Japan and China have agreed to expand their economic relations and taken actions to mitigate any potential future military escalation in the East China Sea.

A Brief Snapshot of Recent Japan-China Relations

The relationship between China and Japan has long been a tricky one. Beijing and Tokyo are both striving for regional dominance, but their economies have traditionally been interlinked as well.

During the first visit of a top Chinese politician to Japan in over nine months, China’s Foreign Minister Wang Yi and his Japanese counterpart Toshimitsu Motegi agreed on the abovementioned increased cooperation. Both sides assured each other that stable relationships were essential both for the region and for the world.

On the one hand, China and Japan stressed the need to maintain and expand rules-based multilateral trade. This formulation signals support for globalization and trade. The bilateral economic dialogue, which was restarted in spring 2019, is to be continued next year. Climate protection, energy saving, healthcare, and the digital economy will also be topics.

The Chinese-Japanese Relationship is Still a Balancing Act

However, increased cooperation between Tokyo and Beijing remains a balancing act. Both sides made no secret of their different points of view of political issues but tried to defuse the risk of confrontation. The sensitive question of a new date for the state visit of China’s President Xi Jinping — which was postponed due to the coronavirus pandemic — was not even addressed.

Instead, both sides affirmed that the new Asian trade agreement called the Regional Comprehensive Economic Partnership (RCEP) would be implemented quickly. Both countries are fully aware of the historical importance of the RCEP. After all, Japan and China have never been partners in a multilateral trade agreement. This fact is given additional weight by the fact that Japan previously promoted a free trade agreement with the Trans-Pacific Partnership (TPP), which was supposed to isolate China.

Xi: China is Considering Joining the TPP

Here, Xi is now building a bridge to Japan and the new US government under President-elect Joe Biden when he said on Friday that China was now considering joining the TPP.

After the US withdrew under President Donald Trump, the contract was signed in 2018 under the abbreviation CPTPP. A logical consequence of these developments would be that China, Japan, and South Korea press ahead with their long-standing negotiations on a trilateral free trade agreement and bring them to a conclusion. The challenges are that the negotiations’ outcome would have to go beyond the RCEP agreements and overcome the heated dispute between Tokyo and Seoul over war compensation.

The fact that Foreign Minister Wang is visiting Japan and South Korea one after the other can be seen as a signal that China seeks to link its economy more closely with Japan and South Korea and expand its political influence through this economic channel.

Japan Still Has Serious Reservations About Chinese Policy

Nonetheless, Japan’s New Prime Minister Yoshihide Suga and Foreign Minister Motegi voiced their concern about China’s new security law for Hong Kong.

Moreover, Motegi called for protecting human rights for the Uyghur minority in the Chinese province of Xinjiang and Japanese prison inmates in China.

The most significant contention point remains the increased presence of the Chinese coast guard near the Japanese Senkaku Islands in the East China Sea, which China claims as its own territory under the name Diaoyu.

Motegi called on China to take “positive action” on Chinese ships on the islands. In contrast, Wang demanded that Japan not do anything to complicate the situation in the disputed waters.

Both national positions are unforgiving, but at the same time, Beijing and Tokyo also both fear an uncontrolled escalation. In the past few months, their planes and ships had been chasing each other. Therefore, the foreign ministers agreed to set up direct communication at the military level by the end of the year.

L'articolo China and Japan Pledge Closer Cooperation proviene da InsideOver.

For the Trump administration, China has played the role of enemy in several past chapters of foreign affairs and economic negotiation, but the US government is now trying to work together with Chinese officials. The shift comes as US deaths from COVID-19 have exceeded 1,000 per day for the first time.

The Beijing-Washington Divide

Beijing and Washington have been at odds since President Donald Trump rode into Washington promising to renegotiate trade with Beijing, which he said had been taking advantage of the US for decades. Trump, he said in the third person, knew how to make the biggest and best deals. 

Thus began the US–China trade war. On Jan. 15, it appeared to be coming to an end as Trump and Chinese President Xi Jinping signed Phase One of the agreement. But only two weeks later, the World Health Organization declared Covid-19 was a Public Health Emergency of International Concern. The virus, which originated in Wuhan, China, delivered Trump a new framework in which Beijing could once again play the role of villain.

Blame Game

To be certain, the Communist Party of China (CPC) took actions that critics might consider unscrupulous. It silenced Dr. Li Wenliang who raised the alarm at the beginning of the outbreak. After he died from the virus, the CPC conveniently exonerated him, but by then the virus had already become a global pandemic.

Some international observers have also questioned the accuracy of CPC reports on the number of Covid-19 cases. “Nobody believes China’s numbers,” said Mario Esteban, a senior analyst at the Elcano Royal Institute in Madrid. 

For a variety of reasons, relations between Washington and Beijing are at their lowest point in decades. Trump has maintained a hardline view on China economically, but he cannot sever ties and apply “maximum pressure” as he does with Iran and Venezuela.

On the virus front, Trump and Secretary of State Mike Pompeo had insisted on labeling the Covid-19 as “the Chinese virus” until recently. The terminology was so important to his administration that it even held up a G7 meeting. Trump and Vice President Mike Pence have also blamed Beijing for their own failure to adequately prepare the US for the scenario it now faces: weeks wasted on inaction, critically low supplies, and incoherent messaging. It is, in the words of Pence, China’s fault that the US is struggling with Covid-19.

‘Really Good’ Relationship

This Thursday, the administration’s tone changed. No longer would it seek to label the virus as “Chinese” or “Wuhan”. Furthermore, Washington is accepting deliveries of medical supplies from China and the American leader spoke highly of the relationship between the two states.

“The relationship with China is a good one, and my relationship with [Xi] is really good,” Trump said. He also added that he “will always assume the best” about Beijing’s leadership. 

Both sides have decided that they can accomplish more by working together. China had been partially to blame as some of its officials spread a rumor that the US created the virus in a lab and American soldiers spread the virus in Wuhan. Putting the war of words behind them, Xi and Trump understand the need for a coordinated global effort.

The seriousness of the pandemic is underscored by rising death rates. Deaths in Spain have hovered around 900 per day for the past week, France has crossed the 1,000 deaths per day threshold for two days in a row, and the US similarly has recorded two days of over 1,000 deaths each.

‘Nobody Cares About Trade’

At the urging of several top officials. Including son-in-law Jared Kushner and Treasury Secretary Steven Mnuchin, Trump has come to see the virus as top priority in order to revitalize the economy, and trade talks along with it. At least publicly, Trump is sidelining the trade discussions.

“This whole invisible enemy has taken over the world. Nobody cares about trade,” Trump said while recapping a phone call with Xi.

Privately, however, he has continued to pressure advisors to deliver him positive export data that reflect increased agricultural sales to Beijing. Boosting American exports to China is considered vital to Trump’s re-election campaign, so that he may say he accomplished a goal he set in 2016 — upending the global trade dynamic to benefit the US.

A Welcome Shift

Trade deal aside, the new tone of cooperation between the world’s two largest economies is a welcome development in the fight against Covid-19. The world — not only America — needs masks and other protection fro medical professionals. China has the factories and labor force to quickly scale up production in a way that the US simply cannot at this time.

Furthermore, China remains at the heart of the virus pandemic. Its data, observations, and findings are critical to understanding how it originated and how to stop it. Although there are reasons to doubt Beijing’s credibility, the US gain’s nothing from festering in the communication breakdown. Working together, China may find itself opening up enough that future pandemics could be prevented.

L'articolo Trump Changes Tone on China proviene da InsideOver.

Year on year growth in demand for liquid natural gas (LNG) has mostly come from developing countries. Are the increasing imports of LNG a positive outcome or a road to increasing dependency on external sources?

Trends in LNG Exports

Two main trends associated with LNG exports and imports have emerged in the last few years. Growth in LNG imports has come from developing countries. Certain patterns have also emerged in countries contributing to the growth of the liquid natural gas industry.

From a geographic perspective, the main regions accounting for growth in LNG imports are Asian countries. Particularly, countries in Asia which are in South and Eastern Asia.

Another pattern in the imports of LNG has been the increasing exports from countries which are already world leaders in fossil fuel exports. Qatar, Australia and the United States are some of the leaders.

The Key Importance of Pricing

The price of liquid natural gas, compared to other fuels has played a role in the imports of this fuel type. The price of LNG exports from the US has steeply declined since 2014. With lower prices, how will the increasing imports to developing countries will affect their foreign relations and the economy?

The countries from which developing countries buy liquid natural gas, play an important role. The developing countries which saw most grow in LNG imports, imported the fuel mostly from developed countries.

Foreign relations also affect the buying process. Buying from neighboring countries or allies is, after all, different than buying from countries with whom relations aren’t as warm. While buying from allies has only given marginal benefits to countries like Bangladesh and Qatar, India’s purchase of LNG from the United States has facilitated their relations in other areas.

Economic Downsides of LNG

A cheaper energy source like LNG also has its downsides. Imports from external sources, while economical in the short term, could decrease energy independence of the importing countries in the long term. There are several examples in developing countries where LNG is a trade-off between independence and diversification. Turkey has diversified its energy sourcing by increasing LNG imports, and Chile is preparing to use LNG imports once again.

However, the overall trend has not been beneficial to energy source diversification and independence in developing nations. Particularly, in South American countries. Countries like Brazil have decreased LNG imports and its role as an energy source.

Liquid natural gas exports are divided between government-controlled companies and private ones. The political implications of importing gas from one or the other type of seller also differ. With the growing entanglement of public and private enterprises in the energy sector, it may seem as if state and non-state actors and their differences are being blurred. Yet, in developing countries, there are still large and expanding differences (politically-motivated decisions, prioritization of internal development rather than lower costs).

The Pros and Cons of Developing Countries’ Rising Dependence on LNG

From economic point of view, increasing LNG imports in developing countries could deliver both positive and negative long term impacts. The cheaper and sometimes cleaner energy source should reduce costs of production and the negative effects of pollutants.

On the macro level, in countries where LNG fuel is used by individuals, effect on their disposable income is bound to appear. In two developing countries with largest growth in LNG imports (China and India), the energy source could increase disposable incomes because of being relatively cheaper compared to other fuel sources, and decreases in price.

Governmental spending on energy generation and fuel sourcing is also bound to be affected. While LNG is a cheap source of energy, and a good tool for increasing the speed of economic growth (in the form of lowering expenditure of businesses on their energy and fuel needs), it could be damaging for long term economic development.

Time to Think Long-Term

Without investments into now more expensive — but cheaper in the long term renewable energy — developing countries face a perilous future. They could be left with only a more expensive source of energy, and the infrastructure for it. Moreover, spending becomes an even larger gamble because of LNG imports being subject to price volatility due to non-energy related factors.

There is some uncertainty to this hypothesis. Because renewable energy infrastructure costs are decreasing year by year, choosing to not invest into it in the present could be an economical decision. Yet, spending billions on energy infrastructure which will get relatively more expensive in the future, is also not the most rational decision.

Such dilemmas are not faced by exporters. For LNG exporting countries, several benefits come from the exports of this fuel type. Because of the early set prices of liquid natural gas exports and their mild fluctuation, there is less volatility and room for manipulation. Hence, liquid natural gas exporting countries can use this benefit for convincing potential importers, and making easier sales.

Stronger ties with importing countries are a given. In many countries, LNG trade relationships have brought on a larger concern for political developments in the parties on the other side of the trade. However, energy ties are far less impactful and strong when countries with already strained relations, or private enterprises engage in the trade. LNG exports haven’t given a strong push for better relations of China and the US.

Boosting Domestic Production of LNG

The development of domestic gas industry so far has been the most noticeable benefit for the exporting nations. It not only allows to better serve exports, but also to have a fallback for increasing domestic demand.

In contrast to exporting countries, for countries importing the fuel, it expands dependence on external sources. LNG contracts can be difficult to renegotiate, and in times of price drops, not all buyers have been able to take advantage of them.

A drawback for imports of LNG into developing countries is the infrastructure requirement and difficulties that come with it for developing countries. Pakistan has experienced a slow pace of building of LNG infrastructure, even with 4^th place in growth in imports in 2018. For other liquid natural gas importing countries in the developing world, the mission to build more objects is often impossible without loans.

This drawback of importing LNG is often compounded by a lack of qualified workforce and a skills shortage for solving problems with the gas infrastructure objects. Outside help is often a necessity both for normal operations, and for accident management.

The increasing development of the domestic industry is a benefit all exporting nations can reap. Exports of other fuels also promote better relations between countries. Yet, not all benefits come without a cost to the other side. LNG exports have one benefit for the exporters, which is also a drawback to the importers. Importing nations not only buy the LNG from certain nations, but also the expertise and loans to import the fuel. In cases like these, many developed nations with sales of LNG, also guarantee sales of related products.

The push to make a choice between fossil fuels, including liquid natural gas, and renewable energy will increase in the future. If the premise of decreasing costs of renewable energy will follow, then the current use of LNG is the most beneficial choice for developing countries.

Factors working against savings on energy in developing countries have been high infrastructure costs, need for external financing, and not always placing value on the cheaper energy options. There are several reasons why they are bound to deliver to deliver a low impact. These include improving financial states of developing countries and decreasing shipping and infrastructure costs. Yet, even with low impact of the current issues, they are a damaging effect to both present and future savings.

With LNG, savings also extend to pollution. Liquid natural gas is a good alternative to oil and coal, which are often used as energy sources in developing countries. In the present, alternative energy sources for largest importers of LNG don’t necessarily have to be a priority, especially when energy flow disruptions are unlikely.

With ongoing processes having a positive effect on energy diversification in developing countries, larger LNG imports are more of a strong push for growth, rather than dependency.

L'articolo Is Rising Demand for Liquid Natural Gas a Zero-Sum Game? proviene da InsideOver.

The Malacca Strait has been become an important choke point for global trade. What is the possibility that this strait will become a bargaining chip in the future? Malacca strait connects four countries in Southeast Asia: Indonesia, Malaysia, Singapore and Thailand. The majority of traffic through the strait comes from ships sailing to China.The strait also has an important role in military operations. However, the Malacca’s importance has mainly increased because of the growing numbers of commercial ships passing through the it.

Why Has the Malacca Become a Focal Point of International Trade?

The strait’s importance for international trade comes from its geographic location, and the current international trade structure. Malacca is conveniently located in Southeast Asia, on the corridor from the Indian to the Pacific Ocean. With the current world trade structure based on East-West trade, the strait’s location enables high ocean shipping traffic.

With over 80,000 vessels passing through the strait every year, the strait is the second-busiest in the world, and the first busiest in Asia. Although important for all of world’s trade, the strait holds different value for certain countries.

For Indonesia, Malaysia, Singapore, and Thailand, the strait not only brings diplomatic and economic benefits. It also brings drawbacks, such as the responsibility for protection of ships in the strait. Malacca’s management requires protection from threats of piracy and unsanctioned use of the strait.

While the strait’s countries and those nearby to it are increasingly using the strait and militarizing it, location is not all that there is to to the strait’s importance. Other factors which play a role in commercial shipping viability increase the strait’s importance to countries farther away from it. These factors are relatively better environmental conditions and the presence of foreign navies.

Future Challenges for the Malacca Strait

Malacca’s importance to the facilitation of international trade is high. However, in the future, several environmental and political challenges could negatively impact the role of the strait. The shallowness of the strait, and the fact that it is managed by four countries creates a whole new set of problems.

The shallowness of the strait can be corrected through efforts of the four countries of the strait. Yet, a rather uncomplicated issue, such as allowing patrol boats to cross marine boundaries when chasing pirates, still has not been solved. With several countries having to agree to a decision, negotiations become harder to conclude. If the same trend continues, cooperation on larger projects in Malacca could be deferred.

The location of the strait and its importance to international trade has been used by Indonesia, Malaysia, Singapore and Thailand. Either in direct benefits from other powers, or through offering better conditions in the strait in exchange for financial benefits, the Malacca is a vital chip in the hands of the four countries.

Diplomacy in Southeast Asia has long been based on emphasizing mutual benefits, rather than withholding of them. Solving issues through worsening conditions in the strait, rather than negotiations and exchanges, would also require strong diplomatic power. The four countries don’t have as much diplomatic power as the superpowers using the strait, to be able to leverage the location of Malacca for their gains without harm.

The countries whose companies use the strait are also mostly allies of Indonesia, Malaysia, Singapore and Thailand. Although this condition ensures an easy passage through the strait, it is a preventative measure against the four countries using the location advantages in negotiations. Can this state continue in the future, or will the countries of the strait will start leveraging their power?

Trade Tensions Could Soon Easily Up in the Malacca

Trade tensions, and the different points of view of the four strait countries regarding the resolution of them, are the most likely reason the strait could become a point of division between the countries.

Future trade tensions between the main users of the strait and their allies could negatively impact the operations in the Malacca. Relocation of manufacturing operations, analyzed in The Consequences of Chinese Manufacturing Migration, both from China into Southeast Asian countries, and from US to cheap manufacturing countries, is bound to become a major issue.

The race for jobs and tax income by governments against relocating manufacturers, is transitioning from being a one-region issue. It is affecting countries previously having benefited from the same issue. Using a major shipping route for the four Southeast Asian countries in order to push for different business conditions is not unimaginable.

External tensions are always a potential negative influence for easy passage through important routes. Yet, internal tensions between the four countries of the strait also can harm the operations of the strait. Tensions between Malaysia and Singapore over disputed borders are a significant issue because of their relevance to marine borders. If an escalation were to occur, it would be a direct threat to the operations in the strait of Malacca.

Proxy Trade War Location: Malacca Strait

It is not unreasonable to suggest that Malacca strait could become a proxy location for a conflict between countries. Malacca shares similarities with other straits and passages which have been used as proxy locations for conflicts (Suez Canal, Bab el-Mandeb). These similarities are an important role in oil transit, commercial shipping, and countries of the strait having smaller diplomatic power than some of the largest users. Nevertheless, cooperation between the neighbors of the strait and a united stance against any issues is a strong deterrent against any conflict.

Good relations between the four countries of the Malacca strait has been a constant since the founding of ASEAN in 1967. Even with different political systems, and external alliances, Indonesia, Malaysia, Singapore, Thailand have continued to peacefully manage the strait.

For the four countries, the peaceful and easy transition of vessels to the strait is not only a matter of political convenience. The successful passage of vessels through the Malacca brings in direct income in the form of port visits and ship repairs. Indirect income, from the jobs created to service primary income sources, also plays an important role. A blockade of the strait would also cause significant loss – totaling over $9M in just a day.

Blocking the passage through the Malacca for political gains would mean giving up the direct and indirect income from it. Not only that, the affected population could deal a blow to the politicians attempting negotiation by hostile measures. The population of the provinces of the three countries closest to the strait – Indonesia, Malaysia and Singapore, is over 45 million. While not all of the population has financial ties to the strait, any blocks of transit to the strait would impact millions of individuals and voters.

Deterrents to Conflict in the Malacca Strait

A deterrent against conflicts in the strait is its benefits to all four countries to which the strait belongs to. Even with differing sizes of maritime boundaries, all of the four countries have managed to carve out benefits from the strait.

Certain conditions and benefits would have to change, and only then the strait could become a point of division. Increasing tension over maritime boundaries, or a push from ally countries using the strait, could disrupt the flow of shipping in the strait. Even if the disruption of the shipping were to happen, increasing diversification of trade routes has enabled shipping through nearby southern straits – Sunda and Lombok.

Diversification of trade routes has been the mark of the start of the 21^st century. Enabled by changing environmental conditions or funding from economic growth, this diversification has delivered plenty of economic benefits. Trade route is diversification is also often touted as a security benefit. A country with different routes for trade, should be less susceptible to a blockade of one having a large effect on it.

Without diversification initiatives, countries reliant on shipping and oil transportation through Malacca would encounter massive losses. A nearby state East Asian state, China, would see four fifths of its oil supply blocked.

Nonetheless, trade route diversification is not an end-all solution against straits becoming bargaining chips in the hands of their managing countries. Trade route diversification, and a lower reliance on world’s main straits, including Malacca, could create an illusion of security. One where more attention is paid to the fact of diversification, rather than the security of the routes.

L'articolo Will the Malacca Strait Become the Center of a Global Power Struggle? proviene da InsideOver.

Many countries have set up agencies to attract Foreign Direct Investment (FDI). Have they been successful in their goal? Or are these investment promotion agencies a trap for voters, instead of an effective mechanism?

Notably, agencies attracting FDI have become an almost necessary governmental agency. Out of 36 OECD member states in 2017, 19 (52.8%) had an autonomous public agency for foreign investment promotion. 32 out of 36 had some kind of an investment promotion agency. Additionally, the World Association of Investment Promotion agencies boasts over 100 members.

With competition for trade and investments heating up, these agencies show promise. In 15 years from 2003, the world’s FDI inflows increased by $800B. Part of this increase can be attributed to the agencies working effectively to attract FDI, as shown by research.

Agencies created to increase FDI inflows can prop up local industries and improve their financial status. The most direct impact is, of course, the higher FDI inflows the agencies work to achieve. However, secondary impacts can be just as important.

The transfer of know-how is an important benefit of foreign investments to local economies. Attracting foreign companies, which have the know-how local industries lack, can help to improve the quality of already existing operations or to help launch new industries. The automotive industry in Asia is partly developed because of the know-how transfers from foreign companies.

Foreign investments often are conducted through joint local partnerships. The partnerships with foreign companies can create easier access to funds for the local companies, compared to loans or other types of funding.

Agencies whose purpose is to attract FDI make these goals easier to achieve through targeting relevant foreign businesses and through easing the process of foreign investments.

Governmental corruption can misdirect the goals of FDI agencies. Kickbacks to local government officials for their support to foreign investments are a common problem. Autonomous governmental agencies, with lower oversight from the central government, then become easier targets for corruption.

Lack of differentiation between the valuable and harmful foreign investments is a problem with many FDI agencies. Foreign investments directed solely into low skills jobs, set up a time bomb of potential problems.

A problem occurs when investment promotion agencies only have a goal to increase foreign investments, without differentiating between long- and short-term ones. This can make economies more vulnerable to the flight of services investments. This has been often the case with services centres relocating from high to middle-income countries.

Not all countries have had negative experiences with FDI. Germany and Ireland received the highest net inflows of FDI in the EU in 2018. Have investment promotion agencies contributed to the $169B inflows into the two countries?

Ireland is a great example of how a governmental agency can support economic development. Decades-long work and a flexible approach to investments has contributed to Ireland being one of the top countries in the EU for foreign investments.

IDA (Irish Development Agency), Ireland’s foreign investment promotion agency, has played a critical role in this process. Consistent actions and adaptability to the changing economic environment, are the key reasons for IDA’s success.

However, it is doubtful whether Ireland’s investment promotion agency is the strongest factor in attracting foreign investment.

Low taxes and a good regulatory environment are far stronger incentives than any work that can be conducted by a government-affiliated agency. Moreover, out of Ireland’s over 187 thousand employed by foreign companies, 130,000 (almost 70%) employees are employed by US companies. An 8.5 percentage point difference between the corporate tax rates, and historic ties between the countries, are important pull factors for establishing operations in Ireland.

Going by the internalisation theory, the removal of competition; and the advantages firms posses in some activity, determine a firm’s decision to engage in FDI. Germany, as the top destination for FDI inflows in EU, seems to be a contrarian example. Its highly competitive economy, and a strong presence of local businesses should discourage foreign firms from investments.

High-quality investment promotion work or similar factors then should influence the decision’s of businesses to invest in Germany. However, as historic ties partly explain the large percentage of Ireland’s employees employed by US businesses, part of Germany’s FDI numbers are also explained by social ties. Opposite to Ireland’s experience, migrants to Germany from high-income countries are a positive influence on FDI flows, research finds.

Because of the influence of foreign direct investments in the economic booms of many countries, FDI inflows have been made into a political goal. This has prompted many countries not only to create investment promotion agencies, but also to give autonomy for their choices. There is data that points to the conclusion that promises of foreign investment are a powerful bait for voters. Given that, it becomes clear that higher funding and more autonomy shouldn’t always be given to the agencies.

The establishment of investment promotion agencies does not always contribute to higher foreign investment. The highly variable, and dependent on outside factors, performances of investment promotion agencies show that. As bureaucracy, and along with it, the inefficiency of governmental agencies tends to grow over time, the impact of government investment promotion agencies is bound to worsen over time.

Corruption can also make agencies working to attract foreign investments more of a bait to voters, than an effective force. Any governmental agency can easily become corrupt. Especially, if less oversight is put on it. When autonomous or semi-autonomous investment agencies are a common sighting, doubts arise on whether less control should be given to an area dealing with large financial transfers.

As a direct influence on voters, new agencies to attract FDI are also a powerful political tool. Promises of higher FDI has been found to increase voting preference for politicians, it is not unreasonable to extend the association to agencies working to attract FDI. When their mixed results, and highly variable performance is considered, high accountability is imperative for success.

Focusing on good foreign relations with other countries could be an alternative to the creation of new governmental agencies with just one goal. A favourable political climate is, after all, is one of the factors that influence a business’s decision to invest in a foreign country.

Research shows that good foreign relations do contribute to a better local response to foreign investments, and that good or bad foreign relations influence the choice to which countries foreign investments flow to.

Nevertheless, are good foreign relations all that it takes to build a better economy? The question should be whether good foreign relations create better economies, or do prospering economies contribute to good foreign relations.

If good foreign relations would be a direct way to better economic outcomes, then all it would take for poor nations to develop is to improve their foreign relations. That is not the case since the lack of infrastructure and an underdeveloped labour force are far more powerful blocks to development.

Stable and improving economic indicators of a country should push other countries to seek financial benefits. One way to get to them is through diplomatic means.

Economic growth is a positive influence on FDI flows. The link between higher development and higher FDI inflows exists. Moreover, out of the top 10 FDI host economies in 2018, the developed ones received hundreds of billions of dollars more than the developing ones.

Yet, when country-to-country agreements can take decades to ratify, diplomacy starts to look like an ineffective method for increasing economic growth. After all, even after ratification, it takes a decade to double bilateral trade after an FTA is signed.

FDI itself shouldn’t always be the goal. The development of internal industries and their players could be far more beneficial in the long-term. Yet, if investment promotion is necessary, high accountability should prevent it from turning into political bait for voters.

L'articolo Are Agencies for Attracting FDI a Trap for Voters? proviene da InsideOver.

Japan’s refusal to continue with the Regional Comprehensive Economic Partnership (RCEP) under the possibility that India will not be a participant brought serious doubt to the whole agreement. Both China and Japan are looking to break into the Indian market. Which country will pay the largest price for this opportunity?

The text of any full version of the RCEP has not been made available to the public. Nevertheless, the comments released by country leaders point that its main direction is to decrease tariffs between signatory countries.

Japan and China are the two different manufacturing leaders of Asia. Japan, with its manufacturing know-how built in the 20th century, is competing with the fairly recently leading manufacturing prowess of China. The two manufacturing leaders of the continent are also dissimilar because of the size of their labour forces (China’s 805M  to Japan’s 66M), exports per capita ($1,696 to $5,090), and innovation (GII rank 14th to 15th).

Although dissimilar on many grounds, businesses and governments of both countries are actively searching for new and bigger export opportunities. India, and its 860M working-age consumers, are a very attractive option to both China and Japan’s exporting businesses.

Current trilateral relations between China, Japan and India are focused on increasing trade, competition for trade access; and territorial disputes. Japan-India are a natural exception, as they don’t share a border. As for China-India and China-Japan, territorial disputes have been souring the relations between countries for many years.

Alliances based on mutual non-financial benefits have been established (China’s and India’s defence, Japan’s and India’s science and technology). The alliance between Japan and India is currently the most stable and has delivered positive change to the countries including joint infrastructure and business initiatives. India’s relations with Japan and China are inevitably different because of the presence, or a lack of territorial disputes.

India’s decision to pull out of the RCEP is mostly an internal issue.

However, there is more at play here. India’s foreign relations are better with Japan than with China, and both countries are looking for better export opportunities to India. Delaying any action on the RCEP then allows India not only to appease internal opposition but also to gain bargaining power over other diplomatic disputes. Amending the agreement to suit the needs of a country of a billion, then also becomes an easier task.

Trade, and the structures of the economies of the three countries, are a major influence on the relations between China, India, and Japan.

For Japan, India offers a suitable exports destination. Some of the top exports from Japan, in 2017, have been machines (36% of all exports), metals (8.3%) and chemical products (8.3%). India’s top import categories are similar to Japan’s top exports. Out of the top 5 imports, three of them correspond directly to the three aforementioned product categories.

For China, India is a nearly perfect market. Not only the cheaper Chinese goods segment would find a large consumer base in India (an opposition to this move has already formed in India). Improving trade ties would allow China to harness more power in any diplomatic disputes.

Closer trade ties brought on by the lowering of tariffs would likely bring a better perception of both countries, in case of increasing exports. It could be an advantage in any territorial dispute talks – concerning contested territories by China and India.

Indian economy and its consumers are not the last in the list of concerns for China and Japan. Both China and Japan have similar trade and economic goals in India. Yet, the benefits offered by the Indian economy to the East Asian countries are different.

India offers the completion of these goals for China: a growing market for low-cost producers and a market for high tech exports (a good boost to “Made in China 2025”).

For Japan, better trade conditions with India could deliver the very needed boost for manufacturing output, and a surge in economic activity and new businesses.

These benefits and goal completion would occur both because of the present conditions of the Indian economy, and its future trajectory. The future growth or the direction of development of India could change. Yet, the present conditions India offers to Japan and China are already very attractive.

India disagreeing to enter the RCEP puts the whole process on hold and diminishes the benefits offered by the deal to China and Japan. Both countries already have trade agreements with the ASEAN (the original initiator of this deal). India’s decline to enter the agreement then makes the RCEP a far less useful tool to Japan and China. Better trade conditions won’t make up for the fact that the most promising market for the two East Asian countries is out of the deal.

Japan and India have signed a comprehensive agreement in 2011. On the other side, the issue of a China-India FTA was most recently raised again in 2018. China would gain more from the RCEP with India in it. For Japan, the benefits would be smaller, as it already has signed a comprehensive agreement with India. The agreement has contributed to the abolishment of the majority of tariffs previously imposed by the two countries.

Increasing trade is often a precursor to warmer relations between nations. For China, better relations with India would allow them to exploit the South Asian nation’s geographic location for trade. The Hindustan peninsula offers wide access to routes to Africa and the Middle East.

Moreover, compared to China, India’s access to the Indian Ocean, and the Arab Sea, allows ships to bypass South East Asian nations and the Strait of Malacca when travelling west. With China’s infrastructure interests directed at western locations (Nepal railway project, Belt and Road), India’s location would fit in with current infrastructure plans of China.

India’s geographic location, and opportunities offered by it, are less beneficial to Japan. 79% of Japan’s exports go to other countries in Asia (mostly East Asia), or eastwards to USA. Hence, there’s a smaller incentive to develop a better relationship with the country due to its geographic location.

The main direction of India benefiting from the competition for the access to this market is by growing its negotiating power. Whether it is in territorial, or trade negotiations, India will be able to take a stronger stance. After all, the two manufacturing superpowers are likely to try to match the demands of a growing market. Also, to work hard for the benefits lower trade barriers would offer.

The clearest direct benefit of China and Japan competing, to India, is the financial support that will be granted to the country. There’s already precedent to this: China has given $31.65B of aid in the period of 2000 – 2014, according to AidData. Japan has been providing financial assistance to India since the mid-20th century.

Japan has provided assistance to India in areas which benefit Japan strategically, as argued in Japan’s development assistance to India. If the Japanese government will perceive India not being in the RCEP as a threat to the country’s strategic interests, then more assistance could be expected.

Japan and China have many different reasons to compete for the Indian market. The two manufacturing powerhouses would flourish in the Indian market with lower trade barriers. Secondary reasons for the push for India to sign the RCEP agreement stem from benefits for foreign relations India’s entry would bring. The country that needs India’s market for immediate growth, will pay the highest price to ensure India’s signing of the Regional Comprehensive Economic Partnership.

L'articolo China, India and Japan: Who Will Pay the Largest Price? proviene da InsideOver.

Bickering between Argentina and Brazil, in face of the ratification of EU-Mercosur FTA, could be a turn for the worse for the trade block. Are Brazil’s worries about Argentina unfounded, or will the new president of Argentina threaten the stability of the whole region?

Argentina’s and Brazil’s relations improved markedly after the election of Mauricio Macri as the president of Argentina. The two presidents, elected for the first time, Macri and Jair Bolsonaro, were elected on similar political platforms and promises to their electors.

The status of presidents elected for the first time put the two politicians on equal footing based on experience as the leaders of their respective countries. Although the time both Bolsonaro and Macri were simultaneously was only a year-long, the relations between the two countries remained stable.

This productive partnership is changing with the election of Alberto Fernández as the president of Argentina.

It’s important to employ a wider look to understand why relations between Argentina and Brazil took a turn for the worse so suddenly. It’s easy to put blame solely on different political platforms of the current leaders of the two countries. However, worries about the growing power of Argentina or Brazil from either countries did not stop cooperation in the past.

The critique Bolsonaro directed at Fernandez came even before his inauguration as a president. This shows that political decisions are not the root cause of the disagreement.

Rather, it is important to look at the internal matters of the two countries.

Internal opposition to elected politicians often indirectly affects the foreign relations between different countries.

In the case of Brazil and Argentina, the Brazilian president’s low approval polls, and the growing opposition, is likely to be a major cause of negative attitudes to the newly elected leader of Argentina.

Evangelical voters, and those looking for an alternative for socialist parties and their past presidents, are a fast-growing group in Brazil.

To gain the support of the group before the fast-approaching elections in 2022, Bolsonaro is very likely taking a stance against a politician that holds ideological views this group doesn’t support.

Any political disputes between the leading member states of Mercosur are bound to destabilise the whole block. This situation has already been a reality in 2015 when Brazil and Argentina disagreed on the issue of trade, and the relevance of Mercosur.

The South American countries, two largest by GDP in the whole continent, are also the leading members of Mercosur. Out of the four current active members of the trade block, Argentina and Brazil are largest by territory, exports, and population.

Paraguay and Uruguay, don’t boast such statistics. However, the two countries have managed to influence Mercosur (most notably with Uruguay pushing for a relaxation of the ban on bilateral FTAs). Although less powerful than the leading members, if the two countries chose the optimal strategy according to economics research (threats to leave), they could negotiate for better conditions.

The powerful impact disagreements between the leading members is not only caused by the sizes of their economies. Argentina and Brazil have many common areas, where disagreements and even stalling negotiations, can negatively impact the Mercosur.

Using trade and political blocks to solve trade problems between members isn’t an unusual occurrence. However, trade problems solved through trade block framework, often concern all or the majority of members of them. This is not the case with Argentina, Brazil, and the Mercosur.

As previously mentioned, the bilateral disagreement has happened in 2015. A possible disagreement on trade between Argentina and Brazil has become a new challenge in 2019.

This time, it concerns the Common Export Tariff (placed on imports into the block). The previous president of Argentina, Mr. Macri, agreed with Brazil’s ideas about the tariff. However, the new president Mr. Fernandez does not support this step. This has caused threats from the side of Brazil to leave Mercosur. A disagreement between two members is now a cause of worry for the whole integrity of the block.

Different takes of Brazil and Argentina on where, and at what speed, should the block’s development be moving, is a problem. For each of the two countries, the block delivers different benefits. Brazil, for one, is said to be using the block as a step to gain more power on the worldwide level.

Argentina, in contrast, is argued to use Mercosur for its free trade market. The two different benefits to the leading member states then contribute to quick destabilisation of the whole block, in case any of the states’ benefits are threatened.

Mercosur’s internal trade delivers different benefits to the member states. This is only natural when the sizes of the members’ economies vary from Brazil’s GDP PPP of $3.37T to Uruguay’s of $81.16B.

For Argentina, Paraguay, Uruguay, free trade in the block is an important export opportunity. The three countries have seen a yearly average growth in exports of 4.14%, since free trade among the member countries became reality in 1995.

Gauging the full benefits of 23 years of free trade is difficult. That’s because for the same period, before free trade in the Mercosur, the average yearly growth in exports of the three countries stood at 9.12% – almost 5 percentage points higher.

For Brazil, the block delivers trade benefits. Nevertheless, other benefits have been prioritised by the country. These have been stronger positions in negotiations and growing political influence.

Mercosur’s external trade is just starting to take off. The signing of one of the most important FTAs, with the EU, happened in 2019. The FTA should contribute to increases in exports of all members of Mercosur – just at different quantities. Negotiating as a block, instead of each separate country, allowed the members to leverage the size of the Mercosur’s market in pursuit of better deal conditions.

As a political discussion and development platform, Mercosur has engaged in solving disputes between member states. Whether Mercosur can be stated to be a successful platform for conflict resolution, depends on the weight given to its successes and failures.

Successes, like the increasing role of the smaller states (a concern for Paraguay and Uruguay), are indicators of Mercosur functioning successfully as a platform for resolving a range of disputes.

The failures, such as the Argentina’s enactment of anti-dumping tariffs on Brazilian goods, if their impact is given weight, they would show the four-member block to be an ineffective and an inefficient platform for trade dispute resolution.

Since the members prioritise country-level concerns, then the platform, from an internal perspective, has been a successful aid.

Individual concerns, rather than block-wide problems are often given priority in Mercosur. Hence, it would seem that the trade block could easily fall apart given four different opinions. Even if the worries about other heads of states are often driven by internal political matters, rather than a genuine concern for foreign relations.

Since Mercosur delivers important benefits to each member, then even changing heads of state are unlikely to destabilise the foundation of the block.

Greater integration, and a movement towards supra-nationalism, could be the solution for any future country-level concerns destabilising the whole block. This solution would clash with the determination of each member to not give away individual political power. Yet, it would increase the confidence in the trade block and its members and would allow to avoid unnecessary political tension.

L'articolo Will Political Differences Split the Mercosur Trade Block? proviene da InsideOver.

In a rare feat, Democratic congressmen and the Trump Administration have agreed on an updated trade agreement between the US, Mexico, and Canada. US President Donald Trump targeted both neighbouring states as part of his sales pitch to negotiate fair deals for the American people. From the onset, Trump laid down tariffs targeting aluminium and steel imports, a move that caused an immediate ripple effect across the American manufacturing industry. Mexico City and Ottawa responded in another trade dispute that has become a hallmark of the Trump administration. 

The US-Mexico-Canada Agreement was originally negotiated in 2018, but changes were made this year that required each nation to sign once again. The deal calls for 75 per cent of North American automobiles to be manufactured in one of the three states. Furthermore, 40 per cent of those vehicles will eventually be required to come from factories which employ workers at a minimum rate of $16 per hour. 

Working Together

With Democrats controlling the House of Representatives, the White House was forced to strategize with them in order to get a workable deal that could pass both houses of Congress. 

“We had an election and the Democrats won the House,” said Robert Lighthizer, US trade representative said. “It was always my plan and I was criticized for this, as you know, it was always my plan that this should be a Trump trade policy. And a Trump trade policy is going to get a lot of Democratic support.”

Democrats forced the issue of unions by having Mexican factories inspected and allowing workers there to unionize. The new agreement lays out benchmarks for the Mexican government to achieve to support the rights of workers.

The stipulation that Mexican factories must be inspected is already a point of contention with the Mexican government.

“This provision, the result of political decisions by Congress and the Administration in the United States, was not, for obvious reasons, consulted with Mexico,” Jesus Seade, Mexican deputy foreign minister wrote to Lighthizer. “And, of course, we disagree. Unlike the rest of the provisions that are clearly within the internal scope of the United States, the provision referred to does have effects with respect to our country and therefore, should have been consulted.”

The Democrats lost one of the key points they were pushing for, weaker pharmaceutical patent protection. The USMCA gives biologic companies a ten-year period when they can basically monopolize a drug. While the US had a 12-year term, Canada had an eight-year term after which time generic versions of drugs could enter the marketplace. The extended period will negatively affect Canadian healthcare patients especially as biologics are becoming more prominent in the industry. 

Changes

The agreement will replace the North American Free Trade Agreement which has been in effect since Jan. 1, 1994. The deal was considered one of the most successful trade agreements as the North American economy increased to a GDP of $20 trillion. However, there were complaints with the deal, most notably in its dispute resolution process. NAFTA called for the creation of panels to solve problems arising when a corporation alleges a government is infringing on the agreement and hindering its ability to do business. The mechanism was seldom used, however, as states could simply not appoint members to those panels. 

Under the USMCA framework, companies will be limited to the situations under which they can request arbitration. In general, the agreement provides weaker protections for businesses by barring investors in the US and Mexico from protesting indirect expropriation and discrimination. 

The USMCA introduces digital protections which could not have been foreseen in 1994. No nation may make a law forcing companies to store data on in-country servers, such as what China did by forcing Apple to keep servers within its borders. Companies also cannot be sued for content users post to their platforms, a point which Democrats conceded. 

Finally, US farmers will be allowed to market dairy, poultry, and eggs in Canada in exchange for the US allowing Canadian dairy, peanuts, and peanut products. 

Both Democrats and the Trump administration have praised the new deal, each claiming it a win for their side, which should be a sign that it is a solid agreement. US auto manufacturers are also pleased by it.

“The USMCA allows the US auto industry to remain globally competitive by ensuring vehicles and auto parts are able to move freely across country lines,” said Matt Blunt, president of the American Automotive Policy Council.

L'articolo Everyone Wins with USMCA proviene da InsideOver.

China has often been criticised for economic colonisation and exploitation of Africa through unfair deals as the battle for economic influence in the continent grow. Its engagement with Africa has mainly focused on trade, aid, infrastructural development and investment while benefiting from the continent’s natural resources and export markets.

Aid has been an important policy instrument for China with Africa being the biggest recipient. However, this has always been tied to African natural resources. Its trade with Africa trade has also been one-sided. According to the Chinese Ministry of Commerce, in 2017, China’s exports to Africa were  $94.7 billion, while the whole of Africa’s export to China were $75.3 billion.

There was some improvement in 2018 when the volume of China’s total imports and exports to Africa grew to $204.19 billion. Out of this, China’s exports to Africa were $104.91 billion, up by around 10.8%, while Africa’s exports to China were $99.28 billion.

At the same time, while natural resources make up 90 per cent of Chinese imports from Africa, China’s exports to Africa are more diversified and virtually include anything from manufactured goods, transport, equipment and machinery. Almost every household in Africa has something made in China, ranging from utensils to socks.

The extent of trade imbalance is even more evident if you look at it on a country by country basis. For instance, the value of Kenya’s total exports to China in 2017 was a paltry $98.6 million, while its total imports from China were a huge $98.6 billion.

Despite Kenya having many inland lakes and also sharing the largest fresh water lake in Africa with its neighbours, it still imports fish from China. Data from the fisheries department shows that in 2018 the country imported 22,362 tonnes of fish from China compared to the lesser amount of 19,127 tonnes in 2017.

Following complaints from local traders and fishermen, the country’s president remarked,” I have been told about the imported fish from China. It is not possible that we import fish when our local traders are here.” However, despite the warning, Kenya is still flooded with Chinese fish.

China seems unconcerned with highlighting the trade imbalance between themselves and Africa. Instead, it has focused on showing off the general growth rate of trade between themselves and Africa. “In 2018, the growth rate of China’s trade with Africa was the highest in the world. The import growth rate was also highest in the world, 15% points higher than our import growth rate of foreign trade in the same period,” said a statement from the Ministry of Commerce.

Such imbalances have made many to question whether Africa is benefiting from its relations with China. The reactions have always been mixed.

Commenting on imbalances between China and Africa in the Financial Times, the Governor of Central Bank of Nigeria Mr Lamido Sanusi believes “ It is time for Africa to wake up to the realities of their romance with China.”
He points out that Nigeria, a country with a large domestic market of more than 160 million people, spends huge resources importing consumer goods from China that should be produced locally.

”We buy textiles, fabric, leather goods, tomato paste, starch furniture, electronics, building materials and plastic goods. I could go on ‘The Chinese’, on the other hand, buy only Nigeria’s crude oil,”

“In much of Africa, they have set up huge mining operations.” Although he appreciated that the Chinese have also built infrastructure, he revealed that “they have done so using equipment and labour imported from home without transferring skills to local communities.”

“Africa must recognise that China, like the US, Russia, Britain Brazil, and the rest, is in Africa not for African interest but its own,” he wrote.

However, the claims were discounted, by the President of the China Institute of International Studies Mr Qu Xing. Responding in the Times he stated that China sends its equipment to Africa because they are not available locally and it costs much more if imported from markets other than China. This makes using equipment brought in from China a cost-effective way of production.

On Chinese labour in Africa, he says many are sent to work in Africa because the Chinese companies have no other choice if they want to facilitate certain projects which require specific skills. In regards tobChina flooding African markets with its exports, he argues “ Africa consumers are free to choose what to buy. China has never acted like western colonialists by forcing Africans to buy Chinese products.”

In Qu Xing’s opinion, the relationship between Africa and China is mutually beneficially. This view is also held by various experts who believe that while China profits by securing natural resources and export markets, it has also sparred development in Africa through aid, investment, infrastructure development and trade.

Global Law Initiatives for Sustainable Development in its report titled ‘Pros and Cons of Chinese Investment in Africa’, says, “Chinese investment is advantageous and self-interested and the government has good reasons to promote it, on the other hand, it is also expediting African economic growth.”

According to Brookings Institution, a non-profit public policy organisation based in Washington DC, China truly hopes to help Africa achieve better development while avoiding meddling with the internal affairs of African countries through conditional aid.

“But on the other hand, China is not helping Africa for nothing. Chinese projects create access to Africa’s natural resources and local markets, business opportunities for Chinese companies and employment for Chinese labour.”

However, “it warns that the short term benefits should not form a cover-up for the potential long term negative consequences associated with neglecting issues of governance, fairness and sustainability. But on the other hand, Lesotho Minister for science and technology believes, “China has opened hands to Africa By doing that China also benefits”

L'articolo China’s Relations with Africa Elicits Mixed Reactions proviene da InsideOver.

The World Trade Organization’s appellate body was at a standstill on Wednesday, as the US refused to approve replacement judges.

Just one member remains on the seven-member body, as the Trump administration continues its assault to dismantle the global trade system in favour of US control. Whether headed by the WTO or Trump, global trade has been in rapid decline since 1995, when the WTO was formed.

In May 2017, Saudi Arabia announced a $20 billion investment in US infrastructure. The announcement, which came during President Trump’s visit trip abroad as president, named Blackstone Group LP – the largest alternative investment firm in the world – as the beneficiary to the investment.

“You have two financial interests here – obviously of the Saudi sovereign wealth fund which is putting the money in and wants to make money, and you have Blackstone which is in the business of making money,” reporter, Arash Massoudi said. “They’re going to target deals where they can make money for themselves, ultimately.”

In December 2018, non-profit consumer advocacy organisation, Public Citizen, (which brands itself as an “advocate” for the people), published a report titled: “’Self-Funded’ Trump Now Propped Up By Super PAC Megadonors.” The report disclosed that CEO of Blackstone Group LP, Stephen A. Schwarzman, donated $344,000 to Trump’s re-election campaign. Following his election, Trump appointed Schwarzman as the chairman of the White House Strategic and Policy Forum.

In April 2017, International Business Times reported that Schwarzman oversees “regulatory, energy and infrastructure policies that could enrich Blackstone”. Wisconsin Democratic Senator, Tammy Baldwin would call for Schwarzman to step down from his Trump-appointed position.

“President Trump said he would drain the swamp, yet time and time again he breaks that promise, granting wealthy Wall Street insiders more access, power and influence in Washington,” Baldwin said.

“Mr Schwarzman should submit to federal ethics laws and recuse himself from influencing public policy that enriches his bank account. The last thing we need in Washington is more billionaires making a rigged game worse.”

Trump, a physical manifestation of all the limitations of a globalist economy, markets himself to the proletariat as the solution to their problems. The poison, disguised as the cure, Trump’s presidency is further embodiment of how big business ruined the world for the financial profit of a few.

In December 2019, the Institute for Policy Studies, Focus on the Global South and the Transnational Institute, published an alarming report on the global far-right movement. Titled: “The Battle for Another World”, the report concluded that the rise of far-right movements worldwide, are as a result of deep anxieties concerning economic and cultural dominance.

“An international reaction to economic globalization has been key to the right’s success,” it reads. “Unlike the internationalist left, the new right has been more effective at channelling discontent into political success at a national level.”

Nationalism and localisation has been taken to the extreme in an ironically global backlash towards globalisation: the (extreme) right’s hatred for globalisation is a global movement.

Although also steeped in other forms of discrimination, these anti-globalist ideologies are a backlash against the World Trade Organisation’s quasi-total dominance of the economic policies of individual nations.

The World Trade Organization shapes our global economy. It claims that it opens markets globally and provides “the legal ground-rules for international commerce”.

“Although negotiated and signed by governments,” it continues, “the goal is to help producers of goods and services, exporters, and importers conduct their business while allowing governments to meet social and environmental objectives.

“The system’s overriding purpose is to help trade flow as freely as possible – so long as there are no undesirable side effects – because this is important for economic development and well-being.”

Although it claims to put social and environmental objectives at the forefront, critics on both the left and the right political spectrum have criticised the WTO’s policies.

For the right-wing, the WTO is a force of evil, because it led to globalisation, which opened the market for manufacturing jobs to be outsourced to poorer countries, such as in 2001, when China joined the organisation. When Trump claimed he would “drain the swamp”, his promises referred to the power big business had attained, because of WTO policies.

For the left-wing, the WTO is a force of evil, because its economic policies drive a wedge between the proletariat. As the global population fights for economic survival among themselves, they are too divided to demand change from mega-corporations, who solely benefit from the WTO’s policies.

Lori Wallach, Director of Public Citizen’s Global Trade Watch, argues that the WTO is solely interested in hyper globalization, at grave cost to the people’s social, economic, labour and environmental rights.

Economically, nations who do not comply to their trade rules and laws face trade penalties worth millions of dollars. Of 242 completed WTO cases, only 22 cases were won by countries fighting to uphold their domestic policies over those of the WTO. Many of the 22 cases won were unrelated to trade.

Our global world has reached a dystopia of ultimate corporate domination, as business leaders such as Bezos, Trump and Zuckerberg gain wealth by sacrificing consumer and labour rights.

The WTO was a deliberate attempt to privatise the world. Its vision of globalisation was a hypercapitalist dream of monopolistic corporate power, not one of mass transnational socialist movements. It consistently favoured trade deals over labour, consumer and environmental groups. For the left today, globalisation can still be saved through socialism; for the right, globalisation will be defeated through tribalism.

In “The Battle for Another World”, it is concluded that the Global Green New Deal is the left’s only solution to the rise of global fascism.

“A Global Green New Deal wouldn’t just address the environmental crisis. By creating enormous numbers of well-paying jobs, it would also speak to those left behind by economic globalization. Such a narrative would undermine the new right’s anti-globalist appeals while offering up a positive vision to rally around within and across borders.”

And yet, the proliferation of extreme right-wing views cannot be blamed solely on the weaponisation of economic policies in the twentieth century. Many who support these movements have previously occupied positions of social and economic power. The rise of Trump, Farage, Le Pen, Bolsonaro and more is indicative of a pushback against a New World Order that favours socialism over conservativism.

It is “the great replacement”, which argues that “minorities, with help from ‘globalists’, will usurp the privileges of the dominant group”. The great replacement, the Institute for Policy Studies report states, “has proven appealing to both an extremist fringe and more mainstream conservatives.”

The desecration of our global economic system only served to mushroom discriminatory ideologies previously laying still. Without the World Trade Organization, the destruction of the global economic system will simply continue at a faster speed. The battle for another world is rapidly becoming a war.

L'articolo How the World Trade Organization Propelled the Rise of the Global Far-Right proviene da InsideOver.