Temas de relações internacionais, de política externa e de diplomacia brasileira, com ênfase em políticas econômicas, em viagens, livros e cultura em geral. Um quilombo de resistência intelectual em defesa da racionalidade, da inteligência e das liberdades democráticas.
O que é este blog?
Este blog trata basicamente de ideias, se possível inteligentes, para pessoas inteligentes. Ele também se ocupa de ideias aplicadas à política, em especial à política econômica. Ele constitui uma tentativa de manter um pensamento crítico e independente sobre livros, sobre questões culturais em geral, focando numa discussão bem informada sobre temas de relações internacionais e de política externa do Brasil. Para meus livros e ensaios ver o website: www.pralmeida.org. Para a maior parte de meus textos, ver minha página na plataforma Academia.edu, link: https://itamaraty.academia.edu/PauloRobertodeAlmeida;
Which country is better equipped to win a US-China trade war?
Eswar Prasad
Brookings Institution, Monday, August 12, 2019
The United States and China are clearly on a collision course. Chinese companies abscond with intellectual property, and President Trump introduces tariffs on Chinese goods; President Xi Jinping responds with his own levies, so Trump adds more. China allows the value of its currency to fall, and the United States brands it a currency manipulator. We are now on the verge of all-out economic warfare.
These are the world’s two largest economies, and the collapse of trade between them would hardly bring either one to a grinding halt. But the combatants are not evenly matched. China might seem in a better position to cope with a trade war, since it is a heavily managed economy and the government squashes political resistance. Yet its every maneuver carries enormous risks. Meanwhile, Trump, who manages a durable and flexible economy, is not exactly seeking victory for the American way of doing business. His approach, in some ways right out of Beijing’s playbook, would make our economy quite a bit more like China’s.
The breakdown in trade between the two countries is already causing pain in both economies, as soybean farmers in the Midwest and Chinese textile exporters in Guangzhou can attest. The battle will intensify if rising tensions close off investment flows and dampen the movement of tourists and students between two countries. But the U.S. economy is about 50 percent larger than China’s, and is less dependent on trade, so its prospects look better. And China exports more to the United States than it imports from the United States (a fact that clearly riles up Trump and was a key instigator for the trade war). So the near-term pain will be greater for China.
But Beijing does have some advantages. One is the structure of its (mostly) command economy, which is dominated by state enterprises. The majority of banks in China are also state-owned, making it easy for the government to generate a surge of cheap credit—and the subsequent investment that boosts growth. The second advantage is the structure of China’s political system, in which dissent is easier to shut down and bad news about the trade war can be filtered out.
Still, even a state-dominated economy with many economic weapons has to be cautious about which ones it uses; some of them could backfire badly.
One of China’s greatest weapons in a trade war is its ability to disrupt the work of American companies that want to sell into China’s enormous and fast-growing markets or that use China as part of their global supply chains. But other foreign companies and investors could also begin to see China as an unpredictable and volatile business environment, unconstrained by the rule of law. This would hurt China’s plans for modernizing its economy with the help of foreign investments and foreign technological and managerial expertise.
China could also further cheapen the value of its currency, the renminbi, to offset U.S. tariffs. Here, too, the government faces constraints. Fear of a major devaluation could cause foreign investors to pull their money out of China, and domestic investors might follow. This happened in 2014-15, when a modest government-orchestrated devaluation set off panic-driven capital outflows in anticipation of further depreciation.
Moreover, even an autocratic government cannot count on getting carte blanche from its people. Xi is not immune to domestic political pressures and must carefully manage the tricky balance between using nationalist sentiments as a rallying cry and actually delivering good economic performance.
Theoretically, China can stimulate a flagging economy by ordering a burst of investment that boosts gross domestic product growth in the short term. But this would probably generate more bad loans in an already fragile banking system. A protracted trade war would also halt even modest momentum toward market-oriented reforms, a putative objective of the Chinese government. This would hurt the economy’s long-term growth prospects. And China’s plan to shift the focus of its economy from staid and inefficient state enterprises to high-productivity and high-value industries will fall short if it loses access to technology from the United States and other Western nations.
In some ways, Trump seems more constrained than Xi because of America’s democratic political system, its more laissez-faire economy and the limits on his executive power. But he, too, has some elements in his favor as he does battle with China. Trump has the advantage of managing an economy that is enormously flexible and resilient. And getting tough on China resonates not just with his political base but even with Democrats, many of whom have long called for aggressive U.S. action against Chinese trade and currency practices, even if they disagree with Trump on tactics.
Yet in exercising his power, he could end up making America’s economy a bit more like the state-dominated one operated by Beijing—and, in so doing, permanently damage the U.S. free market. To rescue the agricultural sector from the consequences of the trade war, Trump has alreadydispatched $28 billion in government subsidies. He has also jawboned American companies to move their production bases back to U.S. shores, rather than letting them make their own commercial decisions. Trump has even pressured the Federal Reserve, whose independence is seen as sacrosanct, to lower interest rates and suggested that the Fed should help drive down the value of the dollar. With such moves, he risks undermining the true strengths of the United States: the institutions that make the U.S. dollar and the American financial system so dominant.
What’s worse, Trump suggests that the rule of law is up for negotiation. After imposing sanctions on Chinese technology companies such as ZTE and Huawei for running afoul of U.S. rules, he hinted that those sanctions could be negotiated away as part of a trade deal. He is fighting a Pentagon process that could award a defense contract to Amazon, whose CEO (who owns The Washington Post) has criticized him.
China has made its lack of independent institutions a source of strength in dealing with external economic aggression. In that model, Trump sees something Washington should copy—and seems ready to abandon what makes the United States special. This truly is a trade war with no winners.
Landry SignéBrookings Institution, Thursday, May 30, 2019
INTRODUCTION
As of April 29, 2019, 22 countries have deposited their instruments of ratification of the African Continental Free Trade Area (AfCFTA) agreement[1]to the African Union (AU), meeting the threshold for the agreement to come into effect. The AfCFTA entered into force on May 30, 2019.[2]
The significance of the AfCFTA cannot be overstated: It will be the world’s largest free trade area since the establishment of the World Trade Organization (WTO) in 1994.[3]Landry Signé has estimated that under a successfully implemented AfCFTA, Africa will have a combined consumer and business spending of $6.7 trillion in 2030.[4]He also finds that the AfCFTA will have a significant impact on manufacturing and industrial development,[5]tourism,[6]intra-African cooperation, and economic transformation.[7]UNECA has predicted it will raise intra-African trade by 15 to 25 percent, or $50 billion to $70 billion, by 2040, compared to an Africa without the AfCFTA. The International Monetary Fund (IMF) similarly projects that, under the AfCFTA, Africa’s expanded and more efficient goods and labor markets will significantly increase the continent’s overall ranking on the Global Competitiveness Index.[8]Increased market access, in turn, is expected to enhance the competitiveness of industries and enterprises, the exploitation of economies of scale, and the efficacy of resource allocation.[9]
While the AfCFTA’s ratification is a cause for celebration, much work remains as critical parts of the agreement have yet to be completed—including countries’ schedules of tariff concessions and services commitments, rules of origin, investment, intellectual property, competition, and a possible protocol on e-commerce.
The extent to which the AfCFTA will reduce barriers to intra-African trade is largely linked to the ongoing negotiations. This piece explores the implications of those negotiations, with a particular focus on market access for goods and services and rules of origin. It also briefly touches upon the outstanding regulatory issues.
IF NOT BREXIT, MIGRATION, OR POPULISM, WHAT ARE EUROPE’S THREE BIGGEST CHALLENGES?
It’s not that these issues do not matter, but the attention devoted to them is all out of proportion. Meanwhile, three changes are going to upend the way we work and live and revolutionize the relationship between the state and the individual. These are climate change, aging populations, and digital revolutions—the “Big 3,” as we call them in a newCarnegie Europe report.
Their effects are going to require Europeans to adapt in ways that we are only beginning to understand. The Big 3 will also have a domino effect. For example, if climate change makes parts of Europe uninhabitable, or if automation causes upheaval in labor markets, migration both within and into Europe will likely go up. The EU needs to do all it can to manage the transitions, which have already begun.
HOW CAN THE EU OVERCOME THE CURRENT POLITICAL PARALYSIS TO SHIFT ITS PRIORITIES?
The EU is devoting some attention to the Big 3, but arguably too little and too slowly, partly because its leaders’ attention is elsewhere. Most mainstream parties are also running out of ideas. Voters sense that, and are being lured away by populist narratives.
Prioritizing the Big 3 could change the debate and lead to a more positive vision for the EU. And the timing is right, with new EU leadership taking office this year and citizens, especially youth, demanding radical change. But to put a new vision in place, the EU will need to redirect its resources and policies and make a clear argument to explain why it is adjusting course.
WHAT ACTIONS SHOULD THE EU TAKE?
Out of the three, the EU has devoted the most attention to climate change, and with some success. But we argue that the current approach—essentially “greening” the current economic model—will not work. Even if wealthier societies ditch single-use plastics, for example, they cannot keep growing without creating an unsustainable impact on the environment.
Europeans should focus on well-being instead of growth, primarily by using fewer but higher-quality products and getting more mileage out of them. Reducing consumption is essential to building a sustainable, low-carbon economy.
One way the EU could ease this transition is to lead an overhaul of the tax system. Taxation should shift from focusing on income generated by labor to focusing on incentives for businesses and people to cut carbon emissions, use renewable energy, and build and use clean products and infrastructure.
The demographic change is going to be tough to tackle. Barring a large inflow of migrants—which many European voters have repeatedly shown they do not want—safety nets will run out of money. This is because the number of working-age people, who pay into the schemes, will shrink relative to the number of retirement-age people. Also, robots will take many jobs currently performed by humans, further eroding tax revenue.
Valášek is the director of Carnegie Europe, where his research focuses on security and defense, transatlantic relations, and Europe’s Eastern neighborhood.
People will likely need to work later in their lives and continually re-educate themselves to gain new skills that suit a changing labor market. Unemployment schemes, such as the European Fund for Transition, should be revamped to better support workers as they move between jobs and to reward caregivers and volunteers as populations age.
Of course, each country will be affected differently. That is why the EU has a vital role to play: unless people all across Europe use fewer natural resources, and some kind of EU-wide floor is put under job market uncertainty, people will travel en masse out of the most affected countries, putting other countries’ resources and safety nets under stress.
The EU could help, for example, by developing a common energy market and capping resource use. It could also pay into and accredit nonstandard education methods, such as online learning, and possibly create EU-wide unemployment funds.
Lastly, the EU is no slouch when it comes to addressing technological challenges. For example, it has already passed a directive requiring more stringent safety standards for critical IT networks. But the measure is not enough. Further steps are needed to make sure companies comply, such as financial penalties for lax security. The EU must also raise public awareness about digital safety, such as through early education and an EU-wide labeling system on product security. It could also help ensure that safeguards are built into the design of artificial intelligence technologies and could help define and dismantle harmful online content.
HOW CAN THE EU, NATIONAL AND LOCAL GOVERNMENTS, BUSINESSES, AND COMMUNITIES WORK TOGETHER?
The encouraging bit is that at the national and local levels, many possible solutions to the Big 3 are being tested and implemented. In France, for example, people earn credit for volunteer work and apply it toward setting up a business or getting training. This is a good model for how to deal with the side effects of automation.
In Germany, numerous energy commons—essentially households or neighborhoods—have pooled their money to buy wind or solar power generators. So many people have done so that these commons now own one-third of all renewable power generation in the country. That is hugely encouraging; it shows that when the EU or states are not acting, communities and businesses are leading the way.
The EU and national governments need to literally watch, listen, and learn. Then they need to connect and support these initiatives through, for example, creating an EU community initiatives fund and developing joint business-community projects.
WHAT SACRIFICES WILL EUROPEANS HAVE TO MAKE DURING THE INEVITABLE TRANSITIONS?
A lot of the predictability that governs our lives may disappear. For example, we have to move away from the “take-make-use-waste” lifestyle, in which companies use natural resources to make products that are used once or twice and then discarded. Products may need to last much longer, as they used to in the not-so-recent past. When they break down, it should be easier and cheaper to repair them than to replace them.
This could have a number of second-order implications: not only will the design of consumer goods need to change, but many shops will need to reorient from retail to repair, with the new jobs paying more than the old ones (essentially because repair is more complicated than retail)
WHAT ARE THE RISKS OF NOT DOING ENOUGH?
They are huge. Failure to tackle climate change alone could lead to more conflict over resources and further divide states and communities. Failure to prepare health and welfare systems for aging populations could leave many citizens without care. Failure to support people during job transitions could lead to wider income gaps and increased poverty. Failure to tackle the impact of technology on democracies could make it increasingly easier for authoritarian politicians to dominate our societies.
But there are good reasons to be optimistic. Traditionally, the EU has had the convening power and assets to solve problems together. It has been able to draw on the extensive, diverse expertise of half a billion people and make commitments stick.
COULD THE EU PLAY A LEAD ROLE IN SETTING GLOBAL NORMS? DOES IT HAVE A COMPARATIVE ADVANTAGE?
Yes, it can, and on some issues such as climate change, it must—in the sense that no other power, neither the United States nor China, currently seems willing to lead. If Europe does not lead on climate change and support poorer, developing countries to grow sustainably, the migration crisis could worsen, even if conflict over resources takes place far away.
The EU has a few comparative advantages. The standards it sets for the EU’s large internal market of $20 trillion tend to get adopted by other economies trading with it. It also has a history of setting rules that serve the public interest because no single country controls them, which adds to Europe’s global credibility.
In 2006, the Brookings Institution created the Global Economy and Development program to explore the most pressing issues facing an increasingly globalized world. Ten years later, the program has become a critical source of innovative thinking on how to improve global economic cooperation.
In honor of this anniversary and in the wake of a year that has shaken perceptions of globalization, we have released 11 essays to help make sense of the biggest debates shaping the global community, and to provide a path forward in uncertain times.
Sincerely, Kemal Derviş Vice President and Director, Global Economy and Development
In 2006, the Brookings Institution determined that a standalone research program was needed to have the depth and breadth to explore the most pressing issues facing an increasingly globalized world. Ten years later,as Brookings celebrates its centenary, the Global Economy and Development program has become a source of innovative thinking on how to improve global economic cooperation and fight global poverty and sources of social stress.
In celebration of this anniversary, these 11 essays below reflect the Global Economy and Development program’s most recent work and delve into the critical issues facing all those concerned about globalization.
Over the past several years, concerns that technology and globalization lead to ever greater inequality have reached fever pitch in the U.S. and beyond. To understand what’s behind this anxiety, three distinctions are useful.
At no point in history have more children been enrolled in formal education. Thanks to global commitments and movements such as the Millennium Development Goals and Education For All, more than 90 percent of all primary-age children are now in school.
After more than a decade of relatively strong economic progress, sub-Saharan Africa’s aggregate GDP growth is slowing as external shocks threaten recent advances. According to the International Monetary Fund’s April 2016 Regional Economic Outlook for sub-Saharan Africa, between 2000 and 2015, the continent grew at an average rate of 5.5 percent.
For the better part of the past decade, close to 80 percent of countries in Latin America were ruled by center-left and populist governments. However, this hegemony seems to be coming to an end, with center-right parties recently rising to power in Argentina, Brazil, Guatemala, Paraguay, and Peru. Should this come as a surprise? The short answer is no.
Globalization—the integration among national economies of markets for goods, services, technology, capital flows, and, to some degree, labor—has played an enormous role in advancing global prosperity. Yet a backlash has emerged, manifested in the recent U.K. Brexit vote, strident “local first” demands, and calls to block trade agreements. The issues are not entirely new.
Incomes in developed and developing countries have been converging, especially since the turn of the century, but the unevenness of that trajectory merits further examination. Beginning in the early the 2000s, the average per capita income of developing countries (adjusted for purchasing power parity) has increased substantially relative to the average per capita income of developed countries.
Today, standard benchmarks of progress, productivity, job quality, and democracy are being upended. Income-based measures such as gross domestic product (GDP) served us well for decades, yet when GDP counts pollutant-generating economic activity on the positive side of the balance sheet, or when it fails to measure unpaid labor activity, it falls short. This is especially worrying given that we live in a world wracked by social inequities.
Since 1945, the United States has led international efforts to expand trade and integrate markets, helping underpin U.S. as well as global growth. Yet 2016 Republican presidential nominee Donald Trump is proposing policies that would turn the U.S. away from greater economic integration and likely provoke a trade war. Democratic nominee Hillary Clinton has backed away from supporting the Trans-Pacific Partnership (TPP) Agreement—a 12 nation trade deal signed by President Obama in February 2016.
The Paris Agreement on climate change overcame the notion of a “horse race” between development and climate responsibility. At its core is a promise to keep global warming to “well below 2 degrees Celsius” and to “pursue efforts for 1.5 Celsius or lower.” The agreement forms the basis of new international, cooperative, long-term climate change action plans with a shared sense of direction and responsibility.
Nine years ago the global urban population surpassed the world’s rural population, making it clear that the fate of cities will determine our future prosperity. As enshrined in the United Nations’ Sustainable Development Goals, for cities to thrive, action is needed to ensure that urban areas and human settlements are “inclusive, safe, resilient, and sustainable.” With the October 2016 U.N. Conference on Sustainable Housing and Urban Development (Habitat III) in Quito, Ecuador set to agree on a new global urbanization agenda for the next two decades, the time to advocate for inclusive, accessible cities is now.
The key question concerning the international monetary system is whether it can function in a manner that promotes global economic and financial stability rather than become a source of instability in itself or a channel through which such instability becomes more pervasive.