Brookings: Topics - Trade

David Dreier, Longtime Chairman of the House Rules Committee, Joins Brookings as Distinguished Fellow

Thu, 23 May 2013 15:17:00 -0400

Washington, D.C. — David Dreier, chairman of the Annenberg-Dreier Commission, and longtime chairman of the Rules Committee of the U.S. House of Representatives, has joined the Brookings Institution as a distinguished fellow, Brookings President Strobe Talbott announced today.

At Brookings, Dreier will participate in a wide range of events, activities, research projects and conferences.

The Annenberg-Dreier Commission at Sunnylands was launched in February. Dreier brought to Sunnylands a high-profile focus on the greater Pacific, and the political and commercial relations transforming it. The commission will work on concrete steps to advance the free flow of goods, services, capital, ideas and people throughout the region.

“We are honored to welcome Congressman Dreier to Brookings,” said Talbott. “For more than three decades, David has been a leader in Congress and we look forward to drawing on his expertise across a wide range of policy areas, notably including advancing international trade, and strengthening democratic institutions at home and around the world.”

Dreier was first elected to the United States House of Representatives in 1980, where he served until January 2013. In Congress, he served as the youngest—and the first from California—chairman of the Rules Committee, playing a pivotal role in fashioning all legislation for debate in the House. He authored the 1995 congressional reform package that streamlined committee structure, promoted fiscal responsibility, created term limits for committee chairmen and opened committee meetings to the public and press. In 2006, he authored legislation to reform lobbying and ethics laws. Dreier is a longtime advocate of open commerce as an engine of growth and opportunity. During his tenure in Congress, he was a strong ally of both Democratic and Republican administrations in support of passage of free trade agreements.

He is a member of the Council on Foreign Relations and serves on the board of the International Republican Institute. Dreier is the founding chairman of the bipartisan House Democracy Partnership, which works directly with legislatures in 17 countries around the globe, helping to build institutions in new and re-emerging democracies. Additionally, he was the founding chair of the Congressional Trade Working Group that has built support for trade agreements for more than twenty years.

Dreier received his B.A. from Claremont McKenna College in 1975 and his M.A. in American government from Claremont Graduate University the following year.

Brookings’s distinguished fellows are individuals of particularly noteworthy distinction whose work across several fields of public policy puts them at the pinnacle of worldwide research and policy impact. Distinguished fellows are actively engaged in the life of the Institution, often with more than one of Brookings’s five research programs. In assuming the title, Congressman Dreier joins Jean-David Levitte, former French ambassador to the United States; Sadako Ogata, former president of the Japan International Cooperation Agency (JICA) and United Nations high commissioner for refugees; Jon Huntsman, former ambassador to China and Singapore and governor of Utah; Donna Shalala, president of the University of Miami and former U.S. secretary of health and human services; Itamar Rabinovich, an Israeli diplomat, scholar, and university president; Ed Rendell, former governor of Pennsylvania; Thomas Pickering, a career U.S. ambassador and former under secretary of state for political affairs; and Javier Solana, former secretary general of NATO and the European Union’s high representative for foreign and security policy.

The Future of Transatlantic Trade and Investment: Opportunities and Challenges

Thu, 23 May 2013 13:30:00 -0400

Event Information

May 23, 2013
1:30 PM - 2:30 PM EDT

Falk Auditorium
Brookings Institution
1775 Massachusetts Avenue NW
Washington, DC 20036

On May 23, the Center on the U.S. and Europe (CUSE) and Global Economy and Development at Brookings, with the Friedrich Naumann Foundation, hosted German Vice-Chancellor Philipp Rösler for an address on the prospects for the Transatlantic Trade and Investment Partnership (TTIP). In his remarks, Dr. Rösler explored the direction of EU-U.S. negotiations on TTIP and the current state of transatlantic economic relations in an increasingly globalized world.

From 2001 until 2003, Dr. Philipp Rösler worked as a doctor and medical officer of the Federal Armed Forces. In 2003, Dr. Rösler was elected to the state parliament of Lower Saxony and remained a member of this parliament and chairman of the Free Democratic Party (FDP) state parliamentary group until 2009. At the beginning of 2009, he was appointed minister of Economics, Labor and Transport and deputy minister-president of the State of Lower Saxony. In October 2009 he joined the federal government as federal minister of Health. He has been federal minister of Economics and Technology, federal chairman of the FDP and vice-chancellor since May 2011.

Senior Fellow and CUSE Director Fiona Hill provided introductory remarks and moderated the discussion.

Audio

The Future of Transatlantic Trade and Investment: Opportunities and Challenges

Growing the Global Internet Economy by Ensuring the Free Flow of Data Across Borders

David Dreier and Joshua Meltzer — Thu, 23 May 2013 15:32:00 -0400

Digital connectivity is the most powerful driver of social and economic change the world has seen. The Internet will connect an estimated 5 billion people by 2020. That many already use cell phones. Connectivity is reshaping the landscape we inhabit, changing the ways we communicate, learn and do business. It is behind the world’s most transformative trends, including an unprecedented empowerment of the individual.

The free flow of data is a core element of the Internet that has underpinned this growth in connectivity, innovation and productivity. This freedom has been vital to the growth of digital trade in goods and services, a quickly growing share of global GDP. Its importance is evident every minute as citizens, businesses and governments access global services such as cloud computing, and health and education opportunities. Entrepreneurs in developing countries benefit from free flow as they sell their products globally over the Internet, using international financial data transfers to process transactions. It has also been a critical factor in the explosive growth of access to information and human opportunity.

We are, however, only at the beginning of the digital age. It is hard to grasp the enormity of what this advance portends. More data was created and exchanged last year than in all of human history. The growth in the use and exchange of data is accelerating exponentially--fueling massive new economic activity, enabling major advances in scientific research, analysis of big data, and providing tools to help address existential challenges to human well-being such as climate change.

There are, however, some major speed bumps that threaten this advance as governments around the world are increasingly seeking to restrict or control the flow of data.

No question about it, the Internet is disruptive. That’s why it’s not hard to understand the impulse to control it. But, as with everything, there is a balance to be sought. For example, efforts to prevent cyber crime, or maintain the privacy of personal data should avoid unnecessary restrictions on the free flow of data across borders. Attempts by government to limit data flows to restrict market access or provide unfair commercial advantages to domestic businesses reduces international trade. This is discriminatory and trade-distorting, and should be prohibited.

Many governments are already restricting the free flow of data. These attempts are most blatant in repressive and authoritarian countries, but evident even in open societies. Across the world governments are grappling with how to reconcile the freedom of the Internet with the need to address some of the harms associated with its use.

But as government interference in the free flow of data multiplies, we may be reaching an inflection point that could determine kind of Internet the world ends up with. It could become truly global, open and accessible to all. Or, the Internet could become increasingly balkanized and closed, with a loss of economic and social potential that harms all.

International trade forums are starting to discuss how to find the right balance between the free flow of data and action to address legitimate concerns about harmful use of the Internet. In fact, cross border data flow is quickly emerging as an important 21st century trade issue. It is not adequately regulated under the rules of the World Trade Organization and the Korea-U.S. Free Trade Agreement is the first trade agreement to try to address issues related to cross-border data flows. The issue is also part of negotiations under the Trans-Pacific Partnership and will figure prominently in talks for a projected EU-U.S. trade agreement.

It is vital we get it right in these agreements. To do so we need a deeper and wider understanding of the value and stakes associated with the free flow of data across borders. The Annenberg-Dreier Commission and the Brookings Institution are trying to build that awareness, so vital to the world. We are partnering in a meeting next week—the start of a larger project—that will gather some of the top experts from the Asia Pacific region to examine the interests in play.

The aim of this project is to build greater understanding in this region on the importance of the free flow of data as a driver of international trade, economic growth and innovation. The U.S. has developed a thriving Internet industry with regulation that balances the free flow of data and access to the Internet with the need to protect legitimate interests such as the protection of intellectual property, fighting cyber crime and maintaining the privacy of personal data.

Other countries are also trying to capture the gains from the Internet economy. And while this should be encouraged, doing so with regulation that is discriminatory and restricts access to the Internet will harm trade, impede growth and is will be harmful to all. On the contrary, an open Internet that encourages access to data and fosters competition will deliver the most economic benefits globally.

Developing a common understanding of these challenges and charting a way forward may ultimately be key to global stability, security, and growth—in short, to building the collaboration necessary to sustain a world we’d want to live in.

Authors

Image Source: © Kacper Pempel / Reuters

Challenges and Opportunities: Aviation Emissions and the European Cap and Trade System

Joshua Meltzer — Tue, 21 May 2013 11:42:00 -0400

Editor's Note: This article was originally published in the Winter/Spring 2013 edition of the Georgetown Journal of International Affairs: The Future of Energy.

On January 1, 2012, the European Union extended its cap and trade system, the Emissions Trading Scheme (ETS), to include CO2 emissions from all airlines arriving in and departing from EU airspace. The EU has claimed that this unilateral action was in response to the slow progress towards reaching a global deal. However, the EU remains committed to reaching a global solution to the problem of aviation emissions and hopes that including international aviation in the ETS will spur action.

These additions to the ETS led the EU to take positions on a number of important policy issues that remain unresolved in the international climate change negotiations. These include issues such as how to attribute CO2 emissions from aviation to countries and how to operationalize the environmental principle of common but differentiated responsibilities (CBDR) – the notion that developed countries will do more to reduce their CO2 emissions than developing countries. Moreover, as many of these issues are also applicable to the broader UN climate change negotiations, the success or failure of the ETS approach to international aviation could affect progress in the wider climate change negotiations.

This article outlines how the EU has designed its system to address these challenges. It also provides an overview of the challenges to reaching a global deal on regulating CO2 emissions from international aviation. The final part of the paper considers the current state of international negotiations over avia- tion emissions and suggests pathways forward.

Read the full article »

Authors

Joshua Meltzer

Publication: Georgetown Journal of International Affairs

Image Source: © Darren Staples / Reuters

Widening the Panama Canal and the Future of Global Trade Mapping

Adie Tomer and Joseph Kane — Fri, 17 May 2013 16:25:00 -0400

Up and down the Atlantic coast, US ports are abuzz. Dredging machines, tunnel excavators, and highway pavers from Miami to New York are preparing metropolitan economies and their ports for a newly expanded Panama Canal. As the thinking goes, an expanded Canal promises bigger ships, bigger cargo loads--and each metro wants a piece of the bigger business.

But lost in this port-related arms race is what the newly-widened Panama Canal means for the US economy . Too many metropolitan areas simply assume they’ll immediately acquire new freight business when the expanded Canal opens, or that there will be more business at all. These billion-dollar assumptions ignore a more fundamental question: how and where will the Panama Canal affect US’ global goods trade?

Answering that question requires a broader view, one less predicated on ship size and more on economy size. It also requires metropolitan areas to gain a better understanding of their goods trading relationships, and how those relationships power their local economies.

It’s time to have a frank conversation about what investments like the Panama Canal mean for US trade and economic growth.

First, let’s start with a little context. The Panama Canal, set to celebrate its 100th birthday next year, is one of the world’s most important trade assets. It primarily helps connect US Atlantic and Gulf ports to their trading partners in Asia, Oceania, and South America. Driven by those major markets, the Canal already moves over 330 million tons of freight each year.

However, the Canal suffers from capacity constraints. The world's largest ships can no longer fit through certain locks, meaning the Canal was ill-prepared for its second century. In response, Panama initiated a major overhaul including two new locks, plus widening and deepening several existing channels. When complete in 2015, larger container ships will expand potential trade volumes between the Americas and Asia--and more seamlessly connect global markets in the process. The promise of these larger ships is the inspiration behind the Atlantic ports’ major capital projects.

Yet, as ports carry out such extensive projects, questions and skepticism linger over the future direction of freight movement and the long-term economic implications. How will ports handle the extra time it takes to load and unload the new mammoth ships? How will Pacific port investments in the United States and Canada counter the investments at the Atlantic ports? These uncertainties complicate analysts’ and policymakers’ abilities to identify exactly how the expansion will shift the precise location and scope of all freight flows.

The country and its metropolitan leaders need a way to remove these uncertainties. And it begins with a better understanding of our current goods trading relationships at the metropolitan scale.

As it stands, metropolitan data is scant. There is no geographically-consistent database of what goods metropolitan areas consume and what goods they export. Similarly, there is no database of geographic trading relationships with their domestic and international peers, or which ports facilitate the international side of the trade ledger

Imagine if the United States didn’t know how much electronics it imported from China, or how much oil it imported from the Middle East. That’s the situation metropolitan economic and freight leaders face.

It’s time to get a better handle on these regional trade relationships. Local, state, and federal officials should know which metropolitan areas trade the most goods with Asia, and are therefore the most sensitive to the Panama Canal’s capacity. They should also know how these goods flow between markets—whether they’re more reliant on Pacific or Atlantic ports, and how a capacity change on either coast could shift that equation.

This kind of knowledge also extends beyond just the Panama Canal. As other freight investments come online across the United States and the world, public and private sector leaders should have the statistical tools to know what’s at stake. A more thorough understanding of the country’s metropolitan trading network would help inform local investment decisions like we’re seeing in Baltimore and Norfolk. It would also inform a national freight strategy that prioritizes investments with the highest returns.

The metropolitan reaction to the Canal widening is a microcosm for what the country misses when it comes to freight planning. In a relatively fact-free zone, it’s easy for local ports to justify these major investments. But dredging a port or building a tunnel costs significantly more than simply upgrading our knowledge base.

Even with global trade slowing its growth since the Great Recession, there’s little question that goods volumes will continue to rise in the coming decades, whether through the Panama Canal or elsewhere. It’s time we make sure our metropolitan economies have the knowledge to succeed in that environment.

The Brookings Metropolitan Policy team will aim to address that knowledge gap over the coming year. Working with a team of outside experts, we've assembled a geographically-consistent, globally-oriented goods trade database. In turn, the analytics from that database will help us provide public and private sector leaders with a better understanding of exactly what, where, and how metropolitan areas trade goods and the implications for their local economies. We are excited to start sharing those results this fall.

Authors

Adie Tomer
Joseph Kane

The African Union Can Do More to Support Regional Integration

Michael Rettig, Anne W. Kamau and Augustus Sammy Muluvi — Fri, 17 May 2013 16:39:00 -0400

Earlier this May in Cape Town, South Africa, economists at the World Economic Forum reaffirmed that regional integration will play a key role in unleashing the continent’s growth potential. More than 10 regional economic communities (RECs) are working toward this goal in Africa, but the main framework behind this effort is the African Economic Community (AEC). The AEC was established by the Abuja Treaty in 1991 and ratified in 1994. The treaty aims to build the AEC gradually through harmonization, coordination and effective integration of Africa’s RECs, eight of which have been chosen as “pillars” of the AEC. It proposes the establishment of a continental free trade area (CFTA) by 2017, and integration of the RECs into a single customs union with a common currency, central bank and parliament by 2028. The Abuja treaty does not lay out precise, top-down steps for achieving this goal, but the African Union (AU) and the RECs have defined their relationship in working toward the AEC in the 2007 Protocol on Relations between the AU and the RECs. Towards this end, the Africa Union has embarked on various programs at the regional and sub-regional level to promote integration. Indeed, at the January 2012 AU Summit, heads of state from around the continent renewed this mission by agreeing to speed up plans for economic integration. The tone of the 2012 Summit implied an ambitious AU agenda of promoting and coordinating African integration and its accompanying benefits more quickly than before.

Like the European Union, the AEC would enjoy increased intra-African trade, improved self-sufficiency in meeting Africa’s import demand, lower poverty levels and a more peaceful interdependent existence. However, in contrast with these grand plans to move toward a CFTA, Africa’s RECs are grappling with numerous challenges. Though it is the responsibility of the RECs and individual countries to implement protocols and integrate, the AU Commission is charged with monitoring the continent’s integration process. The integration process has remained slow despite numerous efforts and working committees formed by the AU to coordinate the RECs, suggesting more work remains to be done. Now, many RECs have missed their target dates for implementing customs unions and common market requirements. For the RECs to achieve integration objectives and a CFTA to still take hold by 2017, the AU may have to play a more active role. Indeed, as the AU celebrates its 50th anniversary this May, the progress made and challenges encountered by Africa’s RECs offer valuable lessons as to how the AU can best act to improve integration, development and growth moving forward. Consider the progress of two RECs from Central and East Africa.

The East African Community (EAC) is composed of five countries in East Africa: Kenya, Uganda, Tanzania, Rwanda and Burundi. The EAC has achieved considerable milestones, having established a customs union in 2005 and a common market in 2010. It is scheduled to move to a monetary union by November of this year and ultimately to a political federation by 2017. In addition, the EAC has taken steps towards further economic integration by signing a free trade agreement with two other RECs, the Common Market for Eastern and Southern Africa (COMESA) and the Southern Africa Development Community (SADC). This progressive tripartite agreement eases the transitional problem of states’ memberships in multiple RECs and therefore multiple sets of requirements and regulations. Despite this progress, the EAC has not fully implemented their Common Market Protocol. While the EAC has made tremendous progress in eliminating tariffs, poor infrastructure and other non-tariff barriers remain. Lack of roads, railways and energy networks add to cost of doing business and make it difficult to increase intra-African trade and attract investment in the region. Moreover, neither the EAC nor the AU has effectively explained the benefits of economic integration to citizens, so the democratic leaders of member states do not feel pressure to improve their progress. In addition, national governments fear a loss in tax revenue, and, despite the elimination of border tariffs, different domestic tax rates still exist within the EAC. Indeed, harmonizing the various economic policies in the EAC has been challenging. As a result, member states are struggling to converge their macroeconomic policies in the prescribed time. Most notably, as the EAC has achieved its successes and struggled with its challenges, the AU’s efforts have barely influenced the integration process in the region.

Another REC, the Economic Community of Central African States (ECCAS), was first formed in 1983 and remained mostly dormant for 16 years until 1999. The group suffered first from states’ unwillingness to pay much-needed fees, and later from a war between some of its member states. Once the ECCAS began operating, it faced renewed challenges from competing economic communities—Rwanda left the group in 2007 to focus on its COMESA and EAC memberships. Unlike the EAC, which includes Kenya, the ECCAS lacks a high-growth country to provide leadership and capital in supporting regional infrastructure and pushing trade liberalization efforts. As a result, the ECCAS remains a group of states of varying levels of development focused on their own self-interests. The AU has an opportunity to educate the member states and apply informal pressure to make progress. In spite of these challenges, the ECCAS has achieved some successes. Many ECCAS members utilize a single currency, and capital moves freely across borders. Steps have been taken to eliminate tariffs as well, though these have yet to be fully implemented. The ECCAS has enjoyed more success in tackling peace and security—leading peace operations in the Central African Republic on two occasions and laying the foundation to host one of the AU’s planned Standby Forces. Indeed, the AU has been effective and proactive in assisting with these security gains (and also throughout the continent), yet the role of the AU in assisting with ECCAS’s economic integration successes has not been visible.

As the African Union reflects on its achievements 50 years since its creation, it should balance its successes in minimizing African conflict with the importance of doing more to promote economic integration. While addressing flashpoints of violence is an important short-term necessity, increasing intra-African trade, building an African consumer base, and networking African interdependence may offer great long-term promise. These are all steps toward the same goal of a prosperous and peaceful Africa. While the AU does not have the authority to overcome poor capacity, a lack of political will, or other challenges that African countries and RECs may face or bring to the table, it can and should better follow its mission in encouraging integration.

Under the 2007 Protocol, the AU is directly charged with working to facilitate and implement regional integration. If the AU hopes to realize its goal of a united Africa by 2028, it must better engage the continent’s RECs and assist in resolving the numerous obstacles they face. It should consider expanding its efforts to coordinate regional initiatives within low-capacity countries and work to ensure that future programs are better targeted and more visible. Further, the AU should exercise leadership in countries that seem not to have the domestic political will to move towards integration. It could also move from biannual meetings to more common ones and more vigorously assist in mobilizing resources and coordinating their application toward regional infrastructure projects to boost trade. The AU could even consider launching voluntary international governance initiatives, such as a two-term limit for political leaders or the teaching of a common language base. It can also more closely oversee and facilitate the long and difficult negotiations of protocols, and may use scorecards and penalties while monitoring their implementation to ensure that states feel pressure to meet their benchmarks. A continental free trade area in Africa holds as much potential as the one seen in Europe, but achieving success of this goal by 2017 will require the African Union to engage its regional economic communities more robustly.

Authors

Michael Rettig
Anne W. Kamau
Augustus Sammy Muluvi

Image Source: © Thierry Gouegnon / Reuters

Mukhisa Kituyi to Head the United Nations Conference on Trade and Development (UNCTAD)

Mwangi S. Kimenyi — Thu, 16 May 2013 11:26:00 -0400

The United Nations Secretary-General Ban Ki-moon has appointed Dr. Mukhisa Kituyi to be the next secretary-general of the United Nations Conference on Trade and Development (UNCTAD). An UNCTAD press release on May 16, 2013 stated that Dr. Kituyi will serve a four-year term beginning September 1, 2013. Dr. Kituyi has held several senior positions including Kenya’s minister of trade from 2003-2008. He is currently a nonresident fellow in the Africa Growth Initiative (AGI) at the Brookings Institution and was a resident scholar in 2011. Dr. Kituyi is well versed in the global trading system and, in the past, was considered a potential candidate to head organizations such as the World Trade Organization (WTO) and UNCTAD, but instead opted to join politics. A dynamic politician and intellectual, Dr. Kituyi is an excellent choice to head UNCTAD.

For AGI, the appointment of Dr. Kituyi is significant not only because he is one of our fellows but also because AGI has been emphasizing the need to increase informed African voices in global governance. We believe that African interests are not effectively represented in major global institutions, and this deficiency has contributed to the broader marginalization of the continent in global affairs. Dr. Kituyi should be an effective voice in representing Africa and other developing countries. And, as I know him, I believe this is one informed voice that the international community is unlikely to ignore.

But it will not be a smooth ride for the new secretary-general; a host of challenges await him in Geneva. First, more than in most global organizations, UNCTAD requires effective management and intellectual leadership. An internal report published last year—the Joint Inspection Unit Report—showed that UNCTAD has been suffering from a lack of effective governance. It is important that Dr. Kituyi focus on raising the bar in terms of professionalism at UNCTAD. This task will require looking into the recruitment and promotion of employees strictly based on merit. Dr. Kituyi will need to carefully evaluate personnel issues and provide the necessary motivation to ensure that the organization delivers on its mandate. Most importantly, he will have to steer the organization towards more transparency, rewarding performance instead of simple loyalty to senior management. The new secretary-general will also need to offer the intellectual leadership necessary to guide the institution through a time of major global economic change and a shifting of economic power to the South. He must therefore lead intellectually in offering alternative ideas to those emerging from traditional development institutions.

An even a more daunting challenge that the new secretary-general will face is to ensure that UNCTAD remains relevant and credible. Over the past few years, questions have been raised as to what should be the institution’s focus. Some have gone to the extent of insisting that UNCTAD should not be involved in macroeconomic and financial areas. But as its name suggests, UNCTAD was created to deal with issues relating to trade and development with a particular emphasis in developing countries. There is no doubt, therefore, that macroeconomics and finance squarely fit in the institution’s mandate. Indeed, UNCTAD used to be the forum where these issues would be negotiated in order to ensure some balance in the global economy. However, since the creation of the WTO, UNCTAD has experienced a progressive erosion of its voice. It will be the responsibility of Dr. Kituyi to reverse this trend so that UNCTAD can play its rightful role in the global economic policy scene. The new secretary-general must also position UNCTAD to better address the imbalance and unfairness in the multilateral trading rules that have shaped globalization. In UNCTAD, it is often the case that developing countries feel bullied by their developed country partners. It will be imperative for Dr. Kituyi to identify the best way to navigate issues that have come to divide developed and developing regions.

The secretary-general must also position UNCTAD so as to assist developing countries in seizing the opportunities presented by the global economy. With all the changes taking place in the world, UNCTAD has to focus on how developing countries can reap the benefits and minimize the negative effects arising from trade and globalization. This focus requires that UNCTAD take on the hard topics that are of particular interest to developing countries, including investment policy, trade in services and commodities—which it has always done—but it should also come out clearly on what path developing countries should follow. Likewise, we are likely to see an acceleration of regional trade arrangements. Most challenging are agreements involving Northern and Southern partners who cannot be considered equal partners when they negotiate. The jurisprudence on the rules governing such agreements is not commonly agreed upon. Hence, there is a need for UNCTAD to demonstrate, based on evidence, how to ensure that balanced development is achievable, especially in respect to North-South agreements.

With an incoming director general at the WTO and Dr. Kituyi at UNCTAD, the global environment offers an opportunity for the two institutions that drive trade and development to establish the missing dialogue. For this to happen, UNCTAD needs to be credible when articulating its voice in this changing global economy. This is the greatest challenge that Dr. Kituyi faces.

Authors

Mwangi S. Kimenyi

Image Source: © Ronen Zvulun / Reuters

Going Global: Greater Houston’s Economic Future

Wed, 15 May 2013 13:30:00 -0400

Event Information

May 15, 2013
12:30 PM - 2:00 PM CDT

Baker Hall
Rice University, James A. Baker III Institute for Public Policy
6100 Main Street
Houston, TX 77005

As the United States emerges from the Great Recession, it is clear that the nation’s economy must be purposefully restructured from one focused inward and characterized by excessive consumption and debt to one that is globally engaged and driven by production and innovation. A growing chorus of leaders is calling for a new growth model, one that creates more and better jobs by engaging rising global demand and attracting global talent and capital. These leaders recognize that only by harnessing the power of cities and metropolitan areas can the country hope to foster job growth in the near term and restructure the economy for the long haul.

On May 15, the Metropolitan Policy Program at Brookings and JPMorgan Chase hosted a forum at Rice University, “Going Global: Greater Houston’s Economic Future,” the second in a series of domestic and international forums being convened this year by the Global Cities Initiative. This is the second year of the five-year initiative. The forum explores how metropolitan-led economic growth—including global trade and investment—are important for job creation, and how Metropolitan Houston can leverage its position in the global market.

Speakers and panels provided context on the region’s position in the global marketplace and offered insight into how area leaders can work together with international partners to expand global trade and enhance Houston’s economic prosperity.

Join the conversation on Twitter with hashtag #GlobalCities. Photos courtesy of John Everett.

Roundtable Presentations:

View Bruce Katz's presentation on Houston's next economy »
Download Marek Gotman’s presentation on workforce development (PDF) »
Download Amy Liu's presentation on regional export planning (PDF) »

Bruce Katz, Brookings Vice President & Founding Director, Metropolitan Policy Program

Gina Luna, Chairman of JPMorgan Chase for Houston

Bruce Katz, Brookings Vice President & Founding Director, Metropolitan Policy Program

Video

Event Materials

Participants

Moderator

Amy Liu

Co-Director and Senior Fellow, Metropolitan Policy Program

Panelists

Bruce Katz

Vice President and Director, Metropolitan Policy Program
The Adeline M. and Alfred I. Johnson Chair in Urban and Metropolitan Policy

Honorable Peter Ammon

Ambassador

Honorable Richard M. Daley

Former Mayor of Chicago
Chairman

Dr. David Leebron

President

Gina Luna

Houston Market President

Amy Liu

Co-Director and Senior Fellow, Metropolitan Policy Program

David McClanahan

President and CEO

The U.S., China and Africa: Pursuing Trilateral Dialogue and Action

Mon, 13 May 2013 14:30:00 -0400

Event Information

May 13, 2013
2:30 PM - 4:30 PM EDT

Falk Auditorium
Brookings Institution
1775 Massachusetts Avenue NW
Washington, DC 20036

With six of the ten fastest growing economies in world, sub-Saharan Africa is attracting both American and Chinese investors. The growing importance of sub-Saharan Africa to the global economy has made the region a focal point for the differing policies of the United States and China. China recently pledged significant financing to Africa over the three year period from 2012-2014, while the U.S. looks to extend the Africa Growth and Opportunity Act ahead of schedule. Despite the opportunities and growth in the region, the U.S., China and Africa all face shared and separate challenges in the areas of security, trade, investment, foreign policy, and natural resource extraction and management.

On May 13, the Africa Growth Initiative and the John L. Thornton China Center at Brookings, with the Institute for Statistical, Social, and Economic Research at the University of Ghana and the Chinese Academy of Social Sciences in Beijing, hosted a discussion to examine the relationships among the U.S., China and African states. This forum was the first in a series, which brings a balanced perspective to the examination of the challenges and opportunities for trilateral dialogue and action.

Economic Growth, Energy, and Economic Partnership: Japan’s Current Obstacles and New Opportunities

Fri, 03 May 2013 15:00:00 -0400

Event Information

May 3, 2013
3:00 PM - 3:50 PM EDT

Falk Auditorium
Brookings Institution
1775 Massachusetts Avenue, N.W.
Washington, DC 20036

In the four months since Prime Minister Shinzo Abe was inaugurated in Japan, his Cabinet has pushed forward in rapid succession an unprecedented series of potentially transformational economic policies. On May 3, the Center for Northeast Asian Policy Studies (CNAPS) at Brookings hosted an address by H.E. Toshimitsu Motegi, minister of economy, trade and industry of Japan.

In his address, Minister Motegi described the steps necessary for Japan to continue to move forward. He touched on Japan's growth strategy, membership in the Trans-Pacific Partnership (TPP) and energy policy.

Richard Bush, senior fellow and director of CNAPS, provided a brief introduction. Brookings Senior Fellow Mireya Solís, the Philip Knight Chair in Japan Studies, moderated the discussion.

Video

Economic Growth, Energy, and Economic Partnership: Japan’s Current Obstacles and New Opportunities

Audio

Economic Growth, Energy, and Economic Partnership: Japan’s Current Obstacles and New Opportunities

Transcript

Uncorrected Transcript (.pdf)

Event Materials

President Obama's Trip to Mexico Emphasizes America's Future Economic Prosperity and Security

Diana Villiers Negroponte and Ted Piccone — Thu, 02 May 2013 00:00:00 -0400

Mexico and the U.S. are mutually dependent on one another for their collective and respective economic and national security interests. President Obama’s meetings with Mexico’s new president Enrique Pena Nieto will certainly cover border security issues, weapons, drug trafficking and immigration, but these two leaders will want to find ways to further cement the economic relationship between the two countries. Earlier this week, Senior Fellows Ted Piccone and Diana Negroponte sat down together to examine the importance of these talks.

Video

President Obama's Trip to Mexico Emphasizes America's Future Economic Prosperity and Security

Authors

Image Source: © Kevin Lamarque / Reuters

Obama’s Mexico Trip: Putting Trade and Investment at the Top of the Agenda

Diana Villiers Negroponte — Thu, 02 May 2013 09:00:00 -0400

President Obama recognizes that security is a pervasive problem in the bilateral relationship between the U.S. and Mexico. But in his April 30 press conference prior to setting out for Mexico, Obama highlighted the U.S.-Mexico trade relationship:

“A lot of the focus is going to be on economics. We’ve spent so much time on security issues between the United States and Mexico that sometimes I think we forget this is a massive trading partner responsible for huge amounts of commerce and huge numbers of jobs on both sides of the border. We want to see how we can deepen that, how we can improve that and maintain that economic dialogue over a long period of time.”

Beyond the statistics of expanding trade, what more should the presidents discuss?

Total two-way trade reached $494 billion in 2012, which according to Mexican Ambassador Medina-Mora means more than $1.3 billion per day; almost $1 million dollars per minute. In absolute terms, Mexico is America’s third largest trading partner, and in 2012 U.S. exports to Mexico were $216.3 billion. According to Medina-Mora this is more than the combination of U.S. exports to all the countries with which the United States has a trade agreement in place – except for Canada. Surprisingly, it is more than U.S. exports to Japan and China combined, that is $180.6 billion.

We agree that exports to Mexico both maintain and create jobs in the United States. The U.S. government estimates that each additional billion dollars in new exports supports more than 6,000 new jobs. According to the U.S. Chamber of Commerce, almost 6 million U.S. jobs rely on trade with Mexico, the consequence of which is the potential creation of 107,000 new U.S. jobs.

Furthermore, individual states benefit from exports to Mexico such as Arizona, California and Texas which hold Mexico as their main export destination. Mexico is also the second destination for exports from 20 other states and is ranked among the top five export destinations for 34 states.

Investment flows are also mutually beneficial. According to the U.S. Trade Representative’s office, sales of services in Mexico by majority U.S. owned affiliates were $34.4 billion in 2010. Sales of services in the United States by majority Mexico-owned firms were $4.8 billion. According to the U.S. Embassy in Mexico, the United States currently provides 41 percent of all foreign direct investment in Mexico, benefiting more than 21,139 companies.

Beyond the numbers, the reality of trade and investment is that the United States and Mexico compete together in the global economy. Production and supply chains in North America are deeply integrated with the U.S. content of Mexico exports to the United States estimated at 40 cents on the dollar. This compares to 25 cents for Canadian exports to the United States and 4 cents for China and 2 cents for the European Union, according to a Wilson Center report. In short, there exists a growing integrated manufacturing platform that takes advantage of geography, time zones and cultural affinity.

The challenge ahead is how to build on that integration for the forthcoming Trans Atlantic Trade and Investment talks with the European Union. The development of common standards and regulations will impact both Mexican and Canadian industry. Therefore, they need to be either at the table, or close to the negotiations. How close will the consultations with the Mexican trade delegation be? Ideally, the Mexicans would like to be at the negotiating table, but that is improbable. More likely is a commitment from President Obama to consult closely with the Mexican delegation. This could include both pre-talks and post-talk briefings, reinforcing Obama’s call “to maintain the economic dialogue over a long period of time.” On the European side, Turkey wishes to have a close consultative arrangement with the EU negotiators. This creates a balanced need for consultations with immediate trading partners.

Related to the growth in two-way trade is the need to facilitate movement of trucks across the U.S.-Mexico border. Despite an increased use of pre-clearance procedures, Mexican trucks must line up several kilometers from the border while they wait their turn to reach the fast lane that leads up to and through the U.S. border. Public-private partnerships are needed to construct the access roads some 10 kilometers from the border so that pre-cleared vehicles can move rapidly through the border zone. Currently, GPS vehicle trackers are used to link the sending and receiving manufacturers with U.S. Customs and Border Patrol (CBP). Before the truck even reaches the border post, CBP will know the content and value of the merchandise, as well as specifications on the cab and its driver. Only if tampering is detected will CBP stop the truck for secondary inspection, otherwise the truck sails through the border and onto its final destination. The Mexican private sector has demonstrated interest in constructing those access roads, but it needs presidential mandates from both governments to support the projects, as well as Mexican government purchase of necessary land.

Increasingly, the economies of both the U.S. and Mexico depend upon each other. There is much for the presidents to discuss and many challenges lie ahead, including productivity and education in both our countries. As President Obama begins his second term, it is constructive for him to put energy and political will into deepening that economic relationship.

Authors

Diana Villiers Negroponte

Free Trade Is Not Quite President Obama's Neglected Stepchild, But...

Bill Frenzel — Wed, 01 May 2013 00:00:00 -0400

In the first Obama term, trade was not quite a step-child, but neither was it a priority. Mostly, the Obama trade team concentrated on improving enforcement of trade laws. That is useful work, but it’s no fun for trade enthusiasts. They would rather play offense by opening markets instead of looking for ways to slow down trade.

The team did manage to complete 3 trade treaties handed to it by its predecessors. Only one of them, Korea, required significant renegotiation. The President’s most important trade action was the initiation of the Trans-Pacific Partnership (TPP) negotiations, effectively managed by U. S. Trade Representative Ron Kirk.

Political polarization makes everything difficult, but the Administration faced other daunting trade problems, too. One of its principal constituencies, big labor, opposes most trade treaties. That labor position has been a powerful deterrent to trade expansion policies.

Most important treaties passed by other administrations in the post-war period were handled under the “fast track” process, now called Trade Promotion Authority, which guarantees an up or down vote in both houses. President Obama and his trade people have never had that authority.

The 2013 State of the Union address was the first sign of change. In it, the President served notice that he has moved trade up the priority ladder in his second term. He cited two major negotiations: the TPP which he hopes to complete this year; and a new initiative, the Trans-Atlantic Trade and Investment Partnership (TTIP).

The Trans Pacific Partnership has been moving along through a dozen and a half negotiating sessions. Until a few months ago, it had a less than impressive list of participants. Then Canada decided to join. Japan followed shortly. Those new entrants, and others as yet unannounced, but known to be waiting in the wings, gave a dose of steroids to the TPP. It began to look more muscular, and therefore more attractive to American businesses.

Surprisingly, the push for TTIP originated in Europe. There, leaders tired of recession and austerity saw it as an economic booster shot. Apparently, President Obama thought so, too. He accepted the difficult challenge of negotiating a Trans-Atlantic agreement. This long-time dream of American and European trade expansionists will require extended and arduous negotiations with no assurance of completion in the next 3.5 years left in Obama’s term. But, it is a prize worth the effort. Europe amounts to about 20% of total US two-way trade.

Taken together, TPP and TTIP form an aggressive effort which, if successful, could be the needed substitute for the moribund WTO Doha Development Round. They could spark a growth spurt in world trade. They also might be the force which causes the WTO multinational Doha Round to arise from its sick-bed. This new Obama trade priority has escalated US trade policy from the minor leagues to the majors.

Last week came more good news on the trade front. Stories from the White House indicate that the President intends to nominate Michael Froman as his new US Trade Representative to replace Kirk, who returned to private life after 4 years on the job. Froman, is a White House insider who previously advised the President on international economic policy, and who is held in high regard by many business people.

The US has been fortunate to have a succession of great Trade Representatives over the 50 year history of the office. Some of the most effective have been those who enjoyed both the ear, and the confidence, of the President. Those who lacked ready access to the President found the job more difficult. If history is any guide, Froman would seem to possess a critical asset for his new trade job.

In the first Obama term, some trade observers were wont to say that the President was wasting the most pro-trade Congress in years. This term will test that assessment of both the President and Congress. Will Congress’ pro-trade proclivities allow it to overcome the polarization that has stalemated the legislative process? Or will the on-going fist-fight under the Capitol dome doom trade legislation that might otherwise claim majority votes?

Trade’s higher priority and increased visibility are assured, but its success is not. The Congress has the right inclinations. The President is showing leadership. The omens appear favorable. But, both branches of government have a long way to go before they can bring home the difficult treaty legislation needed to increase US and world trade.

Authors

Bill Frenzel

Publication: Forbes

A Conversation on President Obama’s Trip to Mexico and Costa Rica

Joshua Meltzer, Diana Villiers Negroponte, Ted Piccone and Neil Ruiz — Wed, 01 May 2013 17:59:00 -0400

In advance of President Obama’s trip to Mexico and Costa Rica later this week, Brookings scholars Ted Piccone, Joshua Meltzer, Neil Ruiz and Diana Negroponte discuss the main priorities on the agenda between the United States, Mexico and Costa Rica. Topics covered include: expanding trade and economic cooperation between the U.S., Mexico and Central America, U.S. immigration reform, border security, drugs, crime and violence in Mexico and Central America, energy cooperation, and local politics in Mexico.

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“I think there has a been a view around for awhile now that the bilateral relationship at least with Mexico has been dominated by drugs and violence. And I think there is going to be a concerted effort here to refocus attention on to the depth and size of the economic relationship.” — Joshua Meltzer

“It’s a second term trip for the president, but its early in his second term and I think he’s got a lot of heavy lifting still to do on issues that are particularly important to Latin America and especially important to Mexico and Central America. These issues [jobs and the economy, immigration, security] are not the typical ones on the foreign policy agenda. These are issues that are bread and butter, hot-button domestic political issues but they are very important to the Latins, particularly in Mexico and Central America.” — Ted Piccone

“Immigration is a hot button issue of course. It’s something that is still alive here in the U.S. There’s no reform yet to report back to Mexican and Central American leaders. But these meetings actually set the stage for building the relationship for working together once immigration reform is implemented into law.” —Neil Ruiz

“This is a time when Enrique Pena Nieto, the newly elected Mexican president, has got a chance to really celebrate the strength of the Mexican economy: 3.5 percent GDP growth this year, 3.9 percent GDP growth last year… [and] a growing middle class, which means more people with a car and an ability to take a vacation, with iPods, with cellular telephones, and more mobile.” —Diana Negroponte

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Don't Forget Free Trade with Turkey

Kemal Kirişci — Mon, 15 Apr 2013 00:00:00 -0400

Last month, both the U.S. and the European Union (EU) took important internal steps to prepare the ground work for negotiations to establish the Transatlantic Trade and Investment Partnership. TTIP would create the largest integrated market in the world, bringing together half of the world’s GDP and 30 percent of world trade. If it went beyond eliminating already low-level tariffs and succeeded in aligning regulatory standards on both sides of the Atlantic, it also could generate more than 3 percent GDP growth. Beyond bilateral effects, TTIP could also spill over to global-trading trends and serve as a tool for strengthening the Western economic order. But in its current form TTIP would leave Turkey, currently the sixteenth-largest economy in the world, and a long-standing transatlantic ally, out in the cold.

Turkey has been deeply integrated within the EU’s internal market since the establishment of a customs union in 1996. Turkey is in membership negotiations with the EU and has therefore already adopted a number of the EU’s internal regulations.

But under current rules, Turkey must negotiate its own agreement with countries the EU signs preferential trade agreements with. This puts Turkey at a significant disadvantage, as the EU-Turkey Customs Union is structured to allow these countries to access Turkish markets without having to reciprocate by opening their own markets. As long as these agreements were signed with countries that had smaller economies, the cost to Turkey was negligible. But the EU has recently begun negotiating and signing trade agreements with countries that have relatively large economies and high volumes of foreign trade, including Canada, Japan, India, Korea and Mexico. Most of these countries have exports that compete with Turkish ones. Thus, it’s a “lose-lose” situation: Turkey faces greater competition in the EU as well as in its own domestic market without enjoying preferential access to these other markets.

Along with other grievances, this asymmetry helps to explain Turkish prime minister Recep Tayyip Erdogan’s announcement in February that Turkey should consider joining the Sino-Russian Shanghai Cooperation Organization (SCO) in favor of the EU. Even though he subsequently retracted this position, his economy minister, Zafer Caglayan, argued in early April that the EU Customs Union had become “an agreement of servitude” and that Turkey either had to renegotiate new terms or get out of the deal. Caglayan’s remarks may well be a bluff intended only for domestic consumption.

Nevertheless, the exclusion of Turkey from TTIP would only aggravate current grievances about the Customs Union, ranging from ground transportation quotas (which deny Turkey the possibility of exporting greater volumes of goods) to requiring Turkish businesspeople to obtain visas for travel to the EU while the goods they sell travel freely. To many in Turkey, such practices seem to be barriers that deny Turkey its full export potential to the EU market.

A study by the German IFO Institute lists Turkey among countries that are likely to experience a net loss of welfare from TTIP. Such an outcome would aggravate existing grievances and create additional pressures on Turkey to break away from the EU and the broader Western liberal order— an outcome detrimental to the interests of both the EU and the United States.

Turkey was a participant in the formation of the global economic order at the end of the Second World War and has remained a part of it in spite of occasional ups and downs. The EU’s engagement with Turkey, first through a Customs Union and then through the pre-accession process, has bolstered revolutionary political and economic reforms. This contributed to massive economic growth in Turkey, and it became a source of stability in a region that has long suffered from entrenched conflicts. Now a model for economic and political transformation in its neighborhood, Turkey has become a major player in integrating the Balkans, the southern Caucasus and the Middle East into the world economy.

Yet in the last few years, as accession negotiations with the EU stalled, Turkey has looked for other economic opportunities in its immediate neighborhood and beyond. This period has also seen the quality of Turkish democracy decline alongside setbacks in earlier political reforms, particularly freedom of expression. TTIPing Turkey would reengage it with the West.

The instability in the Middle East, as well as growing recognition in Turkey of the economic and security advantages that come with the West, have been gently pushing Turkey back toward Europe. The EU is reciprocating with efforts to revive the accession process. In addition, the recent apology by Israel to Turkey will help deepen cooperation with the United States. And the truce announced by the leader of the separatist PKK is opening the prospects of finding a political solution to the Kurdish problem in Turkey, which in turn should help improve the quality of democracy in the country.

While U.S.-EU negotiations on TTIP are going to be challenging, this should not be an excuse for excluding Turkey from the partnership. The EU must rise to the challenge of recognizing Turkey’s concerns. This year marks the fiftieth anniversary of relations between the EU and Turkey. But the EU has not shown any concern for the interests of its long-standing partner. The TTIP impact report prepared by the European Commission makes no reference to Turkey or how TTIP would impact on the customs union. At least a member of the European Parliament has asked the European Trade Commissioner to consider this question, which may be a step in the right direction.

The United States also should avoid to the temptation to reap the benefits of access to Turkish markets without opening its own market to Turkey. The benefits of involving Turkey in TTIP far outweigh the costs resulting from the additional burdens of the negotiation process. TTIP would create more jobs for Americans and Europeans, not just Turks.

Close economic integration between Turkey and its neighborhood means that a Turkey in TTIP would also benefit countries ranging from Armenia to Ukraine—and even countries like Iraq and Syria, once they achieve some stability. Turkey under TTIP would motivate other countries to join the Western economic order and support the values associated with it. Such an outcome would be win-win for the EU, the United States, Turkey, and a Western economic order under challenge from other parts of the world.

Editor's note: This article was originally published by The National Journal.

Authors

Kemal Kirişci

Publication: The National Interest

The Obama-Peña Nieto Meeting: Critical Issues in the Upcoming U.S.-Mexico Talks

Thu, 11 Apr 2013 16:00:00 -0400

Event Information

April 11, 2013
4:00 PM - 5:30 PM EDT

Falk Auditorium
Brookings Institution
1775 Massachusetts Avenue NW
Washington, DC 20036

Next month, President Barack Obama will meet with Mexico’s newly elected President Enrique Peña Nieto. While the two leaders met briefly last November, this meeting—Obama’s first in Latin America since his own re-election—will address major issues of concern to both nations including trade and investment, energy, border security and infrastructure, illicit drug trafficking and public safety. With significant political and economic consequences at stake, the Obama-Peña Nieto meeting will take place as both leaders face complex and contentious domestic challenges that have a direct impact on the bilateral relationship.

On April 11, the Latin America Initiative at Brookings hosted a discussion on the critical issues that will dominate the Obama- Peña Nieto meeting. Arturo Sarukhan, Brookings distinguished affiliate and former ambassador of Mexico to the United States, provided opening remarks on the larger political context for the bilateral meeting. A panel discussion followed featuring contributors to the forthcoming book, The End of Nostalgia: Mexico Confronts the Challenges of Global Competition (Brookings, May 2013). Brookings Nonresident Senior Fellow Diana Villiers Negroponte moderated the discussion.

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