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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Saudi Arabia, United Nations, United States, Yemen

War and conflict in Yemen…

YEMEN

THE RAGING WAR in Yemen is a paradigmatic dispute in a faraway country between people of whom the world knows very little. But sometimes, however, its internal power struggles become entangled in wider geopolitical issues of the day. In the 1960s, for instance, the rivalry between monarchists and Arab nationalists split the Arab world. Then, Egypt intervened on the side of the nationalist republicans against the loyalists of the Zaydi imamate, backed by Saudi Arabia. Today, the great line of demarcation is the rivalry between Saudi Arabia and Iran, which feeds the ravage sectarianism between Sunnis and Shias respectively. Now Saudi Arabia and Egypt are allies, often intervening to support Sunnis against the Houthis (a northern Zaydi militia, that is backed and supported by Tehran).

The conflict in Yemen is escalating. Three weeks into the air campaign, and with civilian casualties growing, there is little sign that the Saudi-led coalition has much of a political or military strategy. The difference in strengths couldn’t be starker: the poorest country in the Arab world is being bombed by one of the richest.

For the United States, which is backing the Saudi operation with logistical support and intelligence, Yemen presents two dangers. First, it is a fertile breeding ground for transnational jihadists (AQAP: al-Qaeda in the Arabian Peninsula is the most dangerous of the group’s branches), and secondly, it offers Iran an opportunity to extend its influence and nurture a Shia ally (which some fear might become akin to Hezbollah in Lebanon). Both risks are being piqued by the chaos.

The Houthis fought repeated conflicts with the Yemeni government led by the former strongman, Ali Abdullah Saleh. Following a popular uprising and coup, the president stepped down in 2011 and power passed to a transitional government led by Abd Rabbo Mansour Hadi. But the Houthis, now allied to the hip with Mr Saleh, took the capital, Sana’ a, last September and then marched on Aden, to which Mr Hadi had fled.

Sectarianism is not particularly strong in Yemen, and there is uncertainty about how much support Iran provides the Houthis. But, in a rhetorical sense, Iran’s backing has become strident. Ayatollah Ali Khamenei, Iran’s supreme leader, said Saudi attacks in Yemen amount to genocide. Using the social networking site Twitter, he has mocked the recently enthroned King Salman, particularly his son and defence minister, Prince Muhammad, who is in his thirties: ‘inexperienced #youngsters have come to power & replaced composure w barbarism.’ (sic)

Amid the chaos, AQAP has taken over Mukalla, a Yemeni port – although it has suffered a setback when a US drone killed one of its leaders on April 15th.

Certainly, Saudi action might have prevented the Houthis from taking all of Aden, but they are still making steady gains. Air strikes alone will not defeat them, but the ground option is receding after Pakistan rebuffed a Saudi request to send troops. Egypt is in no rush to send soldiers to Yemen, either.

The question does loom as to whether the time has come for a political deal. There are increasing calls for a ceasefire and negotiations. On April 14th the UN Security Council passed a resolution placing an arms embargo on the Houthis and Mr Saleh’s family. It also recognised the Saudi call for UN-mediated talks in Riyadh, a condition that the Houthis cannot agree to. The Saudis are pushing for the restoration of Mr Hadi, but he is an unpopular ally, not least because he fled the country. Mr Hadi has appointed Khaled al-Bahah as his deputy. A former prime minister, Mr Bahah is seen as just about the only unifying figure in Yemen. Still, Saudi Arabia has set out no clear political objectives. Whether that leads to the annihilation of the Houthis, or by allowing Iran to act as peacemaker, is yet to become clear.

Appendage:

Graphical and geographic depiction of who controls Yemen.

Graphical and geographic depiction of who controls Yemen.

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Britain, Europe, Foreign Affairs, Government, NATO, Politics, Society, United States

Britain’s shrinking influence on the global stage…

BRITISH FOREIGN POLICY

SOME two decades ago the British foreign secretary, Douglas Herd, decreed that Britain should aim to ‘punch above its weight in the world’. Today the country seems hesitant, reluctant even, to enter the ring. Some, such as a recently retired British NATO chief, have even complained that the prime minister, David Cameron, has become a ‘foreign-policy irrelevance’. America continues to despair of Britain’s shrinking armed forces and has openly criticised Britain’s ‘constant accommodation’ of China. Allies are worried, and so they should be given world events as they are. For example, consider Britain’s non-adoptive approach over events between Russia and Ukraine.

Yet, despite the world’s tensions, the country’s politicians, who are fighting to win a general election on May 7th, appear unbothered by those expressing concern. That is a mistake. Britain’s diminishing global clout and influence has become a big problem, both for the country and the world.

A powerful force in relative decline, Britain’s propensity is to veer between hubristic intervention abroad and anxious introspection at home. Following Tony Blair’s expeditionary misadventures in Iraq and Afghanistan, conflicts which cost us heavily, Britain’s coalition government was always going to shun grand schemes. Now, it would seem, is that our ruling politicians are not so much cautious, but apathetic, ineffective and fickle.

The prime minister did make a brave and passionate case for armed intervention and assistance in toppling the Libyan regime of Muammar Qaddafi. But like so many other examples concerning foreign intervention he did not reckon for the day after and Libya is now in a state of internecine civil war. He led America to believe that Britain would support it in bombing raids over Syria, only to find that his parliamentary vote was bungled by strong political opposition. Britain may have been one of the moving forces behind the workings of the 1994 Budapest memorandum, which ostensibly guaranteed Ukraine’s security when it gave up its Soviet-era nuclear weapons, but the prime minister has been almost absent in dealing with Russian revanchist aggression against it. Last year, too, as host of a NATO summit in Wales, David Cameron urged the alliance’s members to pledge at least 2% of their GDP to defence. Just months later, a fiscally straightened Britain intent on deficit reduction at all costs looks poised even to break its own rule.

David Cameron’s pledge of an in-out referendum on Europe if he wins the election has given the impression of Britain being semi-detached. Rather than counteracting that position through vigorous diplomacy, the prime minister has reinforced it. In European Union summits, for instance, he has often been underprepared and zealously overambitious. His rather humiliating and embarrassing attempt to block Jean-Claude Juncker from becoming EU president of the Commission left him with only Hungary for company as a dissenting voice. Mr Cameron’s insistence of pulling the Conservatives out of the EU’s main centre-right political group has had the unintended effect of cutting Britain out of vital discussions with other centre-right leaders, such as Angela Merkel of Germany.

And what of Labour? Ed Miliband, the party’s leader, may well be pro-European, but he has no more connection of American foreign policy than Mr Cameron does. He apologises for Labour’s interventionist history so strenuously and unreservedly that he leaves little or no room for liberal intervention. And, of course, differing arguments abound from all political parties over the submarine-based nuclear-missile system that is seen by the Conservative Party as a pillar of Britain’s relations with America and NATO – an argument that swings to total rejection when it comes to the Scottish Nationalist Party, a position which rankles right-wing politicians as the SNP could end up propping-up a potential Labour minority government through confidence and supply motions.

Those who defend the prime minister say that Britons are war weary and impoverished. What do they say, then, of Mrs Merkel and François Hollande, the French president, who have shown that you can have an active foreign policy while dealing with an economic crisis?

Liberal values and promoting international co-operation require defending, especially so just now. New emerging powers, particularly China, want a far bigger say in how the world works. By seizing Crimea at will, and invading Ukraine, Vladimir Putin’s Russia has challenged norms of behaviour that were established after the Versailles Treaty and Second World War. If Britain now refuses to stand up for its values, it will inherit and become part of a world that will be less to its liking.

Britain is still well placed to make a difference. With a great diplomatic tradition, a permanent seat on the UN Security Council and reasonably strong ties to Europe and America, Britain ought to be pushing hard to extend open trade, human rights and international law as well as providing impetus towards new agendas against crime, terrorism and climate change.

If Britain is to make its voice heard, it needs to bulk up its diplomacy and armed forces. Pledging to spend 2% of GDP on defence may seem arbitrary but it is a crucial sign to America and other countries that Britain is prepared to pull its weight in exchange for NATO’s guarantee of joint security. This should make more sense than the obscure commitment to spend a lavish amount of 0.7% of GDP on foreign aid.

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