International Trade and Investment
FMI’s analyses of this morning’s August International Trade results and September Non-Manufacturing Index
Key points: - TPP, like other FTAs, is copied and pasted from past FTAs - More text from past American FTAs was copied verbatim into TPP than text from any other country; Japan came in eighth - US share was even higher in chapters where it had a high priority, e.g. nearly 80% of text on investment in past US FDI’s was lifted into TPP’s investment chapter - Since TPP is intended to be the template for future FTAs and to incorporate more and more Pacific countries, including China, this gives US big leg up on others
Key points covered in this report are, - The Hill headline—Hatch: TPP deal will get done in lame-duck session—goes too far - What Hatch said was “I think we’re going to get it done in the lame duck” providing that the Administration meets his conditions, including 12 years of data exclusivity for biologics; informed observers tell us hatch has not changed his position - Hatch said other mechanisms beside “side letters” could be used, but he has said that before as well
Key points included in this report are, - Ryan tells GOP members of House Obama has run out of legal time to force TPP ratification vote this year - Froman hosts breakfast of TPP Ambassadors and says US will not reopen settled issues - US gave up little in market-opening in return for the concessions it demanded of others; ITC says TPP will boost America’s global exports by just 0.2% of GDP - US could have lifted imports five times as much if it further opened government procurement, but it could not do so because Congress would have rejected the pact - Imagine the resentment of others at both the way the US negotiated and now the notion that it will talk away from a pact it virtually wrote - American state losing ability to corral special interests to compromise for the broader national interest
Key points included in this part three of the report are, - Hatch says “progress” in talks with White House on 12 years for biologics, but he said something similar in the spring and it went nowhere - Hatch claims some TPP countries will to go to 12, but informed sources call this “unrealistic” - Not clear whether Obama Administration is even asking anyone for 12 years - Number two and three GOP leaders in Senate (Cornyn and Thune) seem unaware of any WH-Hatch talks, and say concessions on tobacco also needed; Thune says “odds are not good” - Hatch says, even with biologics solution, hard to get ratification - How could Froman ask other countries to make new concessions if he cannot reassure them it will lead to ratification?
Key points included in this report are, - We were cautioned by some pro-TPP players “never say never,” so let’s put odds of TPP ratification in lame duck at 10-15% - Many normally pro-trade members of Congress on both sides of the aisle are deserting the TPP, either opposing it outright or saying they are “studying” it
Key points including in this report are, - TPP will not be voted on in lame duck session of Congress in November-December - If Clinton is elected, she is unlikely to revisit TPP in any form during first year or two in office, if ever - Without US ratification, TPP will die; TPP rules require ratification by at least six of the eleven TPP countries, representing at least 85% of TPP-wide GDP; that 85% target cannot be reached without ratification by both the US and Japan - Other countries are unwilling to reopen negotiations with the US, even in the form of so‑called “side-letters,” because, even then, no President can assure them Congress will not come back with even more demands
China's current leadership transition is an issue. Economic growth is no longer the top priority. Therapy for the real-estate tumour might be painful. New leadership is serious dealing with corruption.
CEE countries in particular are underinvesting as they were hard hit by the 2008 crisis and FDI inflows dwindled. This is often due to government indebtedness levels; banks’ unwillingness to take on risks. However, in CEE quality of regulation and transparency have increased due to the need to attract private sector investment in the sector (EBRD Transition Report, 2015-2016). In 2015, development of PPP legislation, procurement and anti-corruption; important for attracting funds into infrastructure projects.
As the initial proposer and a behind-the-scenes advisor on Japan’s Corporate Governance Code, I am naturally pleased with the progress that the country has made in the past two years. This is of course relative to the rather low bar that was set by the previous fifteen years in which we governance advocates made comparatively little progress, against enormous resistance from the industrial lobby.