Liberal Realism

Obama´s advisor on International Economic Issues

This is Daniel K. Tarullo, Obama`s advisor on International Economic Relations.

 

WSJ: Doha failure hands off the issue to the next US president, unlikely to make it a top priority

The Wall Street Journal tends to be really realistic when it comes to analyze political rational: Here is a part of the article Trade Talks' Failure Weighs on Other Issues (31/07/08) that I think describes pretty much the situation.

The failure of the talks isn't likely to have big effects immediately on the flow of world trade or on economic growth. Outside of agriculture and textiles, trade barriers generally are low globally because of decades of tariff cutting. But the consequences of the failure were still significant because of the message about the difficulty in reaching global agreements.

"This is the first failure of a multilateral trade agreement since the 1930s," an era of protectionism, said Fred Bergsten, director of the Peterson Institute for International Economics. The absence of trade liberalization, he predicted, would lead to an increase in efforts to protect domestic industries around the globe from competition. Although WTO chief Pascal Lamy held out hope that the talks could be revived once again, European Union Trade Commissioner Peter Mandelson said the Geneva talks represented a "burial" for the Doha round.

Given the U.S.'s leading role in trade policy, the Doha failure essentially hands off the issue to the next president, who is unlikely to make it a top priority. Daniel Tarullo, a Georgetown University law professor who advises Sen. Barack Obama, said "U.S. negotiators were right to walk away from what was shaping up to be a bad deal for the United States," although he said negotiators "should not abandon their efforts." Philip Levy, an American Enterprise Institute economist who advises Sen. John McCain, said the inability to reach a deal "calls into question some of the underpinnings of the global trading system."

Instead of global deals, patchwork efforts on global trade issues may become the norm. In another area of global concern -- the barriers to food exports erected by several dozen countries in response to rising prices -- the World Bank has tried to persuade countries individually to change their policies by appealing to their national interests. The bank's president, Robert Zoellick, a former U.S. trade representative, argued to countries that they will wreck their credibility as exporters if they cut back in times of global trouble.

Future trade deals may focus more on narrower national interests, rather than Doha-style talks that call for countries to make concessions in one area to make gains in another. One possible model is a kind of "coalition of the willing" approach. The model is the Information Technology Agreement signed in 1996, which set zero tariffs on new technology goods for countries that signed on. About half the WTO's members have done so.

NYT: Brazil is an example in Latin America

Strong Economy Propels Brazil to World Stage

"Today her country is lifting itself up in much the same way. Brazil, South America's largest economy, is finally poised to realize its long-anticipated potential as a global player, economists say, as the country rides its biggest economic expansion in three decades."

"It has also given Brazil new swagger, providing it, for instance, with greater leverage to push for a tougher bargain with the United States and Europe in global trade talks. After seven years, those negotiations finally broke down this week over demands by India and China for safeguards for their farmers, a clear sign of the rising clout of these emerging economies."

"Despite investor fears about the leftist bent of President Luiz Inácio Lula da Silva when he was elected to lead Brazil in 2002, he has demonstrated a light touch when it comes to economic stewardship, avoiding the populist impulses of leaders in Venezuela and Bolivia."

Instead, he has fueled Brazil's growth through a deft combination of respect for financial markets and targeted social programs, which are lifting millions out of poverty, said David Fleischer, a political analyst and emeritus professor at the University of Brasília.

Long famous for its unequal distribution of wealth, Brazil has shrunk its income gap by six percentage points since 2001, more than any other country in South America this decade, said Francisco Ferreira, a lead economist at the World Bank.

While the top 10 percent of Brazil's earners saw their cumulative income rise by 7 percent from 2001 to 2006, the bottom 10 percent shot up by 58 percent, according to Marcelo Côrtes Neri, the director of the Center for Social Policies at the Getulio Vargas Foundation in Rio de Janeiro.

But Brazil is also outspending most of its neighbors on social programs, and overall public spending continues to be nearly four times as high as what Mexico spends as a percentage of its gross national product, Mr. Ferreira said.

The momentum of its economic expansion is expected to last. As the United States and parts of Europe struggle with recession and the fallout from housing crises, Brazil's economy shows few of the vulnerabilities of other emerging powers.

It has greatly diversified its industrial base, has huge potential to expand a booming agricultural sector into virgin fields and holds a tremendous pool of untapped natural resources. New oil discoveries will thrust Brazil into the ranks of the global oil powers within the next decade.

Yet while exports of commodities like oil and agricultural goods have driven much of its recent growth, Brazil is less and less dependent on them, economists say, having the advantage of a huge domestic market — 185 million people — that has grown wealthier with the success of people like Ms. Sousa.

In fact, with a stronger currency and inflation mostly in check, Brazilians are on a spending spree that has become a prime motor for the economy, which grew 5.4 percent last year.

They are buying both Brazilian goods and a rising flood of imported products. Many businesses have relaxed credit terms to allow Brazilians to pay for refrigerators, cars and even plastic surgery over years instead of months, despite some of the highest interest rates in the world. In June the country reached 100 million credit cards issued, a 17 percent jump over last year.

At Casas Bahia, a modestly priced Brazilian furniture-store chain, the number of customers buying items on installment nearly tripled to 29.3 million from 2002 to 2007, said Sônia Mitaini, a company spokeswoman.

Other signs of new wealth abound. In Macaé, an oil boomtown near Rio de Janeiro, contractors are racing to finish new shopping malls and luxury housing to keep up with demand from oil-service firms. At a port in Angra dos Reis, a town known for its spectacular islands, some 25,000 workers have found jobs building oil platforms.

Petrobras, Brazil's national oil company, shocked the oil world in November when it announced that its Tupi deepwater field offshore of Rio de Janeiro could hold five billion to eight billion barrels of oil. Analysts think there could be billions of barrels more in surrounding areas.

While the oil will be expensive and complicated to extract, Petrobras has said it expects to be producing up to 100,000 barrels a day from Tupi by 2010, and hopes to produce up to a million barrels a day in about a decade.

The new oil plays are setting off an investment boom in Rio de Janeiro, with an estimated $67.6 billion expected to flow into the state by 2010, according to the Rio de Janeiro State Federation of Industries, an industry group. Petrobras alone expects to invest $40.5 billion by 2012.

Some economists say a slowdown in the rest of the world's economy, especially in Asia, which is soaking up much of Brazil's exports of soybeans and iron ore, could crimp growth here. "But that probability is small," said Alfredo Coutiño, the senior economist for Latin America for Moody's Economy.com.

In fact, because Brazil's economy has become so diversified in recent years, the country is less susceptible to a hangover from the struggling United States economy.

Brazil's exports to the United States represent just 2.5 percent of Brazil's gross national product, compared with 25 percent of G.N.P. for Mexican exports, according to Moody's.

"What makes Brazil more resilient is that the rest of the world matters less," said Don Hanna, the head of emerging market economics at Citibank.

The rest of the world certainly has helped. Soaring prices for minerals and other commodities have created a new class of super rich. The number of Brazilians with liquid fortunes exceeding $1 million grew by 19 percent last year, third behind China and India, according to a survey by Merrill Lynch and Capgemini.

At the same time, President da Silva has deepened many of the social programs begun 10 years ago under Fernando Henrique Cardoso, who as president ushered in many of the structural reforms that laid the foundations of Brazil's stable growth today.

In Ms. Sousa's case, for instance, she owes much of the success of her underwear business to loans she has received from the Bank of the Northeast, a government-financed bank that has awarded microloans to 330,000 people to develop businesses in this fast-growing region.

Other programs, like Bolsa Familia, give small subsidies to millions of poor Brazilians to buy food and other essentials. Bolsa Familia, which benefits 45 million people nationwide in distributing an annual budget of about $5.6 billion, has been far more effective at raising per-capita incomes than recent increases in the minimum wage, which has risen 36 percent since 2003.

The bottom-up nature of such social programs has helped expand formal and informal employment as well as the Brazilian middle class. The number of people under the poverty line — defined as those earning less than $80 a month — fell by 32 percent from 2004 to 2006, Mr. Neri said.

The programs have been particularly effective here in Brazil's northeast, historically one of poorest parts of the country. Residents here have received more than half the $15.6 billion doled out in social programs from 2003 to 2006, according to Empresa de Pesquisa Energetica, an arm of the Energy Ministry.

People here are using that new wealth to buy items like televisions and refrigerators at a faster rate than the rest of the country. The northeast, in fact, passed the country's south in electricity use this year for the first time, the energy agency said.

Many families have bridged the gap to the middle class by using Bolsa Familia to meet basic needs, and then applying for small loans to start businesses and escape the informal economy. That is what Maria Auxiliadora Sampaio and her husband did in Fortaleza, a coastal city of 2.4 million people. They were receiving Bolsa Familia payments of about $30 a month, which they used to support their three children. Then, two years ago, Ms. Sampaio used a microloan of about $190 to buy nail polish and kick-start her manicure business, which she runs from home.

Today she is making around $70 a day — about four minimum salaries per month, she said. With her next loan she plans to put about $140 toward a stove to sterilize nail clippers, which today she does with hot water.

The fruits of her new business have allowed the couple to retile their house and buy a television and a cellphone. This month her husband, who works at a Cachaça factory, was able to realize a dream: to buy a drum set.

He plans to use it in a band that plays forró, a traditional music in the northeast. "We always ate and paid bills, but he waited and waited," and finally bought the set for about $780, she said.

"I feel like we are part of this group of people that are coming up in the world," said Ms. Sampaio, 28. "When you don't have anything, when you don't have a profession, don't have the means to live, you are no one, you are a mosquito. I was nothing. Today, I am in heaven."

Mery Galanternick contributed reporting from Rio de Janeiro.

NYT: What does China and India wanted? What is so wrong about it?

China and India wanted a special safeguard regime that would had allowed them to protect their interest if there is a sharp rise (10 %) on imports. What is wrong with that? US and EU have subsidized and protected their crops since 1947 with the permission of the GATT/WTO…. Here is the story told by The New York Times

Trade Talks Broke Down Over Chinese Shift on Food

By KEITH BRADSHER

HONG KONG — China and India have seldom shared the same views on free trade in recent years, but they ended up on the same side at the collapse of world trade talks in Geneva on Tuesday because China made an abrupt about-face.

Growing worries in China about food security now appear to have overridden the country's previous commitment to free trade — a commitment that has served it well until now as China's exports have skyrocketed in recent years, giving it the world's second-largest trade surplus after Germany's.

Since joining the World Trade Organization in November 2001, China has been a strong and outspoken defender of free-trade principles. It has been especially critical of the United States, for example, for invoking so-called "safeguard" rules to prevent an increase of Chinese textile imports that threatened to put American manufacturers out of business.

But this week, China allied itself with Indian negotiators in insisting on safeguard rules for agriculture. China and India insisted that developing countries be allowed to impose prohibitively high tariffs on food imports from affluent countries to halt increases in imports that might put farmers in poor countries out of business.

The United States and other food exporters refused to accept the Chinese and Indian position on food safeguards, and talks broke down.

In an editorial Wednesday, the official newspaper China Daily denounced the draft text that had been under negotiation. "This proposal would put the livelihoods of vulnerable farmers of the developing world in danger due to cheap farms imports from the rich world," the editorial said.

By contrast, the Chinese Commerce Ministry had denounced the American use of textile safeguards in 2003 by saying that it was contrary to international principles on "free trade, transparency and nondiscrimination."

The strong Chinese stance on farm goods comes at a time of rapidly rising worry in Beijing about food security.

Food prices have soared around the globe in recent months, particularly for rice, and many countries with a food surplus have imposed limits on exports to retain supplies for their own populations. China has become increasingly focused on making sure that its farmers can continue to produce most of the food needed for the 1.3 billion people in that country, and leery of having to rely on imports.

President Hu Jintao of China made this point when he met with leaders from the Group of 8 nations in Japan on July 9. According to a Chinese government statement issued afterward, "Hu said China attaches great importance to agriculture and especially the food issue," and he noted that China "pursues a food-security policy of relying on domestic supply, ensuring basic self-sufficiency and striking a balance through appropriate import and export."

Chinese officials have put increasingly stringent limits on the paving over of farmland for factories, office towers and residential projects. They have also held domestic grain prices well below international levels through heavy subsidies, to the point that Chinese officials have been aggressively chasing smugglers who try to buy cheap Chinese rice and other grain and ship it to neighboring countries for resale.

Until now, China and India have had divergent vested interests in international trade negotiations because they joined the World Trade Organization under very different circumstances and are covered by remarkably different trade rules.

The world's major trading powers forced China to lower or eliminate most of its trade barriers in exchange for letting it into the trade group in November 2001. China accepted this deal because its membership forced other countries to eliminate quotas and cut tariffs on Chinese exports _ — and these exports have been soaring ever since.

Since China has relatively few trade barriers to defend, and since its exports are highly competitive in many industries, it has tended until now to favor open markets.

By contrast, India still has some of the world's highest barriers to imports.

India was one of the 23 founding members in 1947 of the trade group's predecessor, the General Agreement on Tariffs and Trade. Since then, it has successfully argued that developing countries already in the global trading system should be allowed to keep much higher trade barriers to imports than affluent countries.

Kamal Nath, the Indian minister of commerce and industry, and the top Indian trade negotiator, said in a recent interview that developing countries needed to be able to protect their own food supplies. "Every country must first ensure its own food security," he said.

Mr. Nath also contended that developing countries' farmers have too often faced unfair competition from industrialized countries — a point that China repeated this week. The United States and the European Union agreed to accept some limits on their farm subsidies in negotiations this week, but their reductions were much more limited than developing countries wanted.

Western manufacturers facing competition from China have sometimes contended that China indirectly subsidizes its exports by controlling currency markets on a massive scale to hold down the value of its currency. China has accumulated $1.8 trillion in foreign exchange reserves through these controls, most of it in the past five years.

But currency market activities are not covered by World Trade Organization rules, and China has begun to allow gradual appreciation of its currency since 2005 — although it continues to put heavy limits on this appreciation.

There is a long history of countries' endorsing free trade in manufactured goods while opposing free trade in farm products. The United States and Western European nations created the current international trading system after World War II and dismantled many trade barriers for industrial products but did relatively little for farm trade until the completion of the Uruguay Round talks in 1993.

A seemingly obscure technical issue had the unlikely but crucial effect of helping to bring China and India together in an unbreakable partnership this week on the issue of food safeguards.

Negotiators had agreed that developing countries could impose some safeguard tariffs to restrict farm imports in case of a sudden rise. But there was no agreement on how high these extra tariffs could go.

Reducing agricultural tariffs has been an important part of the global talks. Food-exporting nations argued that in imposing safeguard tariffs, developing countries could only let their tariffs bounce back up to current levels — in other words, they could revoke whatever tariff reductions they endorse in the current trade talks and no more.

China, with support from India, demanded the allowance of safeguard tariffs that would actually be higher than prevailing tariffs now — a demand that the United States and other food exporters found unacceptable.

WSJ: oh….what a surprise! Doha round collapsed (again)!

EU and US went to the negotiation knowing that nothing will come out of it, but they made India and China look like the party poopers……. Check the Wall Street Journal coverage, is better than NYT´s at least:

 

Global Trade Talks Fail
As New Giants Flex Muscle

By JOHN W. MILLER
July 30, 2008; Page A1

GENEVA -- A seven-year effort to forge a new global trade pact collapsed over farm tariffs Tuesday, reflecting a dramatic shift in the influence and the interests of trading powerhouses China, India and Brazil.

Getty Images

U.S. Trade Representative Schwab delivers a short statement at WTO headquarters after talks on a trade pact broke down.

The failure by negotiators from over 30 countries and blocs at the World Trade Organization in Geneva leaves the so-called Doha Round of talks dead in the water for "the foreseeable future," said European Union trade chief Peter Mandelson. The setback could also signal an end to some 60 years of continuous expansion of global free-trade deals, some trade diplomats and experts said.

The trade summit, among the longest global trade summits diplomats could remember, came undone over what seemed to be a simple bargain: rising titans such as China and India were to lower their tariffs on industrial goods, in exchange for European and American tariff and subsidy cuts on farm products.

China and India, however, demanded a "safeguard" clause that would allow them to raise tariffs on key crops such as cotton, sugar and rice if there were a sudden surge in imports. The two sides couldn't agree, however, on where to set the threshold for any import surge that would trigger the clause. The U.S. wanted to set the trigger at a 40% jump. China and India wanted the trigger set much lower, at a 10% increase. (So, EU and US have protected and subsidized their crops for decades and now pretend that the new superpowers whould not be allowed to have a escape clause for when things get tough. Remember that it was the US delegation the one that proposed the inclusion of the original safeguard clause on the article XIX of the Gatt 1947. Don't we remember that was what made possible that the US government could sign the agreement…)

Agence France-Presse/Getty Images

Drivers of ministers and ambassadors waited during crucial talks outside of the World Trade Organization headquarters in Geneva Tuesday.

Diplomats emerged exhausted Tuesday to trade blame over who had derailed the negotiations, whose original goal in 2001 had been to benefit farmers in poor countries by giving them greater access to wealthy markets.

"In the face of the global food crisis, it's unconscionable that this came down to how much countries could raise their barriers to imports of food," U.S. trade representative Susan Schwab said in an interview, referring to positions taken by China and India.

Ms. Schwab said President George W. Bush had called her on Monday night to say "we should do everything possible" to secure a deal. "To see this fail is heart-breaking." They knew from the beginning nothing would happen with no Trade Promotion Authority for the White House. Also, both the republican and democrat´s constituencies are not in favor of more liberalization).

Negotiators from big developing countries were equally scathing over U.S. claims that Washington had made significant sacrifices, while demanding more access to emerging economies.

"It's unfortunate that in a development round, we couldn't agree to an issue of livelihood and security," said Indian trade and commerce minister Kamal Nath, who emerged as one of the dominant negotiators in the talks.

Trade experts watching the round said the Doha Round suffered a key problem: None of the major players in the talks saw enough gain in a deal to make it worth selling any significant sacrifices to skeptical populations back home.

"Previous trade rounds picked the low-hanging fruit," said William J. Bernstein, author of "A Splendid Exchange: How Trade Shaped the World.''"We may have reached the end of the line for trade deals."

Economists disagree on the Doha round's potential benefits; estimates of economic gain that could have been reaped through additional trade range from $4 billion to $100 billion. Set against the rapid expansion of global trade to $13.6 trillion last year from $7.6 trillion five years ago, however, the bottom-line loss from Doha's failure is "not a market issue," said Julian Callow, an economist at Barclays Capital in London.

Trading Accusations: Kamal Nath, India's minister of commerce and industry, said industrialized countries were responsible for the collapse of the trade talks; the U.S. blamed China and India.

Nor is the world on the edge of the kind of protectionist wave that ended the last period of globalization in the early 20th century and contributed to two world wars, analysts say. Countries are likely to go on negotiating bilateral trade deals with each other, such as U.S.-South Korea free trade deal earlier this year.

But the failure of the Doha round could have long-term effects. For one thing, it could weaken the authority of the WTO, which also plays a key role in settling trade disputes between countries. And it could make even bilateral deals harder to strike.

In Washington, Tuesday's failure is likely to energize critics of free trade, who've already managed to scuttle much smaller U.S. deals with Colombia and Panama this election year. Even with trade skepticism high, the White House had hoped to ink a Doha deal and add to Mr. Bush's legacy before he leaves office at year's end. (Yeah a´right)

That prospect is now gone, meaning the responsibility for reviving Doha -- or finding another path for trade expansion -- will fall to either Republican Sen. John McCain, a free trader, or Democrat Sen. Barack Obama, a trade skeptic. Hours after the collapse in Geneva, Senate Finance Chairman Max Baucus (D., Mont.) was already looking ahead, vowing to work with the "next administration to get back to the drawing board...and lead these talks to a successful conclusion."

Said Mr. Baucus, "No deal was better than a bad deal."

Trade diplomats across the board said Tuesday's failure showcased as rarely before the emergence of China, India and Brazil as trade powerhouses. Their interests are increasingly complex, making any deal logistically far more difficult to reach than in the days of Western economic dominance, diplomats say.

Brazil's and India's status as trade powers grew along with their economies and exports -- but their enthusiasm for Doha waned after 2001. With foreign investors pouring money into factories and offices, they had little reason to further crack open their markets. They especially feared a flood of cheap imports from China, diplomats said.

"This is a round where we're supposed to be getting, not giving," India's Mr. Nath said during the talks last week.

Domestic political concerns also played a role. India's ruling coalition, led by the Congress Party, faced pressure from left-wing parties to kill a deal. "It was easier for Mr. Nath to leave Geneva without a Doha deal than with one," said an Indian diplomat.

The Indian government's left-wing allies withdrew their support from the government a few weeks ago over their objections to a civilian nuclear energy deal between the U.S. and India. Now the Congress Party faces national elections by next May, and is expected to pursue a populist agenda to try to shore up support in the face of rising inflation and slowing growth. Small farmers are a key constituency for the Congress Party, and a global trade deal may have been interpreted by Indian farmers, who aren't big exporters, as exposing them to unwelcome international competition.

Brazil in a Key Role

Brazil, the world's second-biggest exporter of soy and No. 1 in beef, chicken, sugar and coffee, played a key role during the talks. Brazil had taken a lead with India in 2003 in forming a coalition of developing nations that sought to drive a harder bargain with the U.S. and Europe.

For Brazil, the rise of other regional economic powerhouses such as China and India has meant new outlets for its goods, diluting the importance of the U.S. Soaring commodity prices also allowed Brazil and other developing nations to push the U.S. harder on subsidies. Their argument went like this: With food prices so high, why do your farmers need so much government help?

But Brazil, whose agriculture exports make up a bigger portion of the economy than do China's or India's, eventually broke with its allies on Friday. It sided with the U.S. and EU by accepting a compromise deal proposed by WTO chief Pascal Lamy. Mr. Lamy's proposal would have capped U.S. farm subsidies at $14.5 billion annually, improving on the latest U.S. offer of $15 billion. In exchange, emerging economies would agree to cuts in industrial tariffs. Brazil, for example, would have accepted a 56% cut in its industrial tariffs.

Breaking Silence

Brazil's willingness to deal made little difference in the end, however. China broke its traditional silence in global trade talks and dug in its heels over the weekend.

Emerging for the first time as a power player in multilateral trade negotiations, China blocked Mr. Lamy's proposal. Although China stood to gain if Europeans and Americans opened their food markets, it feared the effects of lower tariffs on its own farms and factories. In particular, China argued, it should be allowed to raise tariffs on sugar, cotton and rice if imports should increase. That, U.S. diplomats objected, would have been a blow for farmers from California to Cameroon.

"Having protected its own interests, the United States is asking a price as high as heaven," Chinese Commerce Minister Chen Deming retorted Monday, according to Xinhua news agency.

U.S. farmers and their representatives had opposed Doha, even as Washington pushed to clinch a deal. The sugar, dairy and cotton lobbies feared losing subsidies and tariff protection, while corn and ethanol lobbies opposed cuts in tariffs on imported biofuels that would have accompanied an agreement. U.S. manufacturers, meanwhile, had largely supported a deal, as long as it opened more foreign markets.

Tuesday's difficulties also showed that the involvement of more countries makes it harder to strike a deal. Past rounds were largely set by a handful of negotiators from Washington and Brussels. Now that developing countries are involved, more people are in the room and a broader range of interests and concerns have to be incorporated.

According to Ms. Schwab, Mr. Lamy described the Doha round to her during the talks as a cathedral -- a complex organism with more players and more issues to agree than any previous trade round.

"In the future, we could have a global trade round, but we'd probably have a building block process, agreeing on issues one by one, instead of waiting until you've agreed on everything," she said.

China: Being an elephant, acting like a mice

Being an elephant, acting like a mice: that is the best way to describe how China is behaving on the WTO negotiations. As The New York Times tells:

The discussions in Geneva have confirmed that the balance of power in global trade has shifted irrevocably with the rise of China.

Because of China's enormous population and its growing middle class, even a small opening in the nation's market in goods and services offers exporters from the United States and Europe potentially large rewards.

But by the same token, Beijing's ultracompetitive export performance is the main reason that other emerging economies like India and Brazil are reluctant to open their markets.

This is one reason that China has failed to assume the leadership of the developing world as some had predicted.

"A lot of the reticence we have seen from Brazil or Argentina in nonagricultural market access is driven not by fear of the U.S. and the E.U. but by fear of being swamped by China," Mr. Guinan said.

Another reason that China's role is ambivalent is that it has a large, poor, rural population.

Lu Xiankun, counselor and head of division in the Chinese mission, says there are hundreds of millions of farmers in China earning around $2 a day.

That, he says, explains Chinese efforts to shield cotton, sugar and rice from competition from imports.

From an American perspective, Beijing, having helped shape the deal that won broad agreement on Friday, is now trying to reopen it with the help of India.

David Shark, a senior American trade official, said these policies "would have their most serious detrimental effects on precisely those poorer developing countries that already have such limited agricultural export capabilities."

They also make it harder for the White House to sell reductions in farm subsidies to Congress, particularly for cotton.

In addition, China wants special allowances to reflect its relatively recent entry into the W.T.O. But one European official said that this could mean the delay of some Chinese tariff reductions beyond 2025, perhaps to 2027. More

They knew it long ago. As a Chinese diplomat put while negotiating it WTO accession before 2001: "We know we have to play the game your way now, but in ten years we will put the rule." That is exactly what is happening. Should we start taking China as what it is, a global superpower? That includes also making Beijing act accordingly to its status and not like small middle size player. You should read A Partnership of Equals How Washington Should Respond to China's Economic, by Fred Bergsten, on Foreign Affairs, July-August 2008, to find an answer. Should the US establish a G-2 formula? At least we know one thing, "China is uncomfortable with the very notion of integrating into a system it had no role in developing." That might be the reason why Mr. Lamy invited China into a new Group of 7 industrialized nations, a conference whose other members are the United States, the European Union, India, Brazil, Australia and Japan.

WSJ: Doha may be alive after all…...Naaaa

So people think that something will come out of this meeting to advance for a new WTO pact. Keep dreaming. With no Trade Promotion Authority for the US President. With protectionism spreading through the European and American peoples as the crisis gets bigger. IT WILL NOT HAPPEN. And, even if an agreement is signed, do you think the US Congress would validate it? Here is the latest news on the supposedly progress of Doha talks:

U.S.-Brazil Tariff Deal
May Aid Doha Talks

By JOHN W. MILLER
July 26, 2008; Page A4

GENEVA -- European Union and U.S. trade negotiators achieved a minor breakthrough at the World Trade Organization summit, persuading Brazil to accept a compromise proposal on agricultural and industrial goods.

The Latin American country Friday accepted some tariff cuts on goods like cars and chemicals in exchange for a $14.5 billion cap on U.S. farm subsidies, down from $15 billion three days earlier. Those are key points of contention in the seven-year-old Doha Round of world-trade talks.

A final resolution remains far from certain. China, India, South Africa, Argentina and many others remain opposed to the compromise proposal, drawn up by WTO chief Pascal Lamy Friday in a last-ditch attempt to save the talks. And there are still dozens of unresolved issues on the table.

The negotiations began Monday and quickly turned into a marathon session of ill-tempered bargaining. "The biggest concern we have is that a handful of large emerging markets threaten this round for the rest of us," said U.S. Trade Representative Susan Schwab.

In particular, Indian's industry-and-commerce minister, Kamal Nath, has proved inflexible on the key EU and U.S. demand that he accept cuts in tariffs on industrial goods like cars and chemicals.

But Brazil's acceptance of Mr. Lamy's proposal could unlock the tension in the talks, say analysts. Brazil and India had previously forged an iron pact of resistance to Western demands on industrial tariffs. "The talks had foundered for days and were on the verge of collapsing, so this is important," says Paul Blustein, a trade analyst at the Brookings Institution.

Brazil's foreign minister, Celso Amorim, sounded a note of optimism on leaving the meeting of delegates from some 30 countries. "There is now a 65% chance of doing a deal, where before there was a 50% chance," he said.

On Saturday, negotiators will start discussions on rules for banking, insurance and other service sectors. They will then go back to discussing agriculture on Sunday. Those talks are expected to last until Wednesday.

"What's on the table is not perfect, it's not beautiful, but it's put together what will be a genuine boost for the world economy, and particularly good for developing countries," the EU's trade commissioner, Peter Mandelson, told reporters.

Inter American Court of Human Rights will judge Nicaragua´s President

Daniel Ortega, the famous Sandinista leader, who has being the president of Nicaragua twice, would have to defend himself against the accusations presented by his step daughter for sexual abuse before de Inter American Court of Human Rights, after the Nicaraguan judicial system denied the initiation of any trial. Check this Op-Ed, written by Mario Vargas-Llosa for El País (Spain).

Crítica Digital: US reconciles with Evo Morales

EE.UU. aceptó el liderazgo de Evo

Por Martín Sivak

A fines de 2003, la embajada de los Estados Unidos en La Paz convocó a uno de los bolivianos que solían proveerla de lúcidos análisis de coyuntura. Según contó a Crítica de la Argentina el propio convocado, los funcionarios del Departamento de Estado le expusieron una hipótesis arriesgada: los cocaleros podrían secuestrar un avión del Lloyd Aéreo Boliviano para hacerlo estrellar contra un blanco inesperado. Ante el desconcierto del analista le pidieron que no subestimara el tiempo que los terroristas pasan en simuladores de vuelo y le recordaron que la Guerra contra el Terror también se libraba en territorio boliviano. Esa Guerra ya era pública: a principios de 2002, el embajador Manuel Rocha comparó a los cocaleros con los talibanes e instó a los bolivianos a no votar por el jefe cocalero.

Esta semana, Thomas Shannon, una suerte de vice canciller estadounidense para América latina, llegó a La Paz para hablar de seguridad en un contexto distinto. El "narcotraficante", "terrorista" y "agitador ilegal" –así fue categorizando el Departamento de Estado a Morales- es hoy el presidente del país y Washington ha perdido su notable influencia en el manejo de la Economía, de la Seguridad y de la política Antidrogas.

Más allá de las malas relaciones bilaterales, los Estados Unidos –expresó Shannon a sus pares en Washington- podían tolerar muchas cosas del gobierno de Morales, pero nada que pusiera en riesgo la seguridad de sus funcionarios. Se refería a la marcha de paceños y alteños que llegaron hasta la sede diplomática en repudio a la protección que los Estados Unidos han brindado a Carlos Sánchez Berzaín, responsable en 2003 de la represión estatal que dejó 80 muertos durante la Guerra del gas que forzó la renuncia del presidente Gonzalo Sánchez de Lozada. Según contaron a este diario ex aliados suyos, actualmente Sánchez Berzaín estaría trabajando con Rocha en el estudio que el ex embajador en La Paz ha montado en Miami después de retirarse de la carrera diplomática.

La marcha de protesta contra la embajada provocó que el Departamento de Estado llamara a consulta a su actual embajador en La Paz, Philip Goldberg. Fue la mayor manifestación de disgusto que la administración republicana ha tenido con el gobierno de Morales. No hay ningún elemento serio que haga suponer que la policía boliviana haya entregado la fortaleza norteamericana, ubicada a pocas cuadras de la residencia del Presidente y de los ministerios de Defensa y Gobierno (Interior), a las masas bajadas de El Alto. Si llamaron al embajador, no fue por una cuestión de seguridad, sino porque Morales ha denunciado que Goldberg es parte de una conspiración que intenta terminar con su gobierno.

"Shannon vio con sus propios ojos que las relaciones bilaterales han cambiado", contó desde La Paz a este diario un alto funcionario del Ejecutivo. Morales lo citó a las cinco de la mañana, le dijo que para visitar la zona cocalera de El Chapare debía pedir autorización y durante esa mañana le mostró documentación que, a criterio del gobierno, probaba que la embajada, a través de las agencias de cooperación, financian a la oposición. Uno de esos documentos, a los que accedió Crítica de la Argentina, dice: "USAID (una agencia de cooperación) esta enfocando su asistencia hacia Bolivia en programas que fortalecerán democracias vibrantes y eficaces, incluyendo e apoyo a contrapesos al control uni-partidista" (entendiendo por tal el del MAS). A la salida del encuentro, Shannon habló de la supuesta conspiración: "Acordamos que la única conspiración que va a existir en nuestras relaciones bilaterales será la conspiración contra la pobreza, contra la desigualdad y contra la exclusión social".

La visita de Shannon, más allá de las conspiraciones y las conspiraciones conjuntas, confirma que los Estados Unidos han aceptado que Morales triunfará en el referéndum revocatorio de mandato previsto para el 10 de agosto. Días atrás, en Buenos Aires, Shannon había admitido que Morales es el político más popular del país. Su paso fugaz, pero deliberado, por La Paz buscó establecer una mínima connivencia. Algo similar ocurrió durante la última campaña electoral, a diferencia de las intervenciones públicas de Rocha en 2002. Cuando en 2005 Morales iba a ser elegido presidente, la embajada se preocupó por mejorar sus relaciones con el Movimiento al Socialismo y se preparó para digerir la victoria electoral. Ni la obsesión por la seguridad -como la hipótesis de los cocaleros con horas de simulador de vuelos- puede disimular las malas noticias de la política.

Government interventionism during US history

This a great interactive feature from the Wall Street Journal (linked to the image) on the "regulatory pendulum" of Governement interventionism during US history. Murdoch´s newspaper still hold its quality, despite that they repeat the same false statement I highlighted in my past post about the Fed being created by the pressure from progressives. Once again: It is not true, the Fed was created and it is owned by the big bankers.