Global Trade Alert
www.tradove.com While countries overall benefit from global supply chains, the move of low-skill jobs from advanced economies is one reason, along with technological change, that income inequality is at historic highs. In – Who Let the Gini Out? – IMF economists Davide Furceri and Prakash Loungani conclude that two other factors contributing to suppliers increased inequality are the opening up of capital markets to foreign entry and competition (-capital account liberalization-) and policy actions by governments to lower their budget deficits (-fiscal consolidation-). Both these policy actions confer benefits, the authors stress, and governments do not undertake them on a whim.
Also in this issue, Ake Lonnberg, recently retired IMF currency reform expert, explains in – New Money – how a country introduces a new currency. Oxford professor Paul Collier writes in – Under Pressure – about the importance of communications and managing expectations after a big resource discovery. And we profile Peter Blair Henry , dean of New York University’s Stern School of Business. As a child in Jamaica, Henry experienced firsthand what happens when leaders pursue misguided economic policies. Today, he continues to study why some countries are rich and others are poor-and how business can help.
But the deal reached last weekend in Bali, Indonesia has once again reinstated belief in effective purchasing manager negotiations. While all of the Doha Round’s issue areas were not addressed, the deal will greatly help promote trade facilitation, cutting red tape in customs procedures through global coordination. An often-cited U.S. think tank report has estimated that trade facilitation alone will provide over $1 trillion in global export gains, or an increase of around 5% to global trade. The WTO’s decision will also ensure that the least developed countries have full access to more lucrative developed countries’ markets, helping to promote greater equality in global trade.
Senator Wyden (D-OR) and Senator Thune (R-SD) came together to sponsor a bipartisan bill – the Digital Trade Act of 2013 – that directs U.S. trade negotiators (and other diplomats with economic portfolios) to prioritize attention to the needs of the digital economy. Although the simple bill might seem small compared to the front page political fights that have captured attention over the past few months, the long term effect of such legislation – if passed – could very well be profound as international commerce is increasingly important to global trade, but it lacks most of the protections that legacy goods and services trade enjoy.
Given the increasing importance of the Internet to international commerce, and the lack of international agreements or norms that protect global informational flows (or interoperable international standards governing regulatory aspects of Internet commerce such as intermediary liability or privacy), global commerce is vulnerable to a new wave of short sighted protectionism, which has been spurred on by international politics. For example, countries like Brazil and Vietnam are instituting (or evaluating) local hosting requirements that purport to prevent their citizens’ data from leaving the country – regulations that would be inherently at odds with how the Internet actually works. read more here