Economics and Alaska
To leave a comment click on the word "comment" at the end of each post.
Click here for Atom feed
Race for World Bank President
The Fight for Free Trade
Australian economics blogging
Canadian economics blogging
UK economics blogging
Viennese economics blogging
Sports economics blogs
Policy Essays and Papers
Where are visitors to this page?
(Auto-update daily since 12-27-04)
Go here for a while
I'm going to experiment with TypePad for a few days.
I will be posting to http://benmuse.typepad.com/ben_muse/
What Are the Implications of a Lamy WTO Victory?
As part of a gloomy review of trade developments, Irwin M. Stelzer describes the implications of a Pascal Lamy victory in the WTO Director-General race: "Free Trade?" (Truth about Trade & Technology, April 6):
But Gerhard Schröder and his friends were reluctant to oppose the Wolfowitz appointment, lest they appear to be snubbing President Bush's recent friendly overtures. So they approved the appointment, and will seek a quid pro quo--the appointment of France's Pascal Lamy to fill the vacancy at the head of the World Trade Organization. Lamy is dedicated to the maintenance of the European Union's protectionist agricultural policy, which further enriches well-off French farmers at the expense of poor farmers in developing nations. If he is appointed, and spurns Bush's proposal to end both E.U. and U.S. export-inducing farm subsidies, the Doha round is doomed."
Cuttaree to speak in DC
Mauritian Foreign Minister Jaya Krishna Cuttaree will speak at the National Press Club on April 20: Jaya Krishna Cuttaree to Discuss 'Trade and Development: A Vision for a Better WTO' (U.S. Newswire, April 7)
Offshore Outsourcing of Medical Services to India
This sounds like a good thing: "Low Costs Lure Foreigners to India for Medical Care" (New York Times, Saritha Rai, April 7).
His doctors advised that he get his hip joint replaced, which his insurer would pay for, but after doing some research on the Internet, he decided to get a different procedure - joint resurfacing - not covered by his insurance. And instead of going to a nearby hospital, he chose to go to India and paid $6,600, a fraction of the $25,000 he would have paid at home for the surgery..."
UK Congestion Pricing
John Palmer, at The Eclectic Econoclast, provides an update on London's program of using prices to address congestion externalities: "Congestion and Price Elasticity of Demand" .
Here are links to earlier posts: "The London Congestion Charge is Working".
Two good reads
Two years ago, Kevin Brancato of Truck and Barter scanned and posted a 1948 essay on rent control, by Milton Friedman and George Stigler. Brad Delong found it and linked to it: "Roofs or Ceilings?"
More recently, Ben Bernanke (late of the Federal Reserve Board, recently appointed Chairman of the Council of Economic Advisors), explained "how monetary policy is actually conducted." Brad linked to it: "Implementing Monetary Policy".
Medieval public choice theory
Alex Tabarrok (at Marginal Revolution) points to a paper on "Voting in Medieval Universities and Religious Orders" by Iain McLean and Haidee Lorrey :"Electing a Pope".
What Does Jaya Krishna Cuttaree Think?
Jaya Krishna Cuttaree, the Foreign and Trade Minister of Mauritius, is one of the four candidates for Director-General of the World Trade Organization (WTO).
Here is a favorable profile from the Inter Press Service of Johannesburg, March 10, by Stefania Bianchi, "Trade: Poor Countries' Man Makes a Strong Case", and here is his biography from the WTO web site: "Jaya Krishna Cuttaree".
Mauritius is a small island country in the Indian Ocean. A well governed democracy, it's had a remarkably good growth record. For some background, look at this article by Arvind Subramanian from the IMF magazine, Finance & Development: "Mauritius: A Case Study".
Cuttaree's candidacy has been endorsed by the African-Caribbean-Pacific (ACP) grouping of countries. This is a group of smaller developing countries with historical colonial ties to Europe; they benefit from European tariff preferences (tariff breaks).
In this post I've culled selections from a few of Cuttaree's speeches, to get a better idea of some of the things he stands for. The starting point for this post is a speech he gave to the Mauritius Chamber of Commerce and Industry this past March.
In this speech, he points to the importance of trade to developing countries, points to the problems many of these countries may have in taking advantage of trading opportunities that may open up to them, and argues for the importance of various measures to help them out. I've used other speeches to flesh out some of his points, and to shed light on his negotiating philosophy.
Trade is important to developing countries
In the Chamber speech, he explained the importance of trade to developing country growth.
He argues that trade isn't an end in itself, but promotes the underlying objective of better living conditions. From the point of view of the developing world, trade is one of several factors, which also include aid and debt-relief, for achieving sustainable development.
However, trade is the most important of these factors: "Trade can be a catalyst in developing a country's productive capacity and growth and lift millions out of poverty and the shackles of marginalisation."
So trade is extremely important to developing countries. The development of a rules-based trading system through the WTO may be more important to smaller developing countries, than to developed countries, or larger developing countries,
In the same speech, he pointed out that more liberal trading rules will only help countries that have something to trade. Many developing countries, especially small ones, need help here. They can't "produce competitively"; they face "supply side constraints."
On January 26, after addressing the WTO General Council, he participated in a question and answer session sponsored by a group of NGOs. One of his answers, summarized by session organizers ("Minutes of Civil Society Hearing for WTO Director-General Candidates"), gives a better sense of the "supply constraint" issue. It also indicates that some developing countries have more difficulty with supply contraints than others:
In the Chamber speech, he notes that countries differ, and the WTO should address the distinctive needs of developing countries. These countries need special and differential (S&D) treatment within multilateral WTO trade treaties.
S&D means more than "a system where developing countries were simply given more time to adapt to negotiated trade rules through temporary exceptions and exemptions." "Temporary exceptions and exemptions" could be things like slower implementation of tariff reductions.
Affirmative and longer term action is necessary. Measures are needed, "to establish rules that can foster development and to come up with measures that will enable developing countries to implement these rules and to reap the benefits of further trade liberalisation."
Examples of of these additional measures may be inferred from these Cuttaree remarks, from 2002, ("Rules Issues and Special and Differential Treatment"):
The Agreement on Subsidies curtails the right of developing countries to extend assistance and support for industrialization. It eliminates the acceptability of subsidies as a tool for economic development programmes, which however has been agreed to during the Tokyo Round.
The Agreement on trade-Related Investment Measures (TRIMs) imposes an obligation on developing countries to eliminate the type of investment promotion policies that developing countries could use to promote domestic industry (i.e. obligation on foreign investors to indigenize part of domestic production)..."
Many of the least developed countries depend on exemptions or partial exemptions from normal developed country tariffs (tariff preferences) to give them a competitive boost. Negotiations that reduce normal developed country tariffs, erode the effective size of these preferences, and the competitive advantages they provide ("preference erosion").
An IMF publication titled, "Who Can Explain the Mauritian Miracle: Meade, Romer, Sachs, or Rodrik?" suggests that there is disagreement on the sources of Mauritian growth. However, this Cuttaree speech from the WTO Minister's meeting at Cancun in 2003, leaves no doubt that he attributes a lot of this growth to trade preferences granted to Mauritius: "Statement Circulated by the Honourable Jaya Krishna Cuttaree Minister of Industry and International Trade":
This preferential access has been instrumental in ensuring the economic development of Mauritius...
From the Mauritian experience, it can be safely assumed that through the extension of preferential access, even the most vulnerable of countries can pursue a successful development and export oriented policy..."
5. Consequently, addressing preference erosion would effectively mean maintaining tariffs over a certain level for a very narrow range of products, especially since the export basket of the preference beneficiary countries is almost the same...
6. ... products which are of specific interest to the preference beneficiary countries, in particular textiles and clothing, leather products, footwear and fish and fish products. ..only a limited number of specific tariff lines within these broad product categories are of direct concern to these countries. It is proposed that these tariff lines be identified by the countries concerned and a list compiled by the WTO Secretariat. It is further proposed that such tariff lines be either excluded from tariff reduction or that a maximum tariff reduction of 10% on each tariff line so identified be staggered over 10 annual instalments on developed country markets...
8. Necessary technical assistance should urgently be provided, particularly in regard to the identification of the tariff lines referred to...
9. We are further reiterating our proposal for the setting up of a competitiveness fund in the context of global coherence policy making by international financial institutions in order to assist the industrial restructuring and adjustment of countries most affected by the reductions/phasing out of tariffs."
Approach to negotiations
I thought these remarks to the ACP country trade ministers, shortly before the July 2004 Geneva meetings suggested an attractive combination of principle, pragmatism, and respect for other parties to the negotiations. They're not connected to the Chamber speech, but I'll pass them along: "Speech at the Opening Ceremony of the 8th Africa-Carribbean-Pacific Trade Ministers’ Meeting, 11 July 2004":
...I would like to make a few comments on the process, a consideration that is often neglected although the process may have a significant bearing on the substance. First, at our own level, it is important that we understand that a negotiation is a dynamic process and in a multilateral setting, it will demand constant adjustment and trade-offs. It is therefore important that we transcend our declaratory postures to move into a negotiating mode. It is important that we learn from the lessons of Cancun so as not to be pinned down in the blame game once again. We have the numbers but this is not enough. We must know how we utilise our strength and how we might bargain and persuade and avoid being only negative. We must also learn to seek and broaden our alliances at the WTO so as not to remain isolated.
It is therefore important that we infuse in our stance the right measure of tactical flexibility that will avoid us becoming prisoners of our strategy thus preventing us from participating meaningfully in the negotiations. Of course we must define the red lines below which we are not prepared to cross. But at the same time we must be aware that our partners have their compulsions as well. It is therefore important that we adopt a problem-solving approach as a negotiation cannot be a one track affair nor can there be a winner-takes-all outcome.
Another important aspect is how we focalise on our core issues and prioritise our concerns. In this regard we must put to profit our meeting here to-day. We know what our concerns are and as I said earlier, we have spelt them out in several declarations. As we move towards the writing of the Framework Agreement, it is important that we prioritise those issues, prepare fallback positions and trade-offs and most importantly request our trade experts to develop the sort of language that we would like to see on our concerns in the framework text. It is important that in so doing, we do not open the pandora’s box. Whatever be our convictions, the point of departure of these negotiations remains the Doha mandate to which we have all subscribed. It is important for us to be credible and not to seek to unravel a document which is a delicate compromise and to which we were a party. Success for us will depend on the perception that we are not a Group that just has the numbers to block consensus but, on the contrary, that we have in us the capacity for constructive engagement to put forward ideas and solutions.
As we engage in our deliberations at the level of the ACP, we must be conscious how our meeting dovetails with other processes in which we will be involved. In two days time, we shall move into the larger G-90 Group and from there on we must interface with the larger process on-going in Geneva. In both these instances, we shall have to integrate the concerns of other negotiating groups which may have the same defensive interests as ours but also certain offensive interests which may not be quite ours. We must be able to reconcile those contradictions in a creative manner so that we ensure a balanced outcome with no losers.
In the final analysis, however, I would also like to make one thing clear. In as much as we would like to be constructive and show the required flexibility, we cannot be flexible or be constructive in a process if it is not transparent. We can only do so if the bigger process at the WTO is an inclusive one and we are allowed to participate."
More coverage of Zoellick remarks on Lamy
U.S. Deputy Secretary of State Robert Zoellick has been in Europe for several days. On Monday and Tuesday (April 4 and 5) he answered interview questions about the WTO DG race. I've posted transcripts of his answers here and here.
The posts above link to early coverage of the story. Here's some links to additional coverage. The Calcutta Telegraph headlined a Reuters story, "US to back Lamy as next WTO chief". MSNBC's headline on an AP story read, "U.S. supports EU's pick to head WTO". EUobserver.com: "US supports Lamy for head of WTO". The National Business Review of New Zealand: "World Trade: Lobbying starts for next leader". The stories themselves show that Zoellick stopped just short of a formal endorsement of Lamy over the other candidates.
Bloomberg News (via India's Financial Express, April 6): Lamy is `Strong Candidate' for Top WTO Job: Zoellick supplemented the story with two paragraphs on potential congressional opposition to Lamy:
Citing unidentified staffers for Senate Finance Committee Chairman Charles Grassley of Iowa and House Ways and Means Committee Chairman William Thomas of California, BNA said the two legislators ``are angry with Lamy over his decision'' to challenge the U.S. over a tax law that replaced earlier legislation that had been deemed illegal by the WTO. "
Transcript of Zoellick's April 5 remarks on Pascal Lamy's WTO DG candidacy - transcript
Deputy Secretary of State (and former US Trade Representative) Robert Zoellick is traveling through Europe this week.
Today, in a press conference with Elmar Brok, the Chairman of the European Parliament's Foreign Affairs Committee, he was asked about Pascal Lamy's candidacy for WTO Director-General.
Here are the question and the answer (from "Press Availability With Elmar Brok, Chairman, European Parliament Foreign Affairs Committee. Deputy Secretary Robert B. Zoellick. European Parliament. Brussels, Belgium. April 5, 2005" ):
Deputy Secretary Zoellick: ...As for your comment about Commissioner Lamy, I obviously consider Commissioner Lamy both a friend but more importantly a very accomplished trade leader. And so I have said all along, and the United States has said, that we believe that he would be a very strong candidate for that position.
The process for the WTO selection is different than some other processes. What is happening is that the chairman of the general council, who is actually a chairwoman – she’s ambassador from Kenya -- is undertaking consultations with the help of a Canadian official and one other with all of the member states. Now the United States is a big player in the WTO process. Sometimes our support helps; sometimes it doesn’t help. In this case we’re just one vote of many. But we’ve made very clear that we’d be very comfortable with Commissioner Lamy and that I think that he could play a strong role. There are other good candidates as well.
Now, I spoke with Commissioner Lamy shortly before I took this trip, and I know he’s also planning to visit the United States, which I encouraged him to do. The other candidates have done that, and this would give him an opportunity to talk to members of our Congress, meet some of the officials in the executive branch and others. But I think the WTO would be very well served by his candidacy, but there are some other good candidates as well."
Zoellick remarks on Lamy
Deputy U.S. Secretary of State (and former U.S. Trade Representative) Robert Zoellick commented on Pascal Lamy's candidacy earlier today. Aine Gallagher and Marie-Louise Moller report in this story:"U.S. says Lamy 'strong candidate' for WTO top post" (Reuters, April 5).
The day before, on April 4, Zoellick was interviewed by the Portuguese newspaper Público ("Zoellick, in Portugal, Discusses Mideast, Russia, Airbus, China"). Here are related remarks on this issue:
SECRETARY ZOELLICK: There's no reciprocity on Wolfowitz. Now Commissioner Lamy and I work very closely together. I consider him a personal friend. And, you know, we have, you know, interviewed all four candidates. But in the discussions, I've emphasized how I think Commissioner Lamy would be a very strong candidate, and I have no doubt that he would be able to rise above the European perspective and serve the overall WTO. Now there are other good candidates as well. The way that process is working, is, in Geneva, in the WTO, countries are having consultations with the Chair of the General Council from Kenya and expressing their preferences. But you know, we made very clear that we'd be very comfortable with Commissioner Lamy, or Pascal Lamy as the WTO Director General. And in part, I think whoever the WTO chooses, we need to have somebody who is strong, intelligent, can work with diverse groups to help get the Doha round done. That's the key objective here as we go forward."
Not all developing countries are alike
Alan Beattie and Frances Williams look at key differences between developing countries, and the implications of these for the WTO Director-General race, and the Doha Round trade negotiations: "Who's for the WTO?" (Financial Times, April 4)
Many of the least developed countries depend on tariff breaks or preferences from more developed countries, to give them a competitive boost. Trade negotiations that reduce normal developed country tariff barriers will reduce the effective size of these preferences, and the benefits they provide ("preference erosion").
Beattie and Williams point out that:
Such "preference erosion", which sets developing countries against each other, has become a large issue in the Doha round. Some aspects of the issue have been around for years - the most obvious one being the Caribbean banana-producing nations that have privileged access to the EU market at the expense of mainland Latin American growers and are seeing the value of those preferences reduced by a reform programme. But a swath of poor nations, in other groupings such as the G33, which brings together countries wanting to protect particular agricultural products, or the G90, which includes the world's poorest countries, share similar concerns about protecting their farmers from the onslaught of low-cost competition...
There is a sense among some other nations that countries such as Brazil and India that dominate the G20, although they are frequently regarded as bellwethers for the developing world, also have their own sectional interests. Together with Australia, the EU and the US, Brazil and India made up an ad-hoc grouping of "five interested parties" that was instrumental in pushing through the agricultural part of last August's framework agreement. But Mr Meléndez says other nations, particularly those that are net importers of food, were resentful at the lack of communication and consultation from that small group...
These tensions spill over into the race for the director-general position. Any candidate wishing to be seen as the champion of the developing world has to make clear that he can bridge the divisions. Mr Cuttaree, whose country [Cuttaree is the Foreign Minister of Mauritius - Ben] is one of the most prominent beneficiaries of preferences and whose core support comes from mostly very poor African, Caribbean and Pacific (ACP) nations, has argued for preference-dependent countries to be given more time to adjust. He complains that this has led to him being caricatured as a defender of special treatment...
...He sees no contradiction between his position and support for more open global trade, saying his commitment to the Doha round was amply demonstrated by his role in bringing the G90 developing countries back to the negotiations after the collapse in Cancún.
From the other side of the divide, Mr Seixas Corrêa denies developing countries are split into irrevocably warring camps. Brazil and other competitive exporters recognise the concerns of preference-receiving countries, he says. "We have stated clearly that this is a problem that has to be resolved."
Mr Pérez del Castillo's home country, Uruguay, is in a similar position to Brazil, having recently joined the G20 and also belonging to the "Cairns Group" of farm exporters, which favours agricultural liberalisation. Several such nations, including Australia and New Zealand, have declared their support for his candidacy. But Mr Pérez del Castillo stresses the breadth of his support from developing countries in order to insist that he will not be beholden to any single group. "I also have Indonesia on board, which is a net food importing country, and Singapore, which doesn't have any agriculture," he says...
The WTO Race - Who's Ahead, and the Wolfowitz Factor
Patrick Baert of Agence France-Presse reports on the state of the WTO Director-General race, a day or so into the consultations process: "Shadow of Wolfowitz hangs over WTO amid US-EU bargain fears" (via MENAFN.com, April 4).
Consultations began Monday. Baert passes on one diplomat's conjecture that Lamy and Perez del Castillo are the frontrunners, but that a lot will depend on fluctuations in support as Seixas Correa and Cuttaree withdraw.
Baert's assessment the sources of support for the different candidates:
Perez del Castillo, a former Uruguayan diplomat, has support from some Latin American countries -- with the notable exception of Brazil, Cuba and Venezuela -- and major farm exporters like Australia and New Zealand.
Cuttaree has official support from the 56 countries in the African, Caribbean and Pacific (ACP) grouping, but Paris has pressed francophone African countries to swing behind Lamy, according to a European diplomat.
Seixas Correa has received the support of China, a fellow heavyweight in the G20 group of developing countries that opposes farm subisdies."
"I hope there is no truth in this story of an understanding: if everything is shared between a few players, it means there is no space for other people," an ambassador for an Asian country at the WTO commented..."
Do 60 countries support Perez del Castillo?
The Chinese news service Xinhua passes on Uruguayan press reports that the Foreign Minister is claiming that 60 countries support Perez del Castillo for WTO Director-General: "60 countries back Uruguayan candidate for WTO head" (dated April 2).
Crowell and Moring's "Doha Developments Update"
The Crowell and Moring law firm publishes a weekly web newsletter on the Doha Round negotiations, the: "Doha Development Update"
Recent issues have been carrying short updates on the week's events in the WTO Director-General race. The most recent issue (March 25) talks about the lobbying efforts of the Brazilian candidate, Luiz Felipe da Seixas Correa, at this month's meeting of the G-20 developing countries in New Delhi: "Seixas Correa Garners Support at New Delhi Meeting"