipate this report being transformed into a wiki and for further contributions to be developed via web-based. We hope to maintain the project’s momentum through the wiki, and details of this will be posted on the blog.

I think this report will be very helpful to people, like me, looking for an introduction to the range of information technology issues raised in FTAs to which the U.S. is a party.  The paper itself is meant to be the first - foundational - stage in a longer research project.  Next up:

In terms of immediate further work, we propose investigating the present and future impact of UDRP provisions in DR-CAFTA countries, and liability of Internet Service Providers (ISPs).

The UDRP reference is to the "Uniform Domain Name Dispute Resolution Policy (UDRP)", "a dispute resolution policy governing domain name disputes based on existing trade mark ownership."  The authors plan to continue to post on this effort to the project web site.

Saddam Hussein's Cuban cigars and OFAC

OFAC is the U.S. Treasury's Office of Foreign Assets Control (the office in charge of enforcing U.S. economic and trade sanctions).  Clif Burns has the story over at ExportLawBlog: Saddam’s Stogies.

Modern oil tankers are pretty sturdy

Dennis Blair and Kenneth Lieberthal argue that it is harder to close the world's shipping lanes than many people think: Smooth Sailing. The World's Shipping Lanes are Safe in the May/June Foreign Affairs (subscription required to read more than 500 words).

Part of the reason is that there are a lot of oil tankers, and that they're pretty sturdy.  In a section of the paper titled, "Floating Fortresses," Blair and Lieberthal write:

Recent trends concerning oil tankers make it even more difficult to disrupt maritime oil shipments. The size and the strength of the global tanker fleet have increased markedly over the last two decades. From 1980 to 2006, the number of tankers grew from 2,516 to more than 10,400, and the average capacity of each tanker increased by 400 percent, with a disproportionate amount of the new tonnage having been added in recent years. Single-hulled tankers are being phased out in favor of more resilient double-hulled ones.

The greater number of tankers traveling at higher speeds and in more congested shipping lanes makes it increasingly difficult to identify and intercept them. This is especially true for submarines, which have a limited ability to identify surface ships and have only a small onboard supply of torpedoes and antiship missiles. If a submarine attacks a ship using just two torpedoes, it will have exhausted more than a tenth of its standard arsenal. Meanwhile, other potential targets nearby will disperse, forcing the submarine to relocate. A single conventional-power submarine (Iran has only three) facing no opposition could realistically expect to damage about half a dozen oil tankers in a busy sea-lane several hundred miles wide over the course of a month, disrupting at most a tiny fraction of the oil deliveries made during that period. Conventional-power submarines, moreover, are relatively slow and cannot catch modern tankers, which travel at 15-20 knots.

Mines and conventional-warhead missiles are even less effective now against large modern tankers than they were in the past. During the Iran-Iraq War, several oil tankers ran over mines in the Strait of Hormuz, but they sustained little damage due to their size and the protective effect of the liquid petroleum they carried (petroleum is not explosive in the airless tanks, and its weight holds the hulls in place). Even the most modern antiship missiles have relatively small warheads that are designed to damage the sensors and weapons systems of surface warships but are not capable of sinking or disabling a large tanker. Most missiles shot at a tanker would explode on its large deck, causing minimal damage. Even if they penetrated the deck, they would explode inside tanks where the liquid oil or the water in ballast would absorb the blast without igniting. In order to disable a modern-day tanker, an attack would have to include a salvo of eight to ten missiles with conventional warheads; a sustained campaign would quickly exhaust the missile stockpile of a medium-sized military power.

It's not clear from this if torpedoes are more or less of a threat to an individual tanker than mines or missiles, but the authors clearly think that there are important limits on the ability of most nations to target significant numbers of tankers with torpedoes.

Blair is the former Commander in Chief of the U.S. Pacific Command, so he's in a position to know what he's talking about.

New trade negotiating instructions from Congress?

Doug Palmer reports for Reuters that the USTR and Congressional Democrats have worked out a deal on U.S. trade negotiating objectives: Democrats, Bush strike deal on trade (Reuters, May 10).

Under the trade promotion authority (TPA), the President negotiates trade deals following guidelines laid down by Congress.  I assume this deal as an agreement to change the interpretation placed on the language of existing trade promotion authority, and an understanding on the content of any future legislation to extend TPA.   

Key elements apparently include:

The deal announced on Thursday includes a binding commitment for the United States and its four free-trade partners to abide by five core International Labor Organization standards, such as the right to organize and bargain collectively and the regulation of child labor.

It also makes seven major multilateral agreements enforceable under the bilateral trade pacts.

Other parts of the deal affect intellectual property, port security and government procurement provisions of the four pending trade pacts. One section is aimed at ensuring patent protections do not interfere with the ability of poor people to have access to life-saving drugs.

The deal could affect FTAs with Peru, Columbia, Panama and South Korea.

Schwab told reporters the four countries would have to agree to changes in the trade pacts, which in the case of Peru and Colombia have already been signed.

Peter Goodman and Lori Montgomery report on the deal for the Washington Post: Path Is Cleared For Trade Deals (May 11).

The draft U.S.-Korea FTA was the result of hard negotiations.  The actual text still hasn't been released.   This new understanding of U.S. negotiating goals appears to mean that several elements of it may now have to be revisited.