Category Archives: Economic

Economic, Europe, European Parliament, European Union, Government, Politics, United States

Transatlantic Trade and Investment Partnership is proving controversial…

TTIP

Simmering tensions have surfaced within the European Parliament over the Transatlantic Trade and Investment Partnership.

Simmering tensions have surfaced within the European Parliament over the Transatlantic Trade and Investment Partnership.

Tensions have surfaced in the European Parliament over what could become the world’s biggest trade deal between Europe and the United States.

Jeering, booing and slow clapping were heard in the Strasbourg chamber after the controversial Transatlantic Trade and Investment Partnership (TTIP) was suspended.

Members of the public have also been protesting against the deal, fearing it will hand more power to large corporations at the expense of ordinary citizens.

The Transatlantic Trade and Investment Partnership is a free trade deal between the United States and Europe that has been under negotiation for almost two years. An agreement would see the dawn of the world’s biggest free trade zone, shaping the rules governing a quarter of all global trade.

It aims to cut red tape, making it easier to import and export goods, as well as to invest and set up new businesses abroad. The European Commission predicts that it would boost the size of the EU economy by €120bn and the US economy by €95bn by 2027. Supporters of the deal say these savings would filter back to individuals, who would also benefit from cheaper goods and greater choice.

Critics fear, however, that it will undermine democracy in Europe and the US by favouring the rights of large corporations and preventing governments from regulating in the public interest. The Corporate Europe Observatory, a research and campaign group, claims that 92 per cent of 560 lobby encounters with the commission have come from private sector companies, while just four per cent have come from public interest groups.

Campaigners in Europe think EU regulations on areas such as food safety, employment rights and the environment could be watered down. ‘TTIP is a huge threat to hard-fought-for standards for the quality and safety of our food, the sources of our energy, workers’ rights and our privacy,’ says a Green Party spokesperson. For example, it fears that by harmonising food standards, the UK would be forced to allow chemically washed poultry, livestock treated with growth hormones, and genetically modified crops – which are all allowed in the US. More than two million people have signed an online petition against the deal, describing it as a ‘threat to democracy, the environment, consumers and labour standards’.

Opponents say the guarantee of market access effectively outlaws state monopolies, which could pose a risk to government-run services such as the NHS. Critics have serious concerns about transparency and a clause called the Investor State Dispute Settlement (ISDS), which they claim would allow corporations to sue governments in private. 38 Degrees, an activist group campaigning against the deal, says its details are being ‘worked out in secret’ and will allow big corporations to take governments to court behind closed doors.

EU officials behind the negotiations insist TTIP would uphold current EU standards and leave governments free to run public services as they wish. Negotiators are being ‘as transparent as possible’ and have published fact sheets explaining every chapter of the TTIP, they say. Negotiators also want to tighten up existing ISDS regulation for settling disputes between foreign firms and governments, with public access to hearings. But judging by the ongoing campaigns against TTIP, it appears many don’t entirely trust the EU’s claims.

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Climate Change, Economic, G7, Government, Politics, United Nations

G7 summit: The communiqué indicates an agreement in striving for a low carbon economy…

G7 SUMMIT

At the summit on June 8 the group of seven leaders agreed to wean their economies off carbon fuels and supported a global goal for reducing greenhouse gas emissions, but they stopped short of agreeing their own immediate binding targets.

In a communiqué after their two-day summit in Bavaria, the G7 leaders endorsed the need for reducing global greenhouse gas emissions at the upper end, ranging from 40 to 70% by 2050 (and using 2010 as a basis). The range was recommended by the IPCC, the United Nations’ climate-change panel.

The leaders also backed a global target for limiting the rise in average global temperatures to two degrees Celsius compared with pre-industrial levels.

The communiqué read: ‘We commit to doing our part to achieve a low-carbon global economy in the long-term, including developing and deploying innovative technologies striving for a transformation of the energy sectors by 2050, and invite all countries to join us in this endeavour.’

The G7 host, Angela Merkel of Germany, who was once dubbed the ‘climate chancellor’, had hoped to revitalise her environmental credentials by getting the G7 nations to agree specific emission goals ahead of the United Nations climate conference in Paris at the end of the year.

Whilst the leaders stopped short of agreeing any such immediate binding targets for their economies, green lobby groups nonetheless welcomed the direction of their agreements.

A statement given by WWF Global Climate and Energy Initiative, said: ‘They’ve given important political signals, but they could have done more, particularly by making concrete national commitments for immediate action… We had hoped for more commitments on what they would do right now.’

The Europeans had pressed their G7 partners to sign up to legally binding targets for reducing greenhouse gas emissions.

Russia Sanctions

A firm stance was taken on Russia and its involvement in the Ukraine conflict. Merkel said the G7 countries were ready, if necessary, to strengthen sanctions against Russia.

The leaders want Russia and Ukraine to comply with a February 12 ceasefire agreed in the Belarus capital Minsk that largely halted fighting in eastern Ukraine between pro-Russian separatists and Ukrainian government forces.

Mrs Merkel said: ‘We are also ready, should the situation escalate, which we don’t want, to strengthen sanctions if the situation makes that necessary, but we believe we should do everything to move forward the political process of Minsk.’

The communiqué specifically addresses the issue, and the leaders said they expected Russia to stop its support for separatist forces in Ukraine and by implementing the Minsk agreements in full. The sanctions, they said, ‘can be rolled back when Russia meets these commitments.’

Greece

The Greek debt crisis was discussed by the leaders as a group and also in bilateral meetings during the summit at the foot of Germany’s highest mountain, the Zugspitze.

Mrs Merkel said there was not much time left for a debt deal to keep Greece in the Eurozone and that Europe was prepared to show solidarity if Athens implemented economic reforms:

‘We want Greece to remain part of the euro zone but we take the clear position that solidarity with Greece requires that Greece makes proposals and implements reforms.’

‘There isn’t much time left. Everyone is working intensively… Every day counts now,” Mrs Merkel said.

Greece’s leftist government last week rejected proposals for a cash-for-reforms deal put forward by European lenders and the International Monetary Fund, but has yet to put forward its own alternative to unlock aid funds that expire at the end of June.

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China, Economic, Foreign Affairs, Japan, Society, United States

A bilateral trade agreement between Japan and America looms…

TRADE AGREEMENT

Intro: But why is this potential agreement being treated as a weapon? It shouldn’t be used to contain China

Congressional leaders in America rarely agree on anything, but last week some good news stemmed from Washington. A bipartisan bill has been presented to Congress which, if passed, would for the first time in many years give the president ‘fast-track’ authority when negotiating trade deals. A huge trade deal looms, the Trans-Pacific Partnership (TPP), and the bill would provide a major boost for its prospects. It would bind America with 11 economies (including Japan but not China) around the Pacific Rim. The TPP is being mightily embraced. As Japan’s Prime Minister, Shinzo Abe, heads to Washington for a much anticipated trip – including an invitation to address a joint session of Congress – Mr Abe claimed that America and Japan were close to agreeing the terms of a bilateral agreement on trade.

However, there are two major caveats. First, ‘fast track’, formerly known as Trade Promotion Authority, may still fall foul of Congress. And second, Japan may not make any serious cuts to tariffs that protect its farmers. Yet, underlying this potential trade agreement is that both have been too quick to cast the TPP as a weapon in its desire to contain China.

Flanked by Japan and America, the TPP would link countries which make up 40% of global GDP. That could boost world trade and output by as much as $220 billion a year by 2025. It is aimed at reforming difficult areas such as intellectual property, state-owned firms and environmental and labour standards. It would link economies that lie at different ends of the spectrum of development – from Vietnam to Australia.

But, crucially, the TPP will not happen without fast track, which forces Congress into a yes/no vote on any pending trade deal (avoiding the risk that it will be amended into oblivion). And the passage of fast track will no-doubt face a lot of scepticism from congressional Democrats. There are those who will be implacably opposed, whilst others will want America to have a bigger arsenal with which to fight against unfair traders. Driven by a conviction that China artificially holds its currency down and destroys American jobs, some, such as the New York senator Charles Schumer, remain determined that fast track should include a provision that would make sure any specific trade deal included sanctions on currency manipulation.

Attaching a currency-manipulation clause to trade deals is a poor idea. Not only are they hard to define but the addition of such clauses makes reaching an agreement less likely. But Mr Schumer’s demands are hard to ignore given that the Obama administration has already, mistakenly, directly pitched TPP as a counterbalance to an assertive China.

While Mr Abe has also committed his country to joining the TPP on strategic grounds, the same mistaken logic of counterbalancing China looks set to cause problems in Japan. For example, Mr Abe is a born admirer of free trade. When he first entered negotiations, some of his backers believed that, by playing the China card, Japan would be spared from making real concessions: that America would care more about a pact that excluded China than about prising open Japan’s most protected markets, particularly rice.

Japan will want to keep tariffs high. The best it may offer will be to allow in a fixed quota of tariff-free rice from the other TPP members (including America).

If the China-containment logic prevails and leads to a minimalist agreement, then the economic gains from TPP will be slim. That was never TPP’s aim, but by having real value to set high new standards for world trade. That requires the boldest possible agreement.

In the long run, the world must surely gain if China joins the pact. Yet, the rhetoric makes trade negotiations sound like a contest. It shouldn’t be that way. This is a battle where the more you give away the more you win.

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