Author Archives: jdingel

Brazil, U.S. Agree to Avoid Tariffs in Cotton Dispute

Bloomberg:

The Obama administration offered $147.3 million in assistance to Brazilian cotton producers and suspended an export-credit program for American farmers, in a bid to end a trade dispute with the Latin American nation.
The government will also seek to ease sanitary barriers to Brazilian imports of pork and beef, U.S. Trade Representative Ron Kirk said in a statement today on the preliminary deal. The U.S., which lost a World Trade Organization ruling in August that said its cotton subsidies violate global trade rules, will work with Brazil to reach a comprehensive agreement by June.
“We now have a clear path forward, one that is in the best interest of both the United States and Brazil,” Kirk said. “As a result of our discussions with Brazil we have avoided imposition of higher tariffs.”
The U.S. for now dodges as much as $830 million in trade sanctions on 102 goods including ketchup, cars and boats that Brazil targeted. In addition to financial assistance for Brazilian farmers, the U.S. halted the GSM-102 program that guarantees the credit foreign customers use to by American cotton, and said it will be restarted with higher fees.
Any other changes to U.S. cotton programs are pushed back until at least 2012, when the U.S. Congress will have to revisit the broader issue of farm subsidies before existing legislation governing the nation’s agriculture policies expires.

ACTA

I’m not sure the rumored/leaked “Anti-Counterfeiting Trade Agreement” (14MB pdf) is really a trade agreement. The provisions receiving attention make it sound much more like an intellectual property enforcement cooperation agreement. David Post says “it is really about is the tighter enforcement of copyright law on the Net.” Margot Kaminski says it “amps up IP protection and criminal sanctions, without respecting existing international institutional process and involving the interests of developing countries.”

I know nothing about ACTA. If posts from Volokh to Balkinization say it’s bad law, there’s a decent chance it is. I haven’t seen any trade bloggers analyzing the proposed deal.

“Terms-of-Trade Gains, Tariff Changes, and Productivity Growth” (NBER 15592)

The NBER Digest on the work of Robert C. Feenstra, Benjamin R. Mandel, Marshall B. Reinsdorf, and Matthew J. Slaughter:

In the past decade, the U.S. economy clearly enjoyed faster productivity growth than in previous time periods. The authors suggest that the magnitude of this acceleration has been overstated, with a sizable share of the gains actually being accounted for by the benefits of international trade. Their findings indicate that from 1995 through 2006, the actual average growth rates of the price indexes for U.S. imports are 1.5 percent per year lower than the growth rate of price indexes calculated using official methods. Thus, properly measured terms-of-trade gains can account for close to 0.2 percentage points per year, or about 20 percent, of the apparent increase in productivity growth for the U.S. economy over this period.

US Treasury delays April 15 currency manipulation report

Geithner:

I have decided to delay publication of the report to Congress on the international economic and exchange rate policies of our major trading partners due on April 15.  There are a series of very important high-level meetings over the next three months that will be critical to bringing about policies that will help create a stronger, more sustainable, and more balanced global economy.  Those meetings include a G-20 Finance Ministers and Central Bank Governors meeting in Washington later this month, the Strategic and Economic Dialogue (S&ED) with China in May, and the G-20 Finance Ministers and Leaders meetings in June. I believe these meetings are the best avenue for advancing U.S. interests at this time.

Via Emmanuel.

Today at Vox

There are two columns on important, big-picture topics at VoxEU today.

Martin Ravallion: The World Bank’s estimate of China’s real GDP per capita was revised down by 40% in 2005. This column explains how price surveys led to dramatically different estimates once they considered the effect of economic growth. It argues that while large revisions were needed, they could have been avoided with better economic models to measure PPPs.

Yiping Huang: Should the US follow Paul Krugman’s advice and use protectionist policies against China’s exports to encourage a revaluation of its currency? This column argues against this idea. Far from saving jobs, a revaluation of the Chinese currency might even cut global economic growth by 1.5%.

Against the “startup visa”

Pascal-Emmanuel Gobry:

About a year ago, Paul Graham of Y Combinator put out an idea for a Startup Visa that would allow foreign entrepreneurs to set up in the United States if they could raise enough money from institutional investors such as renowned business angels and VC firms…

Pretty much all the digerati are in love with the idea and believe it will finally allow immigrants to start companies in the US…

For one, getting the visa depends too much on investors. Investors already have too much power in the investor-entrepreneur relationship. If this act is passed, fundraising won’t just affect an entrepreneur’s company, but his or her life. You have to raise that round, or you’ll get deported!…

Another big problem with the Startup Visa Act is that it increases, rather than decreases, risk for the entrepreneurs. Launching a startup by definition means taking on a lot of risk: financial, reputational, you name it. The Startup Visa would increase risk for the entrepreneur by making the stakes so much bigger, by making literally everything depend on success — and not business success, but success how Congress defines it.

Via Tim Lee.

Censorship as a trade barrier

Gilbert Kaplan says that if Chinese censorship forces out US content companies like Google, the US should retaliate by erecting trade barriers to Chinese computer hardware exports. Nate Anderson at Ars Technica reports:

Dealing with censorship as a trade violation isn’t a new idea. Computer industry lobbying group CCIA was talking up trade complaints as a way to handle Chinese censorship back in January. CEO Ed Black said at the time, “It is increasingly apparent that censorship is a barrier to trade, and that China cannot limit the free flow of information and still comply with its international trade obligations. The Chinese government has said it is gathering more information before deciding how to proceed and we would urge that they look at the issue holistically with government, economic and trade officials involved in the decision.”

Of course, lobbyists aren’t the best source to describe trade law. I’d prefer to consult the folks at IELP, for example.

Banning the consumption of tradable goods and services isn’t a WTO violation per se; international trade law emphasizes non-discrimination in the treatment of foreign and domestic products. Consider Antigua’s online gambling case against the US at the WTO. The basis for its claims was not that the US was obliged to allow online gambling, but that if it allowed domestic online gambling (such as allowed by the Interstate Horseracing Act), it was obliged by its GATS commitments to also allow online gambling provided by foreign suppliers. Similarly, I suspect that censorship only constitutes a trade barrier if foreign sources of information are censored more heavily than domestic providers, i.e. a difference in national treatment.

If China censors both domestic and foreign internet sites, then it is unlikely that its WTO commitments oblige it to liberalize both. Thus, the line of thinking from folks like Dan Drezner and Simon Lester (1, 2) is that WTO law isn’t much of a tool to wield against Chinese censorship.