The reusable olive oil bottle -- a staple on restaurant tables across Europe, evocative of summers in Tuscany and vineyards in southern Spain -- has been banned from restaurants by the powers that be in Brussels, in a move the European Commission has sought to frame as a consumer protection measure. Critics, however, see it as an attempt to prop up a struggling olive oil industry and representative of the European Union's bureaucratic overreach.
Reusable bottles, the Commission claims, are unhygienic, and there's a risk that they could be refilled with unknown, cheap, and low-quality oils. The AP has more:
"This will ensure a high-quality product for consumers," said Rafael Sanchez de Puerta of the Copa-Cogecas federation (a European farmers federation). Also, by displaying the name, origins and storing conditions, "this will help to preserve the image of olive oil."
Many, however, are unconvinced.
"With the euro crisis, a collapse in confidence in the EU, and a faltering economy, surely the commission has more important things to worry about than banning refillable olive oil bottles?" inquired one British member of the European Parliament. Germany's Suddeutsche Zeitung newspaper, meanwhile, called the regulations the "silliest" rules since the EU's infamous attempt to regulate the curvature of cucumbers.
Of course, the requirement that olive oil must be served in pre-packaged factory bottles, with tamper-proof nozzles and standardized labeling, is the sort of regulation that people love to mock. And others have voiced the more serious concern that, by placing an emphasis on standardized packaging, the regulations could help out large-scale olive oil producers -- many of which are located in some of Europe's weakest economies -- at the expense of smaller farms.
But consumers could actually use more protection when it comes to olive oil. The staple is one of the most fraud-prone agricultural products in Europe, in part because it's so much more valuable than other forms of oil and remains relatively easy to doctor with cheaper products like soybean and other seed oil. ("Profits were comparable to cocaine trafficking, with none of the risks," one investigator told writer Tom Mueller, who later went on to write a book about olive oil fraud). The EU, in fact, has an olive-oil task force dedicated solely to stopping trafficking in dodgy extra-virgin.
Still, this kind of large-scale fraud takes place at the level of producers and bottlers -- not at the restaurant table.
What can an impoverished island nation -- one isolated by the United States and lacking natural resources of its own -- do to secure its influence in the world and earn hard currency? In Cuba's case, the answer lies in its medical corps.
On Monday, Brazilian Foreign Minister Antonio Patriota announced that his country is in negotiations to hire some 6,000 Cuban doctors to come work in rural areas of Brazil. The plan highlights what has become a cornerstone of Cuban foreign policy and its export economy. Since the Cuban revolution in 1959, the country has aggressively exported its doctors around the world -- sometimes for humanitarian reasons, sometimes for cash -- and has garnered a reputation as a provider of health care to the world's neediest countries.
Shortly after the revolution, for instance, Fidel Castro sent physicians to Algeria as a sign of socialist solidarity and to Chile in the aftermath of a devastating earthquake. Since then, Cuba has sent at least 185,000 health workers to more than 100 different countries, according to the New York Times.
But what began as a strategy for exporting revolution has in more recent years turned into a means of ensuring the government's survival. Cuba's largest medical mission is currently in Venezuela, which sends Havana 90,000 barrels of oil per day in exchange for 30,000 Cuban physicians. It's an elegant quid pro quo that secures legitimacy for the Venezuelan government and keeps the Cuban economy afloat.
We hear a lot about Cuban cigars, but tobacco is far from Cuba's most important export. In 2006, 28 percent, or $2.3 billion, of Cuba's total export earnings came from medical services, according to a study by Julie Feinsilver. As a rough measure of comparison, Cuba's cigar exports totaled $215 million in 2011.
So what might Cuba's latest foray into medical diplomacy entail? In return for physicians and other health workers, Brazil is expected to fund infrastructure projects in Cuba and direct a $176 million loan toward Cuban airports. Cuban medical personnel, meanwhile, will fan out to rural areas of Brazil that are typically underserved by doctors.
It's a bitter irony for U.S. policymakers that 50 years after the imposition of the Cuban embargo, the communist regime is circumventing efforts to isolate it by sending, of all things, doctors around the world.
Never mind that the motive isn't always humanitarian.
ADALBERTO ROQUE/AFP/Getty Images
The Soviet Union's 10-year occupation of Afghanistan cost the country more than 15,000 lives, and an additional 50,000 were wounded. Before the USSR withdrew its forces in 1989, Mikhail Gorbachev described the Soviet efforts to fight the insurgency there as "a bleeding wound." And yet -- just over two decades after leaving what came to be considered the Soviet version of the Vietnam War -- Russia is now eager to return to Afghanistan.
Russian defense officials are exploring the possibility of establishing military bases on Afghan soil after the U.S. drawdown in 2014, according to Russian press reports. Sergey Koshelev, of the Russian Defense Ministry's Department of Cooperation, told Russia Today that the military "will look into various options of creating repair bases" to maintain the Afghan National Security Forces's Russian-made equipment. Further cooperation is also being considered, according to Russia's NATO envoy Aleksandr Grushko.
Russia certainly has an economic stake in post-war Afghanistan. In addition to maintaining Russian gear -- from small arms to armored personnel carriers and helicopters -- Russia is also considering expanding its supply routes into Afghanistan through Central Asian countries. These supply routes, often called the Northern Distribution Network, have been a troublesome logistical lifeline for ISAF troops in Afghanistan, and will likely remain important after the drawdown.
An article in the government-sponsored paper Pravda last November touted Russia's cultural projects in Afghanistan as a prelude to new projects like those being discussed now. "It's obvious that Moscow's interest after the withdrawal of NATO troops from Afghanistan ...will increase dramatically," Lyuba Lulko wrote then. "The country has always been in the zone of Soviet and Russian interests." The article went on to recast the Soviet occupation: "After what the Americans leave in Afghanistan, the Soviet presence seems to be a blessing. Soviet soldiers are remembered with respect," Lulko added. An Afghan student studying Russian was quoted saying, "Russia is our neighbor, we love its culture. All was well, when the Russians were here."
Nonetheless, as RT's report stressed, "Russian officials have repeatedly denied that Moscow is considering resuming its military presence in Afghanistan."
We hear plenty about drugs and conflict diamonds; but the international black market for timber -- a global trade that has been plaguing the forests of South America, Central America, and Asia for years, and one that is estimated to be worth anywhere from 30 to 100 billion dollars a year -- gets a lot less attention.
Illegal wood had a rare moment in the spotlight on Feb. 19, when Interpol reported the results of its first international operation to target timber trafficking. "Operation Lead," which brought together law enforcement agencies from twelve Latin American countries, was carried out over a month late last year and resulted in the seizure of the equivalent of 2,000 truckloads of timber (worth millions of dollars) and the arrests of more than 200 people.
While individual countries in the region, such as Columbia and Brazil, have cracked down on the illegal trade in the past, the transnational nature of the crime makes it difficult for domestic law enforcement agencies, which are limited in their jurisdiction, to be very effective. An international approach has the potential to be more successful. According to the head of Interpol's Environmental Crime Program, Operation Lead has laid the foundations for future efforts to combat the global trade.
So why timber? It is not as lucrative as the drug trade, but it still brings in a fair amount of cash. According to a recent Environmental Investigation Agency (EIA) report, in Laos, rare rosewood logs can fetch $18,000 per cubic meter. The EIA also notes that traffickers can earn $1,700 for a high-quality mahogany tree on the Peruvian black market, and about $1,000 for a cedar tree. In 2006, illegal logging in Peru was bringing up to $72 million in profits per year. Some estimates put the yearly profits in Columbia as high as $200 million.
In Latin America, the drug and timber trades aren't mutually exclusive. Though the extent of the connection is not yet clear, timber trafficking overlaps with organized crime and the drug trade in interesting ways in countries like Colombia and Peru.
For one, it has been suggested that timber offers drug traffickers an opportunity to invest in a new illegal market -- to "diversify their portfolios" -- as some governments become more successful (however slightly) in cracking down on the drug trade.
In Peru, where an estimated 80 percent of total timber exports are illegal, the wood trafficking network has become so sophisticated that drug traffickers are now piggybacking on the timber trade -- literally. In 2006, a U.S. State Department cable (later released by WikiLeaks) reported that drug traffickers in the Andes moving coca paste and opium "appear to be getting involved in transport of illegal timber, for both its profitability and its utility as concealment." In 2010, Peruvian police seized nearly 400 kilos of cocaine and coca base hidden in a single shipment of Sinaloa cedar.
Logging may also be viewed as a profitable way to open land for the farming of coca. According to a 2011 UN report, since 1981, more than 3,000 square miles of Columbia's forests have been cut down illegally to make way for coca crops. In 2008, then Columbian Vice President Francisco Santos Calderon announced, "If you snort a gram of cocaine, you are destroying 4 square meters of rainforest."
All considered, it isn't surprising that the illegal logging trade has taken a violent turn in some countries. Last year in Cambodia, an anti-logging activist and a reporter covering the illegal trade were both murdered. Three Brazilian activists were killed in 2011 -- just three out of dozens that have been murdered over the past several years.
It should be noted that illegal logging is not entirely run by timber kingpins and "wood mafias." Local communities also cut down wood illegally (to use, not to sell), and have probably been doing so for generations.
The countries affected are going to have to take strong action if they want to save their forests, because the problem is not going to fix itself. The world's appetite for high-value wood is high and is only getting higher. In its report entitled "Appetite for Destruction: China's Trade in Illegal Timber," the EIA states that between 2000 and 2011, the quantity of global log imports tripled, with a value that increased fivefold. China -- with wood product exports that have increased almost sevenfold in the past decade, with new construction projects beginning every day, and with a new bourgeoisie that covets fancy rosewood lounge sets (which can cost hundreds of thousands of dollars), cars with wood-embellished interiors, and yachts -- comprises a large part of that demand. According to the EIA, China is the world's top importer of illegal timber. "More than half of China's current supplies of raw timber material are sourced from countries with a high risk of illegal logging and poor forest governance," including Cambodia, Laos, Thailand, Madagascar, Myanmar, and Papua New Guinea.
Nicaragua in particular has seen enormous growth in its illegal timber market thanks to Chinese demand. In 2008, Nicaraguan exports of granadillo totalled about $127,000. In 2011, after other Central American countries enacted stricter wood export regulations, that number grew fifty fold, to $6 million.
China Photos/Getty Images
Alright, I can't believe I need to say this, but the future will not look like Call of Duty.
The latest entry in the bestselling game series, Black Ops II, takes place in the not-too-distant future, a version of the year 2025 in which the United States and China are engaged in escalating tensions after a U.S. cyberattack hits the Chinese stock exchange, prompting officials in Beijing to halt exports of rare earth minerals. Chaos ensues. Drones! Invisibility cloaks! There's a villainous Nicaraguan drug lord pulling strings for good measure, and David Petraeus is the secretary of defense.
The technology is science fiction, but the politics, that's just fiction. You'd never know it by reading some of the responses, though. Probably as a result of game studio Treyarch's effort to bolster the game with the input of some high-profile consultants, including Brookings Institute future-warfare expert Peter Singer and disgraced gun runner-turned-media personality Oliver North, some people are taking the game's premise disturbingly seriously. Fox News' review points to the game development's "eerie resemblances with the serious war-gaming exercises conducted by the U.S. military and government officials," while CNN's review explains that the expert consultants saw the "dwindling supply of rare earth elements" as "a feasible backdrop for a new Cold War."
Yes, China controls 95 percent of rare earth mineral production today, and that does constitute an "undisputed monopoly," as Hal Quinn and Michael Silver wrote in their editorial for the Washington Times. But there's no reason for all this hyperventilating. Despite their name, rare earth minerals aren't all that rare -- the U.S. Geological Survey has estimated that the supply of these minerals, which are critical to high-tech gadgets from cell phones to advanced weapon systems, will last well into the next century, if not longer. Despite China's current market dominance, Chinese reserves constitute only half of global rare earth supplies, and other countries -- notably Brazil, Chile, Argentina, and Australia -- are beginning to exploit their deposits and become reliable suppliers in an increasingly diversified rare earth mineral marketplace.
As to whether competition over these resources could come to blows, Christine Parthemore, who now works in the office of the assistant secretary of defense for nuclear, chemical, and biological defense programs and is also an adjunct professor at Johns Hopkins University, cautioned against cold war alarmism in a Center for a New American Security report on rare earth minerals. "History," she wrote in 2011, "indicates that conflict over absolute scarcities is unlikely." While supply disruptions are possible, the report argues, they'll look more like the 1973 oil crisis than the Cuban Missile Crisis.
So let's certainly open up different sources of rare earth mineral supplies, but let's not have a collective freak out about a potential cold war with China over iPhone batteries. It really is just a video game.
On July 2, Cinnabon made history, becoming the first American franchise to open a location in Libya. The 7,500 square-foot bakery-cafe in downtown Tripoli also sells Carvel ice cream and is the first of at least 10 locations franchisees Arief and Ahmed Swaidek plan to open in Libya in the next four years. Cinnabon, which already has locations in major Middle East markets, also wants to expand into Algeria, Tunisia, and Morocco.
Libyan Cinnabons are slated to "feature classic menu items as well as 'locally created' sandwiches, salads and baked goods," along with cakes and pies imported from Italy. Focus Brands International, Cinnabon's overseas expansion partner, also works with other fast-food chains like Moe's Southwest Grill, Schlotzsky's, and Auntie Anne's pretzels. No word yet on whether Libyans will get to experience the wonders of giant pretzels or Tex-Mex in the near future.
Russian President Vladimir Putin doesn't choose his foreign visits lightly. On May 31, Putin makes his first trip abroad since being inaugurated for a third term as president on May 7, to neighboring Belarus. The visit is highly symbolic of Russia's desire to be the leader in the post-Soviet space, as well as Putin's continued support for the authoritarian president of Belarus, Alexander Lukashenko (also known as "Europe's Last Dictator"). Afterwards, Putin will head to Germany and France, Russia's major trading partners in the EU. After the European visits, Putin will fly to speak with Uzbek ruler Islam Karimov in Tashkent, to Beijing, and finally to Astana, Kazakhstan, to meet with long-time ruler Nursultan Kazarbayev; countries central to Putin's vision of a Eurasian Union.
Earlier in the month, Putin suddenly declined to attend the G8 Summit in Camp David, under pretext that he was too busy forming a new Cabinet of Ministers, sending instead Prime Minister Medvedev. The move was widely seen as a snub to President Obama, as Putin avoided a meeting with the president, and sidestepped making the U.S. his first foreign visit. A few days later, Obama announced he would not be able to attend the Asia-Pacific Economic Cooperation conference in Vladivostok this September, because it conflicted with the Democratic Party convention.
Putin has now also taken the opportunity to snub the UK, by announcing he will not attend the opening of the London 2012 Olympics, even though the 2014 Winter Olympics will be held on Russian territory in Sochi. Likely, Medvedev will once again be sent in his stead. Russian-British relations have been tense since the 2006 poisoning of ex-KGB agent Alexander Litvinenko in London. Moreover the West has been pressuring Russian officials over the 2009 death of anti-corruption lawyer Sergei Magnitsky while he was detained in prison. Putin's foreign trip destinations are by no means accidental.
yesterday's (Nov. 25) Financial Times,
my friend Claremont College professor Minxin Pei commented
that "China may choose to do nothing (with regard to trying to rein in North
Korea) just to prove that the west cannot bash it and beg at the same time."
the question of China possibly cutting off its nose to spite its face that
caught my attention. After all, China may really not consider North Korea to be
or any danger to it at all. Rather it was the use of the term "bash" and its
ascription of bashing to the "West." Let me hasten to say that my comments here
are not at all meant as a criticism of Minxin who I am sure used the term
simply as a repetition of current usage and without giving it much thought. But
that in itself is significant as a manifestation of how extant this powerfully
loaded term has become.
what bash means or what people would be trying to say if they called you a
basher. The word suggests a vicious, even irrational and probably gratuitous or
perhaps racist, attack on someone or some group or some country. And let me say
up front that I know this and am sensitive to it, because in the 1980s and 1990s
when I was first a U.S. trade negotiator with Japan and then an analyst of
globalization at the Economic Strategy Institute, I was routinely referred to
in the press as a "Japan basher."
In the case
of yesterday's article, the comment was in relation to the fact that China has
been criticized over the past few years on a wide range of issues including its
claims of sovereignty over disputed isles in the South China Sea, the ramming
of a Japanese ship by a Chinese fishing vessel, refusal to relax its
intervention in global currency markets and to allow its currency to revalue
significantly, reluctance to accept some degree of responsibility for
rebalancing the current, massive global trade imbalances, as well as its
refusal or inability to do anything about its North Korean allies' nuclear
doubt, there are two sides to all these stories and China has a right to voice
its claims and to act or not to act as it sees fit. But surely other countries
may have grounds for their criticisms. China no more than any other country
should be immune from legitimate criticism. But this is, in effect, what
happens when we use start using the terms bash, bashing, and basher. Because
they suggest irrationality, hatred, and racism, they inhibit and obviate
serious and necessary discussion of important differences and issues. Are there
no legitimate grounds for concern about China's territorial claims in the
Pacific or about its currency and trade policies? Certainly the Federal
Reserve's monetary policies and U.S. currency policies were subjected to
withering criticism at the last G-20 meeting.
only underlines another interesting element of phenomenon. "Bashing" is
something that apparently can only be done by the West, and really only by the
United States. No one calls China a U.S. basher when it criticizes Ben Bernanke
or the U.S. banking system. No one calls Germany a U.S. basher when it levels
criticism at U.S. economic policies.
basher was first popularized by Washington
Post columnist Hobart Rowen in the 1980s when, in his passionate advocacy
of free trade, he used it to undermine the legitimacy of any U.S. response to
or even criticism of Japan's mercantilist, export led growth strategy of the
time. His tactic proved so effective that it was quickly adopted by the
officialdom and media of Japan and other countries wishing to deflect and halt
U.S. pressure on them for change.
time to stop using this term in reference to debate with or about our
international partners. We should be speaking of "criticizing" rather than of
Clyde Prestowitz is president of the Economic Strategy Institute and author of The Betrayal of American Prosperity.
OLIVIER LABAN-MATTEI/AFP/Getty Images
The FT's Martin Wolf managed to find some encouragement in the final communiqué from the Seoul G-20 meeting. In a column earlier this week, he said that language describing the use of various measures of global imbalances and suggesting the need for action to rebalance chronic current account surpluses and deficits suggested that, under the radar, the U.S. and China are moving toward consensus on a way out of the apparent impasse reached in Seoul.
I told him that I marvel at his optimism. But let's say, for the sake of argument, that he's right and that the U.S. will move toward trying to produce more of what it consumes and exporting more of what it produces while China does the opposite. I think there remains the major question of whether either side can actually, physically do what is necessary to achieve rebalancing.
This question occurred to me last night after a chat with a friend from FedEx who mentioned that while his planes fly fully loaded from Asia to America, they return to Asia almost empty. Well, of course, that makes a lot of sense because we don't make much here in the United States that FedEx can take back. Of course, we do export to China, but in recent years our biggest or second biggest China bound export items have been waste paper and scrap metal, and those items go by ship. In the high-value, low-volume, high-tech category of goods that fly well, the United States, despite its self-image as the world's high tech leader, has a trade deficit that will likely exceed $150 billion this year.
Let's take a few major products to see how things might work. Steel, for example, is a key product for any industrial economy. The United States imports about 30 percent of the steel it uses while China has more steel making capacity than the rest of the world combined. So, in a rebalancing scenario, Washington would try to find ways to encourage U.S. companies to buy more of their steel from American producers. But the government would run into the problem that there may not be enough actual production capacity left in the United States to allow a substantial reduction in imports.
Of course, more production capacity can be built, but not in any short period of time. Construction of a new steel mill, even if anyone would have the courage to build one in the United States knowing that China's producers could at any moment unleash a flood of cheap exports into the market, would take one to two years.
At the same time, China already produces virtually all of the steel it uses and has enough production capacity to fulfill domestic demand many times over for a long time to come, even without increasing production capacity. So China's steel industry really can't rebalance. It can't sell a lot more than it already does at home, and if for some reason it stopped its overseas shipments it would be left with massive excess production capacity that could easily bankrupt its companies.
As another example, take the Apple iPad. Apple is an American based company to be sure, but virtually nothing in the iPad is made in America. Of course, the product is conceived, designed, marketed, and sold in the United States, but the components are mostly made in Japan, South Korea, Taiwan, and Singapore, and the assembly takes place in China. So rebalancing implies that maybe some iPad production would be switched to America.
In principle, there is no reason why the semiconductor chips, displays, and other key components of the iPad couldn't be made competitively in the United States and inexpensive assembly could, perhaps, be done in Mexico or elsewhere in Latin America. But that would mean that the major factories and investments that have been made in iPad production in Asia would have to be at least partly abandoned. That would result huge financial and job losses to which Asian governments would object.
I sometimes wonder if economists consider these structural, nuts and bolts issues when they talk blithely of rebalancing. These are not things that can be turned on and off like a spigot. It takes a couple of years to build a new semiconductor plant and costs $5-8 billion. Once that investment is made, it is not quickly abandoned unless there is some major change in circumstances.
In his column, Wolf insisted that the U.S. and China must achieve rebalancing fairly quickly in order to avoid protectionism. But is it possible that the action actually runs in the opposite direction -- that some degree of protection might be necessary in order to create the change in circumstances necessary to achieve big shifts in the location of production and thereby also achieve the holy grail of rebalancing?
Clyde Prestowitz is president of the Economic Strategy Institute and author of The Betrayal of American Prosperity.
MIKE CLARKE/AFP/Getty Images
Of all the many foolish, self-defeating, and downright stupid U.S. policies -- from the Cuba embargo to agricultural subsidies to the prohibition on talking to Iranian diplomats -- tariffs on Pakistani textiles probably rank among the dumbest.
That's the conclusion I drew from the Council on Foreign Relations' thoughtful new report on Afghanistan and Pakistan, which was just released this morning.
The 112-page report, whose lead author was the council's Daniel Markey, a former top State Department official for South Asia, offers a mild-mannered, but unmistakable rebuke to the recent optimistic rumblings coming from U.S. military leaders in Afghanistan.
The bipartisan task force behind the report -- headed by former State Department No. 2 Richard Armitage and Clinton-era national security advisor Sandy Berger -- lends "conditional" support to the Obama administration's current strategy in Afghanistan and Pakistan, but recommends the U.S. downgrade its presence in Afghanistan if Obama's upcoming policy review finds that the current approach is failing. (Note: a number of task force members dissented from that conclusion.)
"We are mindful of the real threat we face," the report reads. "But we are also aware of the costs of the present strategy. We cannot accept these costs unless the strategy begins to show real signs of progress."
The group makes a number of other recommendations -- including a vague call for the U.S. to do something about Lashkar-e-Taiba -- but to me, the textile tariffs stand out.
"The textile sector industry accounts for 38 percent of Pakistan's industrial employment, this agreement could provide employment opportunities for millions of young Pakistanis, discouraging them from paths leading to militancy," the report argues.
Given that additional aid to help Pakistan recover from the horrific floods that devastated the country this summer will probably be a tough sell on Capitol Hill, and the likelihood that China and other low-cost producers, not the remnants of the U.S. textile industry, would probably be hurt by lifting the tariffs, this strikes me as a no-brainer.
Unfortunately, as the Wall Street Journal reported in August that there's little appetite in Washington (or Brussels) to help the struggling Pakistani textile industry, which is getting creamed by Chinese competition.
The link between unemployment and militancy is controversial, but it doesn't get any more direct than in Faisalabad, the hard-scrabble town that was home to one of the Mumbai attackers:
The textile crisis has hit Faisalabad-a grimy city of three million named in the 1970s for the late King Faisal of Saudi Arabia-harder than anywhere in Pakistan. Scores of factories have closed recently here, in the heartland of Punjab province's textile industry.
Umer Apparel Ltd., a Faisalabad company that exports $15 million in goods to the U.S. annually, including brands like American Eagle and Aeropostale, has laid off almost a fifth of its work force of 1,500 and is running at only three-quarters of capacity, says its chief executive, Rana Hassan Sajjad.
Faisalabad officials are concerned about links between unemployment and a wave of Islamic extremism in the city. A number of suicide bombings by the Pakistan Taliban on government and civilian targets in Pakistan this year, including many in Lahore, the capital of Punjab, have been planned from Faisalabad, city police say."There's a valid link between joblessness and militancy," says Tahir Hussain, the chief federal government official in Faisalabad. "Wherever the militants are getting manpower, that's where the joblessness is."
About half a million Pakistani textile workers have lost their jobs, mainly due to Chinese competition, according to the Pakistani government. The United States charges a 17 percent tariff on Pakistani-made cotton shirts and pants -- lifting it entirely would net Pakistan as much as $4 billion a year, the government estimates. (Compare that to the paltry $150 million the U.S. offered after the floods, or the $7.5 billion Kerry-Lugar aid bill, which is spread over five years.)
Getting rid of the tariffs would not be without its complications. India would likely protest the move as unfair preferential treatment toward Pakistan, as would China. That isn't the real problem, though: U.S. textile producers would fiercely lobby Congress against the move, though American garment manufacturers and the U.S. Chamber of Commerce would mildly support it. And with a number of existing trade deals looking dead in the water, it's not clear such legislation would go anywhere.
Last year's experience is instructive: Congress tried to pass a bill establishing special trading zones in Pakistan to get around the tariffs, but Senate Republicans spiked it in a dispute over the law's labor provisions. In any case, as the New York Times noted in an editorial back in August, "The trade legislation that finally emerged from the House last year was so hemmed in with protectionist limits that it was almost worthless."
I hope this new report changes some minds, but betting on Congress to do the smart thing is never a good investment strategy.
Napoleon always said he liked lucky generals. He would have loved Barack Obama. The president is so lucky that he now has the South Koreans doing the dirty work of saving him from committing political suicide by signing a Free Trade Agreement (FTA) that would likely further increase both the U.S. trade deficit and the U.S. unemployment rate.
Reports from Seoul yesterday said the deal was essentially done and that Obama and South Korean President Lee Myung-bak would meet their self-imposed deadline by inking the deal today (Thursday). But no, the Koreans, who have been relentlessly promoting this deal as essential to both Korea's future economic well-being and its national security, suddenly said they couldn't agree to a small increase in imports of U.S. beef or a slight relaxation of emissions rules for imports of small numbers of foreign auto imports.
Since, like China, South Korea already manipulates its currency and imposes a myriad of subtle bureaucratic regulations and informal agreements that make the Korean market one of the most closed in the world, one might wonder why Seoul couldn't agree to these two U.S. requests which would in no way result in any significant increase in Korean imports from the United States. But Obama should really thank his lucky stars for South Korea's economic paranoia because it may save him from his administration's own worst instincts.
I know we're all supposed to be free traders and that opposition to anything labeled free trade is strictly taboo. But really, does anyone truly believe that we have anything like free trade with South Korea? This is a country that, as a matter of policy encourages the infringement of foreign intellectual property, and whose courts routinely annul the Korean patents of foreign based companies.
Yes, the proposed deal would significantly reduce Korean tariffs and facilitate foreign investment in Korea and contains strong language on the protection of intellectual property. But if the courts won't enforce the language what is the point? And tariffs are not the real barriers to foreign penetration of the Korean market, especially since the Korean government can and does manipulate its currency to offset the effect of any tariff reductions. As for facilitating foreign investment in Korea, why do we especially want to do that when we need investment in the United States? Moreover, the proposed deal on investment as presently constituted actually allows the U.S. branches of Korean companies to take disputes over U.S. regulatory rulings and impacts out of the American legal system by appealing to the World Bank and the International Court.
Isn't that something? The United States has consistently refused to join the International Criminal Court on grounds of protecting national sovereignty, but was just on the verge of signing a trade deal that would enable foreign companies to evade the sovereignty of the U.S. legal system in certain disputes. I wonder if the Republicans who have been promoting the deal understand that.
But sovereignty is not really the main point; that would be jobs. Here, the deal fails utterly. Of course, there are lots of studies by the various think tanks around Washington. Not surprisingly they only prove that while figures don't lie, liars figure.
If you are for the deal, you can easily find a computer model that will confirm your view and vice versa. So let me put it in the words of one of the Korean negotiators whom I know and to whom I posed the question of whether, honestly between friends, he thought the deal would significantly increase U.S. exports to Korea or U.S. employment. His answer was an immediate "no." And no one who knows anything about doing business in Korea believes otherwise.
So let's hope Obama's lucky streak keeps holding, at least until he gets out of South Korea.
Clyde Prestowitz is president of the Economic Strategy Institute and author of The Betrayal of American Prosperity.
TIM SLOAN/AFP/Getty Image
As the G-20 talks get underway, we're thrilled to have Clyde Prestowitz guest-blogging for us over the next few days. Clyde is the president of the Economic Strategy Institute here in D.C. He served as counselor to the secretary of Commerce during the Reagan administration and as vice chairman of the President's Committee on Trade and Investment in the Pacific.
Be sure to check out his most recent book, The Betrayal of American Prosperity: Free Market Delusions, America’s Decline, and How We Must Compete in the Post-Dollar Era as well as his piece, Lie of the Tiger, from the November print issue of FP. -JK
First, Barack Obama was shellacked in last week's congressional elections. Then, the U.S. president was garlanded in India and Indonesia. Now he's in Korea, where he's about to be waterboarded by the G-20.
Oh sure, the G-20 will come up with some paper-over language that will allow everyone to sign on to some vague agreement that it might be a good idea to achieve global rebalancing at some undetermined time in the next century. But this is just what the Japanese would call tatemae -- the packaging or superficial appearance of things. The honne -- the truth or actuality -- is that whether he knows it or not, the U.S. president has arrived in Seoul to preside over the end of the Flat World.
In fact, the Obama administration is demonstrating a lot of schizophrenia about this. In India, Obama couldn't stop spouting the conventional wisdom about how international trade is always a win-win proposition and how those who express concern about the offshoring of U.S. services jobs to India are just bad old protectionists.
At the same time, however, Treasury Secretary Tim Geithner is calling for some kind of deal for the G-20 governments to take concrete actions to reduce their trade surpluses or deficits. To be sure, Geithner has quickly backpedaled from his original proposal that governments would set hard numerical targets for the allowable limits of surpluses and deficits at 4 percent of GDP. His first fallback position was that the numbers would be only voluntary targets or reference points. When that elicited a new round of incoming fire he retreated further to the current proposal for agreement that each country will take the measures it thinks necessary to reduce excessive surpluses and deficits. Hardly much of a deal at all.
Yet even this is a revolution. No matter how watered down, Geithner's proposal is a call for managed trade. It is an implicit admission that contrary to 50 years of the preaching of economists, trade deficits matter. Even bilateral trade deficits can matter if they are big enough because they distort capital flows and exacerbate unemployment in the deficit countries. Further, it is an admission that unfettered, laissez-faire free trade is not self-adjusting and therefore not really win-win.
This implicit admission by Geithner has been manifested even more strongly (but still implicitly) by some of our leading free-trade economists and pundits. Thus, Paul Krugman, a Nobel Prize winner and long a champion of conventional free trade has called for tariffs on imports from China. So has Washington Post columnist and eternal free trader Robert Samuelson, and even the Financial Times' economics columnist Martin Wolf has suggested that some offsetting response to China's currency manipulation might be necessary.
But Obama isn't going to get agreement to any of that in Seoul. None of the other countries want to face the fact that the United States cannot be Uncle Sugar and the buyer of last resort forever. In fact, Obama has asked both the Germans and the Chinese to help out a bit by consuming more and exporting less. The Germans told him bluntly to get lost and the Chinese told him somewhat more politely to get lost. So the honne is that the Germans, because they're Germans, and the rest of Europe, because it is in terrible financial shape and can't borrow any more, are bent on creating jobs by dint of export-led growth. Essentially, they are saying they are going to create jobs by taking U.S. jobs. The Asians are saying and doing the same thing. Neither Asia nor Europe is likely to take steps that will achieve significant rebalancing in any reasonable period of time. That, of course, means no new jobs for Americans.
The big question is whether or not Obama will respond to that refusal by taxing foreign capital inflows, imposing countervailing duties on subsidized imports, matching the tax holidays and other investment incentives used by China and others to induce off-shoring of U.S. production, and challenging the mercantilist practices of many Asian countries in the World Trade Organization (WTO). These are all measures that he could take himself in an effort unilaterally to reduce the U.S. trade and current account balances and thereby create jobs for Americans.
If he does, he is sure to be harshly criticized by the apostles of the conventional wisdom. But if he doesn't he is sure to be toast in two years.
TIM SLOAN/AFP/Getty Images
A fair amount, apparently. Just not for very long. Andreas Fuchs and Nils-Hendrik Klann of Germany University of Geottingen looked at 159 countries' trade patterns with China between 1991 and 2008 to see what effect a high-level meeting with the Dalai Lama had on bilateral trade. Here's what they found:
Empirical evidence confirms the existence of a trade-deteriorating effect of Dalai Lama
receptions for the Hu Jintao era (2002-2008). However, we find at best weak evidence to support the existence of such an effect in earlier years. While our results suggest that systematic trade reductions are only caused by meetings with heads of state or government, no additional impact is found for meetings between the Dalai Lama and lower-ranking officials. As a consequence of a political leader's reception of the Dalai Lama in the current or previous period, exports to China are found to decrease by 8.1 percent or 16.9 percent, depending on the estimation technique used. Furthermore, we find that this effect will have disappeared two years after a meeting took place. Analyzing disaggregated export data, 'Machinery and transport equipment' is found to be the only product group with a consistent negative effect of Dalai Lama meetings on exports across samples and estimation techniques.
"Meet with him and we will temporarily reduce our machinery and transport equipment imports!" doesn't sound like the scariest of threats.
The pattern seems similar to what happens with defense ties. China halted its military exchanges with the United States in January in response to U.S. arms sales to Taiwan, but there are strong signs now that these ties will soon resume.
One way to read this is that President Barack Obama was right last year to postpone his meeting with the Dalai Lama until after a summit with Chinese leader Hu Jintao. If you know diplomatic relations are going to take a temporary hit, why not postpone it until a more convenient time. On the other hand, the fact that the punishments China inflicts on its trading partners don't seem to last that long lends credence to Vaclav Havel's argument that "When someone soils his pants prematurely, then [the Chinese] do not respect you more for it."
Hat tip: Marginal Revolution
TIM SLOAN/AFP/Getty Images
"We reversed our trade since the easing of the Israeli blockade and now we export," said a tunnel operator who goes by Abu Jamil.
"The Egyptian traders demand Israeli livestock to breed with their own to improve its quality," the 45-year-old smuggler said, calling his partners on the other side of the heavily-guarded border to tell them the cows are coming through, each with an Israel tag on its neck extolling its breeding potential.
The Egyptians also order Israeli coffee, blue jeans, mobile phones, and what Abu Jamil refers to as "raw materials" -- scrap copper, aluminium and used car batteries that can be recycled in Egypt.
Israel eased the blockade over the summer after the flotilla fiasco drew international attention to conditions in Gaza, but most export from Hamas-controlled territory is still largely banned. (What could be Israel's security concern in Gazan fruit being sold in Europe or Egypt is beyond me.)
The smugglers in Sinai and Gaza who were getting rich off the blockade can continue their profits, it seems, by getting Israeli consumer goods and Gazan agriculture into Egypt. Maybe this says as much about the state of Egypt's economy as it does about Gaza's.
SAID KHATIB/Getty Images
Law enforcement agencies are buzzing over the news of the largest food smuggling case in U.S. history:
US authorities have indicted 11 German and Chinese executives for conspiring to illegally import $40m (£52m) worth of honey from China.
The executives were accused of being part of an operation which mislabelled honey and tainted it with antibiotics in an attempt to avoid import duties.
The smugglers were attempting to avoid U.S. anti-dumping laws by mixing it with Indian honey, which begs the question: how can you tell where honey is originated from?
The prosecutor for the case, federal attorney Patrick Fitzgerald -- yes, that one -- explained the situation:
The charges allege that these defendants aggressively sought and obtained an illegal competitive advantage in the US honey market by avoiding payment of more than $78 million (60.9 million euros) in anti-dumping duties, and while doing so deliberately violated US laws designed to protect the integrity of our food supply.
For the record I am not the first offender of making bad puns related to this story. Sen. Charles Schumer (D-NY), in a statement, wrote that he was happy authorities were taking this "honey laundering" seriously, and also hoped for the creation of a national honey standard so that this "crackdown on Chinese imports sticks."
I'm just personally worried that this may be a part of a Dr. Who plot come to life.
Miguel Villagran/Getty Images
This week's quiz question:
The volume of global trade decreased how much in 2009?
a) 3 percent b) 12 percent c) 23 percent
Answer after the jump …
Joe Raedle/Getty Images
For those of you who don't subscribe to the bimonthly print edition of Foreign Policy, you're missing a great feature: the FP Quiz. It has eight intriguing questions about how the world works.
The question I'd like to highlight this week is:
In the World Trade Organization’s 15 years of operation, which country has made the most trade complaints? (Not including the street protesters.)
a) India b) Japan c) United States
Answer after the jump …
BAY ISMOYO/AFP/Getty Images
Today Russian Prime Minister Vladimir Putin and his Indian counterpart Manmohan Singh met in New Delhi to sign a number of bi-lateral commercial agreements. While the agreements cover a wide variety of topics, including space exploration, fertilizer importation, and commodities trade, nuclear energy and defense are what have received the most attention.
Edging out competition from France and the United States, Russia won contracts to build up to 16 new civilian nuclear power plants in India, six of which are expected to be completed by 2017, according to Russian Deputy Prime Minister Sergei Ivanov. This is sure to leave a sour taste in the mouths of many American firms, especially after the success of the 2005 Indo-U.S. civilian nuclear agreement.
Additionally, the two countries signed a multi-billion dollar deal which will see Russia refit Indian aircraft carriers, help India develop transport aircraft, and supply India with 29 new MiG fighter jets.This should leave Russia well positioned to remain India's largest military hardware supplier. Currently, Russia accounts for approximately 60-70% of India's total defense spending.
While New Delhi's goal of diversifying its energy supplies and moving away from coal may be admirable -- in 2003, coal was estimated to account for almost 70% of India's energy consumption -- you've got to question the wisdom of sinking billions of dollars into improving commercial ties with Russia when your country's per capita GDP puts you in the bottom quartile of the world.
At his State of the Union address, President Barack Obama swore to double U.S. exports in five years. At the time, some pundits (including one here) scoffed at the idea. Doubling exports, of course, means convincing the world to buy twice as much of the stuff the U.S. produces. That will be no easy feat, particularly given that just about every high-income economy is looking for an export-led recovery.
But it is a feat that has been accomplished before. I used Commerce Department trade data to make the above graph. It turns out, the last time the United States had a year that doubled its trade level from five years before was 1981; the average five-year increase is around 140 percent.
Still, Obama's plan to double the number by 2015 does not seem so far-fetched. For one, trade has fallen due to the recession, meaning the United States needs to double a lower-than average number.
Obama started to detail how he plans to double exports at the annual conference of the Export-Import Bank today. First: panels. He is creating an "export promotion cabinet" including representatives from state, treasury, agriculture, commerce, and other agencies, and creating an "export council" with adivsers from the private sector. Second: trade regulation reform, to make it easier for businesses to put products and offer services on the global market. Third: better governmental promotion of small- and medium-sized businesses.
In the Financial Times on Wednesday, Chris Cook argues that British immigration laws are giving an unfair edge to soccer clubs with more money.
Clubs with deep pockets hire the small number of local and foreign gifted players available, while poorer clubs must make do with the remaining, potentially much weaker, local journeymen.
Not only that, he says, but the protectionist measures of allowing non-European workers only if the fit certain high-skill benchmarks also inflate wages for less-skilled Europeans, raising ticket prices.
Cook contends tougher competition would boost the English national team:
The impact of more foreign players on the elite band of players who might conceivably play for the national team is that they need to play better to keep their places in their club teams. So, they improve. The English team has markedly improved since foreign footballers started pouring into the country’s top league.
Would some British and European soccer players be pushed out of work if rules were liberalized? Probably, but a more competitive league would be worth it Cook says.
Consumers of an increasing range of products will soon feel the pain in their wallets already endured by so many fans on a Saturday afternoon, who routinely complain that they pay ever-greater sums to watch a football league dominated by just four clubs. What English football needs is fewer English footballers.
Not knowing that much about the economics of the Premiere Leage, here's a question: If teams in the lower half of the standings became much more competitive, would it increase their revenues? Higher ticket sales? More advertising?
Laurence Griffiths/Getty Images
A disturbing report from The Telegraph suggests that China may soon cut off the world's supply of the metals needed for many modern electronics:
A draft report by China’s Ministry of Industry and Information Technology has called for a total ban on foreign shipments of terbium, dysprosium, yttrium, thulium, and lutetium. Other metals such as neodymium, europium, cerium, and lanthanum will be restricted to a combined export quota of 35,000 tonnes a year, far below global needs.
China mines over 95pc of the world’s rare earth minerals, mostly in Inner Mongolia. The move to hoard reserves is the clearest sign to date that the global struggle for diminishing resources is shifting into a new phase. Countries may find it hard to obtain key materials at any price.[...]
New technologies have since increased the value and strategic importance of these metals, but it will take years for fresh supply to come on stream from deposits in Australia, North America, and South Africa. The rare earth family are hard to find, and harder to extract.
Danger Room's Nathan Hodge comments:
[I]t’s a reminder of the role that strategic resources play, especially for the high-tech military of the United States. [...]
Of course, China is not the only country that’s figuring out how to play the mineral wealth hand in geopolitics. For several years now, Russia has used natural gas supply as a way to exert less-than-subtle pressure on its neighbors. Energy, the Kremlin found, is a more effective instrument than an aging nuclear weapons stockpile: You can actually turn the gas taps off when you feel like punishing someone.
As an old piece of wisdom from Strategic Air Command put it: “When you have them by the balls, their hearts and minds will follow.”
During the ongoing political crisis in Iran, another less noticed "revolution" has been going on in Peru with relatively little international attention, but potentially with lasting consequences for both the country and its role in the global economy.
Over the past two weeks, indigenous protesters have successfully forced the Peruvian protesters have successfully forced the government to reverse planned land reforms that would have opened their traditional land to investment and exploration by international energy companies.
The demonstrations against the reform turned violent earlier this month in a confrontation that left 50 dead, including 23 police officers. Peru's prime minister offered to resign over the controversy after the government caved to the Indians demands. The leader of the protest movement has fled into exile in Nicaragua after being charged with inciting the violence.
President Alan Garcia has come under fire for his insensitivity to the violence and for comparing the protesters to "garden watchdogs" protecting their food. Garcia had framed the new development as both an economic opportunity for the region, a way of clamping down on illegal logging, and a way to combat drug trafficking by increasing government presence.
Granted, the news has been dominated by Iran this month for good reason, but protests leading to the killing of 23 police officers, the reversal of a major government decisions affecting multinational corporations, and the resignation of a head of government, seems like a pretty big deal. I think it's safe to say that if this had happened in Asia or the Middle East it would have been front page news in the United States.
Consider how intertwined it is with U.S. foreign policy, it's always surprising how little discussion Latin American affairs (unless Hugo or Fidel are talking) merits in the United States. Peru's largely ignored situation is a perect example. Since when are race, money, violence, and drugs not interesting topics?
Move over Roquefort. The newest niche transatlantic trade dispute involves Canadian seal products, which the EU has banned because of Canada's commercial hunting practices. Inuit hunters are exempt from the ban, but fear that it will inevitably affect their livelihoods.
While touring Inuit Communities in Northern Canda, Governor General Michaelle Jean -- Queen Elizabeth's representative in the Canadian government -- butchered and ate raw seal heart in solidarity with the hunters:
Ms Jean used a traditional Inuit knife to help gut the animal then ate a slice of raw heart.
It came weeks after the EU voted to ban Canadian seal products, but Ms Jean did not say if her actions were in response to the EU proposals....
Asked later if her actions were a message to the EU, she said: "Take from it what you will."
An EU spokesperson called Jean's actions "too bizarre to acknowledge," which the Inuit, who I presume have been eating seal heats for quite some time, would probably take umbrage at. And this from the continent where its a major media scandal when companies paint fake black hooves on ham legs.
Update: Video from the CBC if you really want it:
ATTILA KISBENEDEK/AFP/Getty Images
Want to get a sense of just how bad things are? Take a spin on Google Earth.
The above image, pulled today from Vesseltracker.com's Google Earth file, shows container ships languishing off the Singapore coast. Welcome to the largest parking lot on Earth. International Economy explains:
The world's busiest port for container traffic, Singapore saw its year-over-year volume drop by 19.6 percent in January 2009, followed by a 19.8 percent drop in February. As of mid-March 2009, 11.3 percent of the world's shipping capacity, sat idle, a record.
It's a rough time to be an Asian tiger, or to be in the shipping business. The IMF projects that Singapore's economy will shrink significantly in 2009. Globally, bulk shipping rates have dropped more than 80 percent in the past year on weak demand, and orders for new shipping vessels are cratering. In Busan, South Korea, the fifth-largest port in the world, empty shipping containers are piling up faster than officials can manage.
"Things have really started to get bad -- laborers spend their entire day waiting for a call from the docks that they have a job," Kim Sang Cheul, a dockworker at Busan, told Bloomberg. "People spend all day staring at their phone as if staring at it can make it ring. You’re lucky if you get a call."
Green shoots? Not so much.
(For another view of Singapore's port, you can check out Vesseltracker's Microsoft Virtual Earth mashup map.)
Our long international nightmare is over. The U.S. and EU have reached an agreement to end the world's most entertaining trade dispute, which began with George W. Bush's lame-duck decision to raise import duties on Roquefort cheese:
The new US administration has now agreed to drop the import duty threat, due to come into force this week, and which would have affected to a lesser degree a range of EU products, from truffles and mineral water to chewing gum.
Under the provisional deal, the EU will keep the hormone-treated beef ban, which it claims poses a health threat, but will quadruple imports of non-hormone treated American beef in four years.
Cheese farmer and lefty icon Jose Bove (above) described the deal as evidence that the U.S. has "accepted that health is more important than trade," even though this is actually an expansion of trade and between all this beef and cheese, I'm not sure who's getting healthy.
But in any event, kudos to negotiators for ensuring that neither American populism nor European ludditism will bring down the transatlantic alliance. Time for a celebratory cheeseburger.
JACQUES DEMARTHON/AFP/Getty Images
I'll start with the bad news for anyone with a pet guinea pig: this blog post is not about pets. It's about food staples -- the guinea pig being a major one for Peru, with 65 million of the critters eaten each year. In addition to genetically engineering the perfect pig, Peru celebrates its culinary tradition in splendid a guinea pig festival.
Alas, despite a bull market at home, exporting the creature has proven difficult in a world where guinea-pigs are at times more associated with cages and hampster wheels than with fine cutlery. But now from the blogosphere a rather brilliant suggestion: export to China. No qualms about pet vs. platter there. And guinea pigs are remarkably economical -- at just $3.20 to feed half a dozen people. Sounds like guinea pigs are a recession proof (even countercyclical) market. I'm investing now.
Hat tip: Double Handshake.
STAN HONDA/AFP/Getty Images
One European company seems to be surviving the global economic downturn just fine. EADS, the pan-European aerospace conglomerate best known as the parent company of Airbus, has recovered from a dismal 2007 to record a $2 billion profit in 2008.
Travis Sharp's new piece for FP, might offer a hint for why things are looking up for EADS. While the world's economy contracts, countries everywhere are investing in expensive military systems like those built by EADS:
Despite its overwhelming dominance in overall spending, the United States did not have the fastest growing defense budget in the world between 2005 and 2007, the most recent period for which an accurate assessment is possible. That distinction belongs to Kazakhstan, which saw its defense budget increase by 84 percent. Other countries with booming budgets during this period included Angola (80 percent), Ukraine (57 percent), Jordan (57 percent), and Slovakia (55 percent). The United States, China, and Russia had more modest growth rates of 17 percent, 27 percent, and 33 percent, respectively.
But EADS's good times may not last forever, particularly if U.S. Democrats enact "Buy American" policies to limit the amount of equipment the U.S. military buys from overseas. The main flashpoint for this debate is an Air Force refueling tanker contract that Airbus and U.S. rival Boeing have been fighting over for years with Congress acting as an increasingly incompetent referee. Former Undersecretary of Defense Jacques Gansler believes military protectionism is bad for dense and ultimately bad for the economy:
The Defense Department is not a social welfare organization, and its sole responsibility is to supply U.S. war fighters with the best equipment at the best price. Luckily, though, these two goals aren't mutually exclusive: Military globalization is in fact a blessing for Americans.
The United States is still the world's largest military customer, and it's in the interest of international weapons manufacturers to do business where the buyers are. In the past decade, a number of major international firms have set up shop in the United States. In fact, the Northrop deal would have created tens of thousands of U.S. jobs.
JOEL SAGET/AFP/Getty Images
Via Matthew Yglesias, it seems that there's at least one U.S. politician brave enough to fight for Americans' God-given right to enjoy fancy French cheese. Minnesota Congressman Jim Oberstar has written a letter to the president protesting the United States's relatiatory tariffs on Roquefort cheese:
“Freedom fries and “freedom toast” did serious damage to U.S.-French relaions. We both want to reestablish America’s moral authority in the world under your presidency; a very noble gesture toward that goal would be to remove or reduce this mean-spirited and unproductive punitive duty on Roquefort cheese.
Though I am a supporter of “buy American”, it is for unfairly subsidized foreign products when they are identical or comparable to ours. Roquefort cheese is not in this category. I know from my own experience that if such retaliatory action were taken on products produced in small communities in my district, as Roquefort cheese is in a small French town, it would have a serious adverse local economic impact.
Even here at Passport, we realize that the Roquefort controvery is not one of the more pressing issues Obama faces. But all the same, it's impressive when a congressman from an agricultural state is willing to come out against counterproductive protectionism, and for something French. Though a quick Getty Images search reveals that Oberstar is a longtime French sympathizer.
Cato's Daniel Griswold catches an interesting provision in the omnibus appropriations bill passed by the house:
Buried in the $410 billion catch-all appropriations bill now before the U.S. Senate is a provision that would end a program that has allowed Mexican truck drivers to deliver goods to destinations inside the United States....
Under current restrictions, goods coming into the United States from Mexico by truck must be unloaded inside the “commercial zone” within 20 miles or so of either side of the border and transferred to U.S.-owned trucks for final delivery. U.S. goods going to Mexico face the same inefficient and unnecessary restrictions.
The Bush administration established a pilot program that allows certain Mexican trucking companies that meet U.S. safety and other standards to deliver goods directly to U.S. destinations, while the Mexican government has agreed to allow reciprocal access to its market. But the Democratic Congress and the new Democratic president have vowed to finally kill the program, and the provision inside the appropriations bill will probably deliver the final blow.
So much for being "very careful about any signals of protectionism." Maybe that only applies to Canada.
(Hat tip: Hit & Run)
This blog does not have any specific about information tied to it.