Trade

Prospects and Challenges for Increasing India-Pakistan Trade

Wed, 23 Nov 2011 05:56:58 -0600

Ishrat Husain, dean and director of the Institute of Business Administration in Karachi, Pakistan, authored the latest South Asia Center issue brief titled "Prospects and Challenges for Increasing India-Pakistan Trade."

In the face of massive economic challenges, a burgeoning population, energy and water shortages, and huge and growing numbers of unemployed workers, especially youth, Pakistan needs to look for ways to move itself out of the economic hole into which it has fallen. Greater trade with India offers an immediate and rich possibility of economic growth for both Pakistan and India. Recent meetings between the commerce ministers of both countries in New Delhi appear to have yielded some good intentions to increase trade from its current level of $2 billion a year to $6 billion, still well below what many scholars estimate to be the potential. Yet, the obstacles remain, in the form of rules and regulations that inhibit trade, and in the lack of private-sector initiatives that would surmount governmental foot dragging. In the end, it is the private sector—not offcial trade—that will boost incomes on both sides of the border. And the question remains: Will India and Pakistan see the advantage of opening borders as being mutually beneficial?

China surpasses U.S. as EU's top trade partner: MOC

Jorge Benitez — Mon, 17 Oct 2011 09:59:48 -0500

From Xinhua: Trade between China and the European Union (EU) totaled 35.6 billion euros (49.4 billion U.S. dollars) in July, allowing China to overtake the United States as the EU's largest trade partner, the Ministry of Commerce said, citing the latest statistics from Eurostat.

The overall value of China-EU trade in July exceeded that of the EU and the United States by 800 million euros, accounting for 13.4 percent of the region's total imports and exports, according to data released by the EU's statistics office. (photo: Getty)

Trade Deals Require Involvement from Obama and Other Heads of State

Daniel Price — Tue, 19 Apr 2011 09:59:50 -0500

The Obama administration is helpfully moving forward on bilateral trade deals with Korea, Colombia and Panama, finally abandoning “don’t ask, don’t tell” as its trade policy. But global trade talks at the Geneva-based World Trade Organization are limping into their 10th year. The WTO’s director general recently likened them to a stuck mule, warning of a “grave risk” of failure. At this point, it is only heads of state and government — leaders, not trade officials — who can get the mule unstuck.

Launched after Sept. 11, 2001, in the capital of Qatar, the Doha Round was supposed to galvanize the global community and promote economic growth, particularly in the developing world. Economists estimate that an ambitious trade deal could increase global gross domestic product by more than $300 billion annually. CEOs and development organizations alike routinely call for completion of the deal. Finance and trade ministers all acknowledge that a successful Doha Round would advance efforts aimed at a global rebalancing that is central to the Group of 20’s recovery and reform agenda. Yet prospects for an agreement are more dismal than ever.

The stalemate results from the stubborn refusal of the major economies — developed and developing — to recognize two game-changing facts.

First, the relative economic weight of the big emerging markets has expanded dramatically. In 2001, China, India and Brazil accounted for only 7.4 percent of global gross domestic product. That figure has doubled, to 15.6 percent, and China is the world’s second-largest national economy. On a per capita basis, they are still developing countries and understandably focused on domestic priorities to better the lives of their people. But their aggregate global footprint demands that they play a leadership role and belies their false solidarity with the rest of the developing world.

Significantly, the share of developing country exports destined for other developing countries now exceeds 50 percent. That share will only increase given that growth rates in emerging economies are more than double those in the developed world. For any trade deal to fulfill the promise of delivering growth, the big emerging economies must open their markets to goods and services and wean their industries from state protection.

Second, the slower recovery in the advanced economies has caused many to question the benefits of globalization, making trade more political than ever. Now it is only government leaders, not ministers, who have the wherewithal to strike a global trade deal. In fact, in early G-20 summits French President Nicolas Sarkozy (the current chair of the G-20) and Britain’s prime minister at the time, Gordon Brown, called for direct leader involvement in the negotiations. Those summits, and all subsequent ones, yielded only the ritualized call for a speedy conclusion but, like the negotiations in Geneva, produced no results.

To be sure, leaders cannot negotiate line-by-line tariff reductions or detailed sector-by-sector liberalization of services. But they can do more than cheer from the sidelines. Just as G-20 leaders reached broad agreement at the Washington, London and Pittsburgh summits on the outlines of global financial reform, leaving the details to ministers and international organizations, they must now dig in on trade. They could, for example, agree that in certain industrial sectors such as chemicals, machinery or electronics, all the major players will agree to the same comprehensive baseline tariff cuts. Similarly on services, they could bind themselves to grant the market access their domestic laws already permit and commit to greater openness in key, economic-driver sectors such as telecommunications, logistics and financial services. Trade ministers, following leader-level agreement, could finish the work on a tightly supervised schedule.

Of course, the United States and Europe would have to confront their farm sectors and eliminate trade-distorting subsidies. Here again, leader involvement is key because of the outsize political influence of agriculture that, in the United States, accounts for less than 2 percent of GDP but about 98 percent of the leverage in negotiations. Competitive farmers and deficit hawks on both sides of the Atlantic should be willing to trade away subsidies for boosting agricultural exports through better market access abroad.

Before the WTO, world trade was governed by the General Agreement on Tariffs and Trade (GATT). Given the length of negotiations, GATT was known pejoratively as the Gentleman’s Agreement to Talk and Talk. But the time for talk is over. Leaders must be prepared to get their hands dirty and pull the stuck mule out of the mud. President Obama, fresh from bilateral trade success, should get to work now with President Sarkozy and other like-minded G-20 leaders so that they may seal a multilateral deal at the summit in France this fall.

Daniel Price is a member of the Council's Business and Economics Advisors Group, a Partner at Sidley Austin LLP, and served as assistant to President George W. Bush for international economic affairs and his personal representative to the G-8 and the G-20. This essay originally appeared in The Washington Post.

The Next Steps in the U.S.-Russia Reset

Jorge Benitez — Mon, 14 Mar 2011 07:44:33 -0500

From Joe Biden, the International Herald Tribune: The next frontier in our relationship will be building stronger ties of trade and commerce that match the security cooperation we have achieved.

Since the reset, major American companies — including Chevron, Pepsico, Alcoa, General Electric and Cisco — have signed major deals in Russia. Last week, in Moscow, I witnessed the signing of a $2 billion sale of eight Boeing 777 aircraft to Aeroflot. Boeing estimates that this contract alone will sustain 11,000 jobs in the United States. This expands on last year’s agreement to sell 50 737s to Russian Technologies. All of these contracts allow our companies to tap into unique Russian technical expertise and make even better products that we can sell in Russia and the rest of the world.

Yet our trade and investment relationship is nowhere near where it could or should be. Russia was America’s 37th largest export market in 2010, and the value of goods that cross our borders with Canada and Mexico every few days exceeds the annual value of our trade with Russia.

One way to realize the potential of that relationship is to bring Russia more fully into the international trading system. That is why we strongly support Russia’s effort to join the World Trade Organization.

Accession will enable Russia to deepen its trade relations with the United States — and the world. And it will give American companies greater and more predictable access to Russia’s growing markets, expanding both U.S. exports and employment. Being a part of the W.T.O. means that Russia will have to play by the rules or face enforcement actions.

Once Russia does what is required to join the W.T.O., we will also work with Congress to terminate the application to Russia of the Jackson-Vanik amendment — a Cold War era law that tied trade relations with Russia to Jewish emigration, but remains on the books.

These steps are crucial components of our administration’s trade agenda.

But even if they do join W.T.O., Russia’s business and legal climate and backsliding on democracy will present serious obstacles.

Joseph R. Biden Jr. is the vice president of the United States. (photo: Getty)

Turkey's Three Transformations

Fri, 04 Mar 2011 08:46:44 -0600

In the latest Dinu Patriciu Eurasia Center Issue Brief, “Turkey’s Three Transformations,” Ambassador Ross Wilson, the Center’s Director, analyzes the mutually-reinforcing trends in migration, economics and politics that have reshaped Turkey and will continue to do so.

Common images of a Turkey that go back decades are increasingly being swept away by social, economic, and political changes that are substantially altering the country’s character. They leave Turkey today in the throes of profound and far-reaching transformation. At a mass level, Turks feel their country is more successful now than at any time in at least a century, and they demand that their government reflect that in its approach to regional issues and turmoil around Turkey. How the country matches these kinds of ambitions with real capacities so as to have impact is, of course, another matter. Disagreements and confrontation are not inevitable.

The author concludes that while the ultimate destination of the changes Turkey is embarked upon is not clear, the United States and Europe have a profound interest in keeping it close by and ensuring that differences do not slide into enmity. For the United States, this means employing deft diplomacy, keeping anti-Turkish sentiments at bay and including Turkey in its regional foreign policy planning and thinking. For the European Union, it means stopping the pointless stiff-arming of Ankara and re-engaging with it on accession.

Ambassador Ross Wilson is the Director of the Patriciu Eurasia Center at the Atlantic Council. As a U.S. diplomat, he served as American ambassador to Turkey in 2005-08 and to Azerbaijan in 2000-03, as well as in other posts overseas. As Director of the Dinu Patriciu Eurasia Center, Ambassador Wilson leads the Atlantic Council’s work on the region that extends from East-Central Europe across the Black and Caspian Seas and beyond to Central Asia.

Turkey, China eye more trade in "strategic partnership"

Jorge Benitez — Sat, 09 Oct 2010 06:41:14 -0500

From Selcuk Golokuk and Tulay Karadeniz, Reuters: Turkey and China aim to treble bilateral trade to $50 billion a year by 2015 and to $100 billion by 2020 under a new "strategic partnership", the prime ministers of the two countries said on Friday. ...

"We have decided bilaterally to establish a strategic partnership in our relations," Wen told the news conference with Prime Minister Tayyip Erdogan.

Erdogan said the two sides had agreed to use the lira and the yuan, rather than dollars, in bilateral trade and singled out nuclear energy cooperation as a promising driver of trade.

The two leaders signed eight deals in areas including trade, infrastructure, energy and railway networks that would help connect Istanbul to Beijing through a "modern silk road".

Turkey's ties with China have been complicated at times because of Beijing's tough approach to unrest in Xinjiang, home to China's Muslim Turkic minority of Uighurs.

Both Ankara and Beijing have increased commercial ties with Iran, signing deals on oil and gas fields to the frustration of Western powers, who suspect Iran of a secret nuclear weapons programme, an allegation that Iran denies. ...

Currently, bilateral trade of about $17 billion is made up mostly of Chinese exports to Turkey.

In 2009, a year when global trade slumped because of the economic crisis, Turkish exports to China rose 11 percent to $1.6 billion, while imports fell 20 percent to $12.7 billion.

Turkey wants to rebalance trade with China through more Chinese investments in Turkey, Chinese tourists, joint ventures in third countries and more access for Turkish goods in China. (photo: Getty)

Enhancing India-Pakistan Trade

Thu, 29 Jul 2010 12:13:12 -0500

Despite a global trend toward increased economic interdependence, trade between India and Pakistan, two historically tense neighbors, remains unnaturally small. The Indian economy and trade continue to expand outward, to the United States and China, while Pakistan looks to trading partners like Iran and China for assistance with urgent needs in the energy sector. Improving the economic relationship between the two South Asian neighbors could produce numerous gains for both countries, but government policies on both sides continue to restrict bilateral trade below natural levels. Under freer economic conditions, trade between India and Pakistan could increase from the current $2 billion a year to a conservative estimate of $42 billion annually, which could play an effective role in increasing economic prosperity in both countries and the region as a whole, while also contributing to its stability.

On July 29, the Atlantic Council’s South Asia Center addressed these questions with a panel discussion featuring Mohsin S. Khan, Senior Fellow at the Peterson Institute for International Economics, and Surjit Mansingh, Adjunct Professor at American University’s School of International Service. Dr. Khan discussed the nature of trade constraints in South Asia and offered suggestions for short- and long-term measures that could be taken by both governments to liberalize trade between the two countries. Dr. Mansingh provided a political perspective on this topic and offered insights drawn from her expertise on India's foreign policy. The question and answer session covered such diverse topics as the rise of online consumer markets, the need to reconcile security and openness in both countries, and the role of American and European companies in the region.

The discussion was moderated by South Asia Center Director, Shuja Nawaz.

To read transcript of event click here

Atlantic Council Experts Testify on U.S.-EU Trade Relations

Tue, 27 Jul 2010 13:39:36 -0500

On Tuesday, July 27, Atlantic Council Board Director Stuart Eizenstat and Council Vice President and Director of Transatlantic Programs and Studies Fran Burwell, spoke at a hearing of the House Ways and Means Trade Subcommittee entitled "Enhancing U.S.-EU Trade Relations." Kathryn Hauser, U.S. Executive Director, Trans-Atlantic Business Dialogue; Peter H. Chase, Senior Representative in Europe, U.S. Chamber of Commerce, Brussels; and Stephen Flanagan, Senior Vice President and Henry A. Kissinger Chair, Center for Strategic and International Studies, also provided testimony.

The hearing focused on: (1) potential issues presented by differences in approaches to regulatory standards on both a bilateral and multilateral basis; (2) ways to advance the World Trade Organizations’ (WTO) Doha Round of international trade negotiations; (3) opportunities for greater engagement between Congress and the European Parliament, particularly given the Parliament’s heightened role in European trade policy-making; and (4) ways to take advantage of existing structures, including the Transatlantic Economic Council (TEC), the WTO and Article 2 of the North Atlantic Treaty Organization (NATO) treaty to promote economic collaboration.

Click here to read Stuart Eizenstat's testimony

Click here to read Fran Burwell's testimony

Video of Stuart Eizenstat and Fran Burwell at the hearing follows below.