10 Quick Facts on US Trade

10 Quick Facts on US Trade. YaleGlobal. Farok J. Contractor. May 10, 2018

Trade offers many benefits for economies, and the outlook for the United States is not as grim as some political leaders suggest. Still, there are challenges for the US-Chinese trade relationship, explains Farok J. Contractor, professor at Rutgers Business School. The United States does have a hefty trade deficit with China in goods, but is also the world’s leading exporter in services and enjoys a surplus in services with China. US companies are innovative and entrepreneurial, recognizing they must guard their technology secrets in any trade relationship. The United States has operated with deficits against the rest of the world for decades because the country resists curtailing spending or increasing saving. Such patterns contribute to ballooning government debt, about half of which is held by foreign investors. Contractor warns the US pattern of deficit spending can continue only as long as three conditions hold: foreign and domestic Investors continue viewing the US dollar as a safe haven, foreign workers keep working for low wages, and the United States continues to create jobs. [Note: contains copyrighted material].

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What Is the U.S. Trade and Development Agency?

What Is the U.S. Trade and Development Agency? Center for Strategic & International Studies. Daniel F. Runde et al. January 30, 2018

 The U.S. Trade and Development Agency (USTDA) is a small independent federal agency whose mission is to help American “companies create U.S. jobs through the export of U.S. goods and services for priority development projects in emerging economies.” USTDA links American businesses to export opportunities in emerging markets by funding activities such as project preparation and partnership building in sectors including transportation, energy, and telecommunications. Since it was established 25 years ago, the agency has generated a total of $61 billion in U.S. exports and supported over 500,000 American jobs. In connecting American business to such opportunities, USTDA also links American technology’s best practices and ingenuity with U.S. trade and development policy priorities.

 USTDA is an instrument to enable American-led infrastructure development in emerging economies and, therefore, frequently sees increasing competition from government-backed Chinese firms and the challenge they can pose to American commercial engagement under the flag of One Belt, One Road (OBOR). OBOR is paving the way for Chinese engineering, procurement, and construction companies to prepare and develop infrastructure projects in OBOR countries in a way that favors Chinese standards, thereby exerting significant pressure to select Chinese suppliers. This creates a potentially vicious cycle—the more China builds, the faster their standards become the international norm, and, ultimately, this cycle could foreclose export opportunities for U.S. businesses and harm American competitiveness in global infrastructure development. U.S. exporters are increasingly requesting USTDA intervention at the pivotal, early stages of a project’s development, to compete in markets, such as the OBOR countries, where they frequently face Chinese competition. Of note, 40 percent of USTDA’s activities in 2016 were in OBOR countries across South and Southeast Asia, Central Asia, the Middle East, and Africa.

 Although there are other agencies that may seem to do work similar to USTDA, there are various aspects that make it a unique agency. This paper provides a brief description of USTDA, its origin and evolution, the impact on the U.S. economy and its proactive collaboration across U.S agencies. Finally, it offers a set of recommendations for USTDA on how to improve its operations and strengthen its role in the developing world. [Note: contains copyrighted material].

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Europe Turns to Russia, and Elsewhere, to Meet Rising Gas Demand in 2017

Europe Turns to Russia, and Elsewhere, to Meet Rising Gas Demand in 2017. Center for Strategic & International Studies. Nikos Tsafos. January 18, 2018.

 In 2017, Europe imported a record amount of natural gas: Russia’s exports rose by 8 percent, reaching an all-time high; Norwegian pipeline exports reached an all-time high as well, up 7 percent; pipeline imports from North Africa were slightly down, but imports of liquefied natural gas (LNG) rose by 16 percent—but still below their 2011 peak.

Higher imports came largely from higher demand. After a decade of almost steady decline, gas demand in Europe has risen three years now—a major reversal. Europe pulled in more gas from most major suppliers since there are no longer any systematic differences in pricing among them. Invariably, the headline take-away is likely that Europe became more dependent on Russian gas, which is true but also beside the point. The real take-away is that demand rose—and that a continent that will rely more on gas needs to remove the final obstacles in the way of a fully functioning internal market. [Note: contains copyrighted material].

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Why Do People Oppose Globalization?

Why Do People Oppose Globalization? YaleGlobal. Farok J. Contractor. June 15, 2017

Politicians are reaping gains by wrapping themselves in flags and directing hostility toward globalization. “Humankind is developing an emerging ‘global consciousness’ – a collective sensitivity to noble thoughts as well as to phobias and ignoble protectionism,” explains Farok Contractor, a professor of global management at Rutgers University. Contractor describes how responses to global connections divide societies. One example is the embrace of Valentine’s Day by many consumers in Asia while some religious fanatics in India target foreign practices for eroding cultural traditions. Likewise, voters in rural United States and Britain, areas with few foreigners, fell prey to scaremongering about immigration while the more educated and wealthy in cities may be less threatened by multicultural ideas. Angst over job losses, stagnant wages and changing industries is real, but unscrupulous media and populists manipulate audiences by blaming globalization, trade and immigration rather than automation or the quest for modernization by majorities in many countries. Contractor concludes that “Globalization is a symptom of human desire and ambition leading to ever-increasing connections.” Nations that resist globalization, rather than engaging in thoughtful examination and policymaking, will encounter many negative consequences. [Note: contains copyrighted material].

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The Payoff to America from Globalization: A Fresh Look with a Focus on Costs to Workers

The Payoff to America from Globalization: A Fresh Look with a Focus on Costs to Workers. Peterson Institute for International Economics. Policy Brief, 17-16. Gary Clyde Hufbauer and Zhiyao (Lucy) Lu. May 2017

Hufbauer and Lu, updating a landmark PIIE study made in 2005, calculate the payoff to the United States from trade expansion from 1950 to 2016 at $2.1 trillion. The payoff has stemmed from trade expansion resulting from policy liberalization and improved transportation and communications technology. The sum translates into an increase of $7,014 in GDP per capita and $18,131 in GDP per household. The potential gains from future policy liberalization could be as large as $540 billion for the United States by the year 2025, or an increase of $1,670 in GDP per capita and $4,400 in GDP per household. On the other hand, 156,250 manufacturing sector jobs were lost annually over the past 13 years, representing less than a percent of the number of people involuntary separated from their jobs each year. A more generous unemployment insurance program and expanded tax credits would help displaced workers adjust, the authors argue, while preserving the large gains resulting from trade expansion. [Note: contains copyrighted material].

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Global Order and the New Regionalism: Discussion Paper Series on Global and Regional Governance

Global Order and the New Regionalism: Discussion Paper Series on Global and Regional Governance. Council on Foreign Relations. September 2016.

Regional institutions and initiatives have proliferated in the twenty-first century. This latest wave of regional innovation raises, in new guise, a long-standing conundrum for global order and U.S. foreign policy: When is regional organization a useful, even essential, complement to the ends of global governance—financial stability, an open trading system, sustainable development, robust protection of human rights, or the end of civil wars—and when does it threaten or undermine the achievement of those goals? The new regionalism presents the prospect for new benefits for global order as well as new risks. How those challenges and risks are addressed, by the United States and by other member states, will determine whether a fragmented global order or more effective global and regional governance emerge over the next decade.
Five authors examine these dilemmas across five issue areas: finance, trade, development lending, human rights, and peace operations. In each issue area, regional actors and institutions have emerged that reopen and recast earlier debates about regionalism and its effects on global order. [Note: contains copyrighted material].

[PDF format, 88 pages, 1.75 MB].

Trade-Based Money Laundering: Overview and Policy Issues

Trade-Based Money Laundering: Overview and Policy Issues. Congressional Research Service, Library of Congress. Rena S. Miller et al. June 22, 2016.

The U.S. government has historically focused on TBML schemes involving drug proceeds from Latin America, particularly the Black Market Peso Exchange (BMPE). Although a number of anecdotal case studies in recent years have revealed instances in which TBML is used by known terrorist groups and other non-state armed groups, including Hezbollah, the Treasury Department’s June 2015 National Terrorist Financing Risk Assessment concluded that TBML is not a dominant method for terrorist financing.

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