Intriguing piece in the Economist about “Chilecon Valley”, Chile’s attempt to snaffle some of the start-up tech talent driven out of the US by self-destructive American immigration laws. Some public seed capital and easy-to-get work visas and the sector is up and going.
So where does this leave the argument that a tough intellectual property rights regime, particularly with software and other tech patents, is necessary for innovation? Chile was forced to tighten up its patent and copyright law as a result of its 2004 bilateral trade deal with the US, but Washington remains unhappy about the implementation. Chile is one of the dirty dozen countries (actually 13 in 2012) on USTR’s ominously named annual Priority Watch List for poor IP protection, and Washington is trying to raise the IP bar yet higher for Chile and the other countries in the Trans-Pacific Partnership. Read more
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Yesterday, I was all “the emerging markets have a point about running the IMF”. Read more
Giving emerging markets their rightful place in running the world economy has now been a staple summit platitude for years. Getting everyone to agree how to calibrate hegemony is a bit trickier.
The IMF is struggling with this at the moment, as its shareholder countries remain a long way apart on revising the “quota“, or voting share, given to each nation on the fund’s executive board. (For a sense of the complexity and intractability, think the Schleswig-Holstein Question but with Excel spreadsheets.) Read more
A thought on intellectual property rights following yesterday’s magnum opus. As is often the case in trade deals, political economy means that the remedies are at a tangent to the real problem.
The main complaint I hear from US companies is that their IP is being stolen in emerging markets, particularly but not exclusively, China. It’s not just about the quality of the laws on the books: it’s about getting them enforced. Even if you can get the evidence together for a case (especially tough for industrial espionage), Chinese IP courts have limited recourse and are subject to local political pressure. Read more
Paraphrasing Churchill (who was speaking at a White House lunch, as it happens) to law-law is better than to war-war. Obviously disappointing that the Obama administration is willing to politicise a trade policy (or at least its timing) so blatantly, the US government starting a WTO case against China on auto parts the day that POTUS arrived to campaign in Ohio.
But that’s hardly new. George W Bush imposed steel import tariffs in 2002 ahead of the mid-term elections, knowing that by the time that the WTO had declared the tariffs illegal, as it duly did in November 2003, they would have done their electoral work. Read more
The World Bank has a new chief economist: Kaushik Basu, currently chief economic adviser to the Indian finance ministry and otherwise a professor at Cornell. He follows China’s Justin Lin, another high-profile appointment from the Brics.
With the Bank playing a smaller role than formerly in financing development, its views on economics also carry less weight. The flagship World Development Report used to host some fierce ideological disputes, one of which a decade ago caused another Cornell economist to quit as head of the report (and produce a remarkably illuminating paper describing the unnecessarily polarised debate within the discipline).
But the Bank still has the capacity to start debates, and one particular idea of Basu’s seems a likely candidate. He created a stir by publishing a proposal on the highly charged (particularly in India) question of corruption, suggesting that giving bribes be legalised and only bribe-takers prosecuted. There are sound incentive-based reasons for this – it encourages those asked for bribes to report them to the police – but one can imagine why it might be controversial to let bribers go free. Read more
In the interests of fairness, having looked at how the Republican platform addresses trade and globalisation (fizzy rhetoric but not many hostages to fortune), here’s how the Democratic platform measures up.
In summary: it doesn’t say much, and it doesn’t say much new. The overall tone is boilerplate mercantilist with a soupcon of social concern:
We have taken steps to open new markets to American products, while ensuring that other countries play by the same rules. President Obama signed into law new trade agreements with South Korea, Colombia, and Panama … but not before he strengthened these agreements on behalf of American workers and businesses. We remain committed to finding more markets for American-made goods—including using the Trans-Pacific Partnership between the United States and eight countries in the Asia-Pacific, one of the most dynamic regions in the world—while ensuring that workers’ rights and environmental standards are upheld, and fighting against unfair trade practices.
According to the New Zealand Herald, it is Tim Groser, New Zealand’s trade minister, who has ambitions to replace Pascal Lamy as director-general of the World Trade Organization, when the Frenchman steps down next summer.
In Mr Groser’s favour, he is smart and experienced. Formerly New Zealand’s ambassador to the WTO, he chaired the agriculture talks in the Doha round, which is not a job for the easily-frustrated or detail-averse. Read more
Much wonkery is going on as academics pore over the Republican platform for November’s elections, adopted by the convention on Tuesday.
Given Mitt Romney’s sharpish turn towards China-bashing on the campaign trail, the section on trade is worth a detailed look. Scott Lincicome does a thorough number on it here - but I’m also thinking, cynically, about how much of the frothy combative stuff a Romney presidency (and a Republican Congress) could execute in the least trade-warmongering fashion possible – i.e. keep to the letter but not the spirit of the platform. Read more
A farmer irrigates his Indiana cornfield in July 2012, amid one of the worst droughts in five decades (Scott Olson/Getty Images)
The farm bill, which sets US agricultural subsidies for five years at a time and is up for renewal this year, isn’t normally a party-line issue. Lawmakers from rural areas and particularly senators from agrarian states unite across party lines to fleece the taxpayer. Urban congressmen are bought off with food stamps for their poorer voters – now given the ironically unsnappy name of Snap, the Supplemental Nutrition Assistance Program – which actually makes up more than three-quarters of total spending under the bill.
It might be a sordid trade-off, but it generally produces consensus. Not so this year: while a bipartisan bill easily passed the House of Representatives agriculture committee (dominated by rural types), Republican leader John Boehner dared not put it to a vote of the full House, or even pass a one-year extension of the current programmes. Read more