What should I do next summer?

I have yet to decide what to do this summer after I graduate. One option would be to work as an intern or research assistant at an institute focusing on development and trade topics. If you have suggestions about where I should apply for such a position, or other ideas about how to best spend my summer between undergraduate and graduate studies, please leave a comment. Thanks!

India’s Stifling Regulations (an ongoing series)

What theory supports this regulation?

Kingfisher, which is a full- service airline, commenced operations in May this year. The airline will only be allowed to operate international flights in 2010, following India’s civil aviation regulation which requires new airlines to serve domestic market for five years before flying overseas. [NST]

Did you think this was a segmented market?

New Jersey Attorney General Peter Harvey said Hurricane Katrina showed why a national law is needed. Gasoline price spikes happened in many areas outside hurricane-ravaged regions, but many prosecutors were unable to pursue price-gouging complaints because of rules requiring a state of emergency declaration before the laws kick in. “We found retailers raising their prices five or six times a day,” Harvey said. “This had nothing to do with supply. This was New Jersey.” [AP]

Fungible: “The noun fungible has one meaning: a commodity that is freely interchangeable with another in satisfying an obligation.”

[Hat tip: Catallarchy]

Has EU agricultural subsidization been decoupled?

I’m unclear as to whether the EU has made substantial strides in eliminating its non-export agricultural subsidies as a market distortion.

At a July 7, 2005 event at the Washington Council on International Trade, Nikolaos Zaimis, an EU trade delegate, said that, for domestic subsidies, the EU will shift to an income-based regime as of January 1, 2006, terminating its production-linked subsidies (this severance is known as “decoupling”). This shift will be very costly — the EU will pay guaranteed incomes to farmers equal to their average subsidy receipts in the last few years. However, this means that farmers will now respond to market incentives in making their production decisions, as the marginal revenues associated with various output levels are entirely unaffected by subsidies.

Does anyone know if the EU is really committed to 100% decoupling in 2006? Prior policy commitments, such as the 2003 reform of the Common Agricultural Policy, implemented a variety of minimum levels for decoupled payments, ranging from 40% for tobacco to 75% for grains. Was Zaimis mislabelling the EU’s previous partial decoupling as a more significant shift, or are there new policies taking effect in 2006?

Ag Subsidies Aren’t That Big!

Arvind Panagariya has consistently been the most insightful analyst of agricultural subsidy issues. In a Wall Street Journal article, he criticizes “fuzzy trade math”

Trade talks at Cancun broke down principally because the G-20 group of mainly larger developing countries rejected U.S. and EU offers on reducing their agricultural protection. Two years later, as the Hong Kong Ministerial approaches, agriculture remains the make-or-break issue in the Doha negotiations. But the impasse can be broken once we clear up the misinformation on (a) the magnitude of EU and U.S. subsidies and (b) the level of protection through trade barriers in developed and developing countries in agriculture.

The New York Times has editorialized that the “developed world funnels nearly $1 billion a day in subsidies,” which “encourages overproduction” and drives down prices. The World Bank’s president, Paul Wolfowitz, similarly referred to developed countries expending “$280 billion on support to agricultural producers” in an op-ed in the Financial Times. Oxfam routinely accuses rich countries of giving more than $300 billion annually in subsidies to agribusiness. Astonishingly, these estimates bear virtually no relationship to the subsidies actually at the heart of the Doha negotiations. Instead, they have their origins in the altogether different measure called the Producer Support Estimate (PSE), published by the OECD. The PSE includes all measures that raise the producer price above the world price, including border measures such as tariffs and quotas. All economists would find the identification of such a measure with subsidies unacceptable.

Read the whole thing.

Different Perspectives on Economic Crime

BBJ:

Economic crime poses a significant threat to companies, with one in four of organizations in Hungary being victims of fraud in the past two years, according to the PricewaterhouseCoopers Economic Crime Survey 2005.

Bernama:

A survey by PricewaterhouseCoopers reveals that only 23 percent of Malaysian companies have been subject to economic crime in the past two years.

Everything But Arms comes home to roost

Thanks to preferential trade (the EU’s Everything But Arms program), both rich and poor farmers oppose the EU’s move to liberalize its sugar regime:

Change was demanded of the EU after the WTO ruled earlier this year that its existing 40-year-old guaranteed pricing system was illegal. The WTO’s judgement followed a formal complaint from Australia, Brazil and Thailand.

These three countries will now benefit from a reduction in subsidised European sugar on the global marketplace, along with other smaller, and poorer, sugar producing countries in the developing world.

However, not all sugar exporting nations are happy at the changes. Some 18 sugar producing former European colonies with special access to EU markets will also now be affected by the guaranteed price cut, such as Mauritius, Barbados and Fiji. These so-called ACP countries (African, Caribbean and Pacific) have warned that their sugar cane growers will be less able to cope with the changes than European farmers.

Oxfam has called the EU’s agreement a “betrayal”, claiming it does not go far enough in helping sugar farmers in developing industries, at the same time as offering insufficient compensation for affected ACP members. [BBC]

My favorite piece on this topic is “Agricultural Liberalization and the Developing Countries: Debunking the Fallacies” by Arvind Panagariya [pdf]. See pages 11-12 for his comments on sugar and the EBA.

Byrd Amendment may be repealed

The House of Representatives’ version of the budget reconciliation bill contains a measure that repeals the Byrd Amendment, a protectionist statute passed in 2000 that encouraged rent-seeking by distributing anti-dumping revenues to companies that filed grievances. The Senate budget bill does not contain such a measure.

Over two dozen senators have signalled their intent to fight in support of the Byrd Amendment. Rep. Jim Ramstad, a Minnesota Republican, has called the program “the ultimate combination of protectionism, corporate welfare and government waste.”