Why did Trump end the WTO's Appellate Body? Tariffs - Chad P. Bown (PIIE) and Soumaya Keynes (The Economist)

REUTERS/Jonathan Ernst Why did Trump end the WTO's Appellate Body? Tariffs. Chad P. Bown (PIIE) and Soumaya Keynes (The Economist) Peterson Institute for International Economics, March 11, 2020 The world trading system has long depended on the Appellate Body of the World Trade Organization (WTO) to referee trade disputes. The Trump administration’s refusal to appoint new members has rendered that body defunct. The administration’s rationale invokes process and is written in legalese. The real explanation lies elsewhere. KEY TAKEAWAYS The United States Trade Representative’s office accuses the Appellate Body of acting beyond its powers. But its real concerns are about tariffs, not a philosophical legal debate. Under WTO rules, members can raise tariffs unilaterally to defend against cheap imports or to prevent damaging import surges. Increasingly, the Appellate Body has ruled against US use of those kinds of tariffs. The solution to losing US appeals is not to shut down the Appellate Body but negotiate more precise rules in light of US complaints and legitimate concerns of trading partners.

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From January 1, 1995 until December 10, 2019, the world trading system had a relatively reliable referee. If one government reckoned that another had broken the rules, then instead of lashing out immediately on its own, it could complain to the World Trade Organization (WTO). After a first round of independent arbiters judged on which side was in the right, WTO members could appeal to the Appellate Body, which would deliver the final verdict. But now, because of the Trump administration’s refusal to appoint new members, that Appellate Body is defunct. Without a referee, the danger is that trade disputes blow up into trade wars. Why, then, has the Trump administration done this?

One answer came on February 11, 2020, when the Office of the United States Trade Representative (USTR) published the Report on the Appellate Body of the World Trade Organization. Over 174 pages, the report accused the Appellate Body of engaging in ultra vires actions (acting beyond its powers) and obiter dicta (going on and on). It complained about these adjudicators taking away members’ rights and adding new obligations, in ways that American policymakers had never intended when they signed up to the WTO.

From this body of lawyerly Latin one could easily conclude that the Trump administration is engaged in a philosophical legal debate. Perhaps this is about a clash of legal systems, with the American contract-based approach to international law pitted against a European one, where interpretation—or, in American eyes, misinterpretation—is more acceptable.

Dig through the details, though, and it becomes clear that a key area of conflict is much less grandiose. In particular, one collection of judgments by the Appellate Body has caused special angst. In the section of the report titled “Appellate Body Errors in Interpreting WTO Agreements Raise Substantive Concerns and Undermine the WTO,” four of the five alleged errors concerned “trade remedies.”[1]

In other words, this is about tariffs. In a new essay, we explain why.[2]

TRADE REMEDY BASICS

Under WTO rules, members commit not to raise their tariffs above a certain level. But under exceptional circumstances, governments can break those limits to apply trade remedies. These include antidumping duties to defend against cheap imports; countervailing duties to protect against subsidized imports; and safeguard tariffs in response to import surges. By alleviating the pressure caused by injurious foreign competition, these defensive duties are supposed to preserve the political legitimacy of the system.

UNDER THE WTO, AMERICA’S USE OF TRADE REMEDIES CAME UNDER FIRE

When negotiating the terms of the WTO, American trade negotiators fought hard to retain the right to use trade remedies. And immediately after joining the WTO, their import coverage increased (see figure). But then their import coverage fell, from a peak of 5.5 percent of total US goods imports in 1999 to a trough of 1.9 percent in 2013.

 

Pinning down exactly why this happened is all but impossible, as so many different things were happening at the same time. It is possible that this decline was the natural consequence of globalization. For example, as American companies built cross-border supply chains to take advantage of cheap inputs from other countries, their calls for tariffs should have quietened down.[3]

But one might also have expected to see the reverse. Over that period American producers were increasingly exposed to international competition, not only through tariff cuts agreed to as part of America’s WTO membership but also through the North American Free Trade Agreement with Mexico and the agreement to grant China permanent normal trade relations in 2000. The Great Recession, with its devastating impact on American manufacturing, should also have increased demands for protection.

Meanwhile, as demand for protection should have been on the up, the supply of tools to respond to such demands had fallen. Before the WTO, American negotiators had sometimes dealt with import competition by browbeating their trading partners into limiting their exports. At their peak in the late 1980s, such voluntary export restraints (VERs) affected 12 percent of US imports. But under the WTO, the United States agreed to relinquish this tool and use tariffs instead.

Implicit in the USTR’s report is the idea that this decline in trade remedy use was in fact the unnatural consequence of the WTO’s Appellate Body. Upon joining the institution, America’s use of trade remedies came under intense attack from other members. Nearly two-thirds of the disputes filed against it by other members were about trade remedies. Between 2002 and 2019, anywhere between a third and 60 percent of America’s trade remedies by import coverage were subject to a formal WTO dispute (see figure).

Time after time, the American government defended its behavior in front of the Appellate Body. And time after time, it lost. After losing, it would generally change its practices to comply with the Appellate Body’s judgments. But over time resentment built. To the likes of USTR Robert Lighthizer, these decisions from judges in Geneva were undermining the rights that American negotiators had fought so hard to protect and influencing American policymaking in ways that only Congress was supposed to.[4]

Of the five complaints about Appellate Body errors listed in the USTR’s report, two concerned antidumping, one was about countervailing duties, and the fourth was about safeguard tariffs.

THE TRUMP ADMINISTRATION’S SOLUTION IS MORE CONTROVERSIAL THAN ITS DIAGNOSIS

The Trump administration is not alone in finding fault with the WTO’s Appellate Body.[5] But its solution, of leaving too few arbiters for the dispute settlement system to work, has attracted criticism. For example, the Obama administration’s USTR, Michael Froman, has summarized the system of definitive rulings supported by the global trading community and not just one government as “an important advance over the last 20 plus years.”[6] The system’s defenders could point out that the United States has brought the most offensive disputes of any WTO member and has won an overwhelming number for the benefit of American companies and workers.

Some policymakers outside America may hope for a different American administration to sweep in, recognize the value of independent international arbiters, and restore the Appellate Body to its former glory. Other more pragmatically minded ones should get to work. First they must recognize the source of American discontent, which goes beyond procedural gripes.[7] And they must start working on a politically sustainable fix.

NOTES

1. The fifth error involves “Technical Barriers to Trade,” or how the Appellate Body ruled on challenges to US regulations such as the country of origin labeling program for beef and pork products.

2. For more on the history of this issue, see Chad P. Bown and Soumaya Keynes, 2020, Why Trump Shot the Sheriffs: The End of WTO Dispute Settlement 1.0, PIIE Working Paper 20-4, March.

3. For evidence that this contributed to the application of new trade remedies, see Emily J. Blanchard, Chad P. Bown, and Robert C. Johnson, 2016, Global Supply Chains and Trade Policy, NBER Working Paper No. 21883, January. For evidence that this contributed to the removal of old trade remedies, see Chad P. Bown, Aksel Erbahar, and Maurizio Zanardi, 2020,Global Value Chains and the Removal of Trade Protection, PIIE Working Paper 20-3, February.

4. Before becoming the USTR, Lighthizer represented the steel industry as it requested tariff protection through trade remedies. In any given year between 1999 and 2019, between 20 and 70 percent (by import coverage) of America’s trade remedies subject to a formal WTO dispute were in the steel sector.

5. See, for example, Payosova, Hufbauer, and Schott (2018); Schott and Jung (2019); González and Jung (2020); and Hillman (2018).

6. Chad P. Bown and Soumaya Keynes, 2019, US Trade Policy Before Trump, with Ambassador Michael Froman, Trade Talks podcast, Episode 93, July 19, at 18:50.

7. See Informal Process on Matters Related to the Functioning of the Appellate Body–Report by the Facilitator, H.E. Dr. David Walker (New Zealand), WTO legal document WT/GC/W/752, October 15, 2019.

Crescimento da renda vs Resistência à mudança - The Economist

Daily chart
Countries that have benefited most from globalisation are the most fearful of change

People in slower-growing rich countries are most at ease with it

Countries that have benefited most from globalisation are the most fearful of change

People in slower-growing rich countries are most at ease with it

The Economist, Feb 27th 2020

THE PAST decade has been an uncomfortable one for economic liberals. The global financial crisis of 2007-09, and the Great Recession that followed, caused many to question the merits of trade and immigration. Such doubts have given rise to a wave of populist movements across the West, many of which cut across the traditional left-right political divide. In 2016, shortly before Donald Trump was elected America’s 45th president, this newspaper observed that the world appeared to be separating into two distinct groups of people: those who are “open” to change and those who are not. Drawbridge down, or up?

A sweeping new survey by Ipsos MORI, a pollster, sheds some light on precisely where support for pulling up the drawbridge is strongest. In August 2019 Ipsos asked 22,000 adults across 33 countries (a representative sample covering some two-thirds of the world’s population) more than 300 questions about their attitudes towards the world, their country, their community and their own lives. The results suggest that on average, people view globalisation more favourably than they did in the depths of the financial crisis. In the 20 countries surveyed by Ipsos over the past six years, 56% of respondents, on average, think that globalisation is good for their country, up from 49% in 2013.

Economist: editorial sobre o acordo comercial EUA-China

Between the lines America and China sign a trade deal

But it will be an uneasy truce

The Economist, Jan 16th 2020

SHANGHAI AND WASHINGTON, DC

WITH HIS habit of announcing trade deals only for them to dissolve within weeks, President Donald Trump is a standing reminder that talk is cheap. But on January 15th he signed a phase one trade agreement with China alongside Liu He, the Chinese vice-premier, and published its contents for the world to see. The 86 pages set out the terms of a new economic relationship between these two giants. Alongside some welcome measures, there are some howlers—and glaring omissions.

Throughout the whole, however, runs a common pattern. Clauses that are in reality concessions wrung from the Chinese are often written in such a way that they formally apply to both sides—but with subclauses specifying the actions that the Chinese are to take. For example, pledges to protect trade secrets are accompanied by new processes by which American companies can complain about breaches.

The deal also addresses several long-standing American complaints about China’s foot-dragging. China pledged that approvals of agricultural biotechnology products will take less than two years. The deal sets deadlines for China to consider licence applications by MasterCard and Visa. And China will lower bureaucratic barriers to imports of American dairy, pork and beef.

As many a weary trade negotiator can attest, China has a history of reneging on promises. But this deal comes with a novel dispute-settlement mechanism. After a speedy consultation, either party may find fault with the other. (History suggests that the Americans are more likely to feel aggrieved.) If a solution cannot be reached, the accuser can unilaterally impose penalties. The accused cannot retaliate, short of pulling out of the deal altogether.

It is possible that this mechanism will force China to address American grievances. But it may also cause new problems. It hands huge discretion to Robert Lighthizer, the United States Trade Representative (USTR). Take China’s ever-contentious yuan regime. On January 13th, in a sign of thawing relations, the American Treasury removed China from its list of currency manipulators. But if at some point China is put back on the list, the USTR would now seem to have virtually unchecked power to slap tariffs on it.

Further problems may be caused by China’s pledge to buy an extra $200bn of American goods and services over the next two years, on top of a baseline of $187bn in purchases in 2017. That is intended to satisfy Mr Trump’s main desire: to close America’s trade deficit with China. But making it happen will probably require China’s government to direct Chinese companies to buy lots of American goods. Both countries will become more reliant on each other, which neither wants. And their other trading partners might be squeezed out.

The Americans do not seem overly concerned. Mr Lighthizer is keen to move on to implementation, saying that, as the first deal of its kind, “we have to make sure that it works”. The coming months will demonstrate whether the two countries can establish a friendlier dialogue, and whether their relationship can survive America’s more aggressive use of security-related export and investment restrictions.

The deal is far from a reset. As Mr Lighthizer noted, China’s cyber-intrusions and industrial subsidies still rankle with America. Chinese media, meanwhile, laid out an argument that may become more familiar: if American export restrictions prevent China from fulfilling its purchase commitments, the fault will lie with America.

A truly grand pact between the two countries is some way off—and indeed, may never arrive. But this modest trade agreement shows how much the status quo has changed. Tariffs on hundreds of billions of dollars’ worth of imports into both countries remain in place, with an ever-present threat of more. This is not trade peace, but rather a trade truce—and a tense one at that. ■

This article appeared in the Finance and economics section of the print edition under the headline "America and China sign a trade deal"

Como os EUA salvaram russos da fome e do canibalismo 100 anos atrás

A century ago America saved millions of Russians from starvation

The story of “The Russian Job” contradicts the bellicose histories preferred in both countries

The Economist, November 9th 2019

https://www.economist.com/books-and-arts/2019/11/09/a-century-ago-america-saved-millions-of-russians-from-starvation?cid1=cust/dailypicks1/n/bl/n/20191114n/owned/n/n/dailypicks1/n/n/NA/343149/n

The story of “The Russian Job” contradicts the bellicose histories preferred in both countries

The Russian Job. 
By Douglas Smith. Farrar, Straus and Giroux; 320 pages; $28. Picador; £25.

TO MOST PEOPLE shaped by the cold war—and today’s icy relations—Russia and America may seem always to have been sworn enemies. When the Soviet Union collapsed in 1991 America celebrated victory. When Vladimir Putin set out to avenge history and make Russia great again, he whipped up anti-American hysteria and scorned Washington’s overreach. For his part, Donald Trump—who thinks America has in the past been a soft touch—in effect concurred with Mr Putin’s criticism, pledging to put narrow American interests first.

In recounting America’s biggest ever humanitarian effort—to save millions of lives in the nascent Soviet state a century ago—“The Russian Job” by Douglas Smith repudiates the modern mythologies of both countries, and their leaders’ twisted histories. Already ravaged by wars and revolution, in 1920-22 Russia was hit by droughts and faced one of Europe’s worst ever famines. It was partly self-induced: terrorised by the Red Army and threatened with requisitions and executions, Russian peasants drastically reduced the land under cultivation, sowing the minimum required for their own survival.

Acutely aware that food meant power, Vladimir Lenin abandoned War Communism in favour of a new economic policy that replaced requisition with taxes and made some concession to capitalism. But it was too late. By the end of 1921, the vast territory along the Volga succumbed to starvation and cannibalism.

Having come to power on the promise to provide bread and end war, the Bolsheviks confronted the prospect of being swept away by hunger. Unable to feed their own people, the leaders of the proletarian revolution turned to the West for help. Maxim Gorky, a Bolshevik writer who had once demonised American capitalism, appealed to “all honest European and American people” to “give bread and medicine”.

The appeal struck a chord with Herbert Hoover, founding chief of the American Relief Administration (ARA). The future president responded not out of sympathy for the “murderous tyranny” of the Bolshevik regime, but from faith in America’s mission—and ability—to improve the world. If children were starving, America was obliged to ease their suffering. “We must make some distinction between the Russian people and the group who have seized the government,” Hoover argued.

The ARA’s insistence on complete autonomy made the Soviet government suspicious, as did its pledge to help without regard to “race, creed or social status”. After all, the regime had liquidated entire classes of citizens and nationalised not only private property but human life. Still, given a choice between losing face or losing the country, the Bolsheviks conceded the ARA’s conditions—while putting the operation under surveillance by the secret police.

Mr Smith’s book is not a political history, however. It is principally a reconstruction of the lives of those ARA men, many from military backgrounds, who over two and a half years in effect took over the functions of civil government in Russia, feeding some 10m people. In the Volga region, where residents were driven by hunger to boil and eat human flesh, the ARA organised kitchens and transport, distributed food and rebuilt hospitals.

The misery they encountered in Russia strained their nerves to the point of breakdown and despair, but also imbued their careers with meaning. “It is only by being of service that one can be happy,” an ARA officer wrote. “The help given by the Americans can never be forgotten, and the story of their glorious exploit will be told by grandfathers to their grandchildren,” grateful Russians told them.

Yet the duplicity and paranoia of the Soviet government haunted the ARA’s operation to the very end. While publicly Bolshevik leaders showered the Americans with praise and thanks, the secret police instructed local officials: “Under no circumstances are there to be any large displays or expressions of gratitude made in the name of the people.” No sooner was the Russian job done than the authorities began to expunge all memory of America’s help.

The edition of the Great Soviet Encyclopedia of 1950 described the ARA as a front “for spying and wrecking activities and for supporting counter-revolutionary elements”. Modern Russian textbooks barely mention the episode. But it is not just Russia that needs to be reminded of this story—so does America, which derived much of its 20th-century greatness from its values rather than military power. As Gorky told Hoover: “The generosity of the American people resuscitates the dream of fraternity among people at a time when humanity needs charity and compassion.” ■

This article appeared in the Books and arts section of the print edition under the headline "The kindness of strangers"

Os 70 anos da China comunista - editorial da Economist

Xi’s embrace of false history and fearsome weapons is worrying

China’s leader is stoking hair-trigger nationalism with his idea that the Communist Party never makes mistakes

The Economist – 8/10/2019

The most revealing moment of the national day parade through Tiananmen Square on October 1st lasted just a few seconds. It came as China’s fearsome new df-41 nuclear missiles, capable of striking any city in America, neared Chaguan’s press seat on the Avenue of Eternal Peace. Loudspeakers came to life as their camouflaged, many-wheeled carriers growled towards the grand gateway of the Forbidden City where President Xi Jinping and other Chinese leaders waited on a rostrum. Unseen voices explained how the weapons would ensure that China always retains a deterrent capability, thus safeguarding peace. Turning lyrical, the voices compared the missiles to large dragons that can hide in massive mountains or boundless seas before delivering earth-shaking blows. The hand-picked crowd erupted in spontaneous cheers.

Those cheers reflect two messages conveyed by the parade, which marked 70 years of Communist rule. The first is that China wields such firepower that no country may safely defy it. The second is that China is great again thanks to the Communist Party which is, and has always been, a force for good.

That second message was pressed home by the civilian half of the parade, which began with open-topped, gold-painted buses carrying red princelings and other descendants of Communist China’s founders and martyrs. One was a grandson of Mao Zedong, squeezed into a general’s uniform. The point was reinforced by marchers dressed as Mao-era farmers, soldiers and workers, dancing and singing in celebration of party-ordained campaigns of the 1950s, 1960s and 1970s to tame nature, mobilise the masses and turn China into an industrial power. Such sanitising of the Mao years is indecent. On balance those were lost decades that left millions of Chinese dead, whether from man-made famines, class warfare or ideological purges. Yet under Mr Xi, the twists, turns and dead-ends of party rule have been tidily woven into a glorious story of national progress. China’s boss has not hidden his motives. He links the Soviet Union’s collapse to the moment that Russian leaders disavowed crimes by Stalin and other Communist leaders. Mr Xi has chosen another course, curtailing the party’s previous, limited tolerance for historical candour.

Previous parades have nodded to live debates. On national day in 1984 Deng Xiaoping, then China’s leader, said the country’s primary task was to reform the economy to remove obstacles to growth. That parade included busts of leaders purged or sidelined under Mao, and a float from Shekou, a pioneering special economic zone that Deng’s leftist critics called capitalist.

In elite settings, largely for the benefit of insiders, Mr Xi has repudiated past crimes by ultra-leftists who were deemed by Deng to have deviated from the party line. Honouring revolutionary heroes on the eve of this year’s national day, Mr Xi remembered Zhang Zhixin, a party member executed in 1975 for speaking out against Mao-era excesses, though not before her larynx was cut to stop her calling to fellow inmates as she died.

No such candour is offered to the masses. The true story of China’s recovery from Maoist ruin was written by hundreds of millions of individual Chinese. They were enabled to raise themselves from poverty through hard work and risk-taking, after Deng pragmatically embraced market forces. Yet in this year’s parade, a vast painting of Deng in a Mao suit was escorted by identically dressed dancers waving fronds of grain, as if he were the skilled boss of a collective farm rather than the man who let peasants grow their own crops, transforming rural lives. Later floats, lauding the Xi era, showed such centrally planned glories as high-speed trains and space rockets. Some of the few visible representatives of private enterprise were delivery drivers on scooters, a low-paid group once praised by Mr Xi for being like diligent bees. In apparent homage to this simile, the parade’s delivery drivers wore yellow and black hats topped with bee antennae, like heroes in a children’s book. As if vanquishing the ghosts of the Tiananmen protests of 1989, students from the city’s universities marched beneath their college flags, hopping with excitement as they saw Mr Xi, through air still heavy with the fumes from parading tanks.

China’s nationalism is the world’s problem

It is understandable, indeed inevitable, that a wealthier China would seek to become a great military power. What was not inevitable was that Mr Xi would embrace populist, nostalgic, red-flag waving nationalism, while glossing over the party’s terrible mistakes. Traditionally, those urging China to reckon honestly with the past have appealed to rational self-interest. Brave, embattled liberals have called for more open debate about the Great Leap Forward and the Cultural Revolution, to prevent such mistakes from being repeated. That argument feels weak today. Mr Xi is not a revolutionary like Mao, bent on dismantling the party. Rather, he is an authoritarian obsessed with stability, determined to assert the party’s absolute authority. To that end his team is happy to harness Maoist rhetoric, nostalgia for a simpler, less materialist China and the public’s justifiable pride in the endurance of past hardships. Judged cynically, such propaganda is astute domestic politics. Mao-style strongman rule is still a danger, but there is little risk of a return to the mayhem of the Cultural Revolution.

Other countries may have more to fear from Mr Xi’s embrace of false history. By telling his people that Communist China has never taken a wrong turn, he is stoking an impatient, hair-trigger nationalism in which criticism from abroad equates to hostility.

China is not the first rising power to seek fearsome weapons. Its people’s patriotism cannot be dismissed as brainwashing. Many are clear-eyed and rational in their love for their country and support for Mr Xi. But heavily armed, self-righteous nationalism can start wars. Both China and the rest of the world would be somewhat safer if party chiefs were to acknowledge their fallibility. That Mr Xi is heading in the other direction should alarm everybody. ?

Supremacistas brancos: a escória da humanidade - The Economist

What is “White Nationalism”?

Governments have underestimated a growing, and murderous, threat

The Economist, August 14th 2019

Governments have underestimated a growing, and murderous, threat

THE SURGE in terrorist attacks by white nationalists includes, this year, the massacres in Christchurch (51 dead) and El Paso (22 dead). Often the killers cite fears of white “replacement” and draw inspiration from other, similar atrocities, especially Anders Breivik’s slaughter in 2011 of 77 people in Oslo and a nearby island. But what is white nationalism, and where did it come from?

The phenomenon is hard to define because of its ideological and geographical fractiousness. Broadly, white nationalists want to achieve an ethno-state of, and for, whites. Some do their best to avoid overtly claiming that any race is inferior, arguing that each should have its own ethno-state. The majority, however, are white supremacists, who also believe that races form a normative hierarchy with whiteness at the top. They demand policies ranging from stricter controls on immigration to wholesale ethnic cleansing, or even genocide. All this is often tied to the fear of “white genocide”, or white “replacement”, ie, the notion that the “white race” is being squeezed out of existence through its own low birth rate, miscegenation and more prolific reproduction by non-white people.

Modern white nationalism, which has spread across the world, first emerged in America after the civil war. With the end of slavery, states took action to preserve the privileged position of American Protestants of western European heritage, including “Jim Crow” laws that enforced segregation. Others took to paramilitary violence and lynchings. The fixation with being white grew with increased immigration, especially of Chinese people, Irish Catholics, southern Europeans and Jews. New immigration acts were designed to restrict the number of new arrivals. Madison Grant’s “The Passing of the Great Race”, published in 1916, melded nativist sentiment with eugenics to produce a theory of white supremacy and “race suicide”. Adolf Hitler reportedly wrote to Grant, stating that the book was “his bible”.

Though discredited by the war against Nazism and later by the civil-rights struggles of the 1950s and 60s, white nationalism experienced a resurgence towards the end of the 20th century, leading to a number of violent attacks in America and Europe.

In 1988 David Lane wrote “The White Genocide Manifesto”, giving a new name to Grant’s theory of “race suicide”. This text introduced the world to white nationalism’s rallying cry: “We must secure the existence of our people and a future for white children”, a phrase canonised by white nationalists as “the 14 words”. Beyond a core belief in white superiority, white nationalists vary widely in their views. Some share the deep suspicion of the federal government found in militia groups; some embrace a revisionist history of the civil war that glorifies the Confederacy; some believe in anti-Semitic conspiracies about global Jewish control, including the theory that an internationalist Jewish elite is responsible for encouraging immigration. “”The Turner Diaries”, a white-nationalist dystopic fantasy published in 1978 by William Luther Pierce, told the story of an armed insurrection against the federal government by defenders of the white race. It influenced both Lane and Timothy McVeigh, a disenchanted army veteran and gun-rights enthusiast who carried out the Oklahoma City bombing, killing 168 people in 1995.

White nationalism evolved rapidly with the advent of the internet. It has picked up the irony-tinged discourse of the darker corners of cyberspace to couch political views in a humour that never reveals whether the writer is serious or not. This allows white nationalists to use non-believers, just in it “for the lulz [laughs]”, to spread their message to a wider audience. In Europe, meanwhile, white nationalists agonised about a supposed Islamic invasion, particularly after 9/11 and the rise of global jihadism. In “The Great Replacement”, Renaud Camus claimed true Frenchmen were being supplanted by immigrants from Africa and the Middle East, encouraged by a “replacist” elite. American white nationalists have incorporated Muslims into their taxonomy of invading races but remain mostly focused on Latinos, blacks and Jews. 

Donald Trump’s critics accuse him of being a white nationalist. That goes beyond the evidence. However, his words do play into the supremacist ideology. For example, in 2017 he described a “Unite the Right” march in Charlottesville, Virginia, as “people protesting very quietly the taking down the statue of Robert E. Lee”, a surprisingly gentle way of describing self-proclaimed Nazis marching with tiki torches and chanting “Jews will not replace us”. Last year right-wing extremists killed more people in America than in any year since 1995, the year of the Oklahoma City bombing. The vast majority of these were by white supremacists. It is a threat that authorities in the West have taken too lightly.

A destruição da Amazonia no governo Bolsonaro - The Economist

Deathwatch for the Amazon

Brazil has the power to save Earth’s greatest forest—or destroy it

The Economist, Londres – 1.8.2019

Although its cradle is the sparsely wooded savannah, humankind has long looked to forests for food, fuel, timber and sublime inspiration. Still a livelihood for 1.5bn people, forests maintain local and regional ecosystems and, for the other 6.2bn, provide a—fragile and creaking—buffer against climate change. Now droughts, wildfires and other human-induced changes are compounding the damage from chainsaws. In the tropics, which contain half of the world’s forest biomass, tree-cover loss has accelerated by two-thirds since 2015; if it were a country, the shrinkage would make the tropical rainforest the world’s third-biggest carbon-dioxide emitter, after China and America.

Nowhere are the stakes higher than in the Amazon basin—and not just because it contains 40% of Earth’s rainforests and harbours 10-15% of the world’s terrestrial species. South America’s natural wonder may be perilously close to the tipping-point beyond which its gradual transformation into something closer to steppe cannot be stopped or reversed, even if people lay down their axes. Brazil’s president, Jair Bolsonaro, is hastening the process—in the name, he claims, of development. The ecological collapse his policies may precipitate would be felt most acutely within his country’s borders, which encircle 80% of the basin—but would go far beyond them, too. It must be averted.

Humans have been chipping away at the Amazon rainforest since they settled there well over ten millennia ago. Since the 1970s they have done so on an industrial scale. In the past 50 years Brazil has relinquished 17% of the forest’s original extent, more than the area of France, to road- and dam-building, logging, mining, soyabean farming and cattle ranching. After a seven-year government effort to slow the destruction, it picked up in 2013 because of weakened enforcement and an amnesty for past deforestation. Recession and political crisis further pared back the government’s ability to enforce the rules. Now Mr Bolsonaro has gleefully taken a buzz saw to them. Although congress and the courts have blocked some of his efforts to strip parts of the Amazon of their protected status, he has made it clear that rule-breakers have nothing to fear, despite the fact that he was elected to restore law and order. Because 70-80% of logging in the Amazon is illegal, the destruction has soared to record levels. Since he took office in January, trees have been disappearing at a rate of over two Manhattans a week.

The Amazon is unusual in that it recycles much of its own water. As the forest shrivels, less recycling takes place. At a certain threshold, that causes more of the forest to wither so that, over a matter of decades, the process feeds on itself. Climate change is bringing the threshold closer every year as the forest heats up. Mr Bolsonaro is pushing it towards the edge. Pessimists fear that the cycle of runaway degradation may kick in when another 3-8% of the forest vanishes—which, under Mr Bolsonaro, could happen soon. There are hints the pessimists may be correct (see Briefing). In the past 15 years the Amazon has suffered three severe droughts. Fires are on the rise.

Brazil’s president dismisses such findings, as he does science more broadly. He accuses outsiders of hypocrisy—did rich countries not fell their own forests?—and, sometimes, of using environmental dogma as a pretext to keep Brazil poor. “The Amazon is ours,” the president thundered recently. What happens in the Brazilian Amazon, he thinks, is Brazil’s business.

Except it isn’t. A “dieback” would directly hurt the seven other countries with which Brazil shares the river basin. It would reduce the moisture channelled along the Andes as far south as Buenos Aires. If Brazil were damming a real river, not choking off an aerial one, downstream nations could consider it an act of war. As the vast Amazonian store of carbon burned and rotted, the world could heat up by as much as 0.1°C by 2100—not a lot, you may think, but the preferred target of the Paris climate agreement allows further warming of only 0.5°C or so.

Mr Bolsonaro’s other arguments are also flawed. Yes, the rich world has razed its forests. Brazil should not copy its mistakes, but learn from them instead as, say, France has, by reforesting while it still can. Paranoia about Western scheming is just that. The knowledge economy values the genetic information sequestered in the forest more highly than land or dead trees. Even if it did not, deforestation is not a necessary price of development. Brazil’s output of soyabeans and beef rose between 2004 and 2012, when forest-clearing slowed by 80%. In fact, aside from the Amazon itself, Brazilian agriculture may be deforestation’s biggest victim. The drought of 2015 caused maize farmers in the central Brazilian state of Mato Grosso to lose a third of their harvest.

For all these reasons, the world ought to make clear to Mr Bolsonaro that it will not tolerate his vandalism. Food companies, pressed by consumers, should spurn soyabeans and beef produced on illegally logged Amazonian land, as they did in the mid-2000s. Brazil’s trading partners should make deals contingent on its good behaviour. The agreement reached in June by the EU and Mercosur, a South American trading bloc of which Brazil is the biggest member, already includes provisions to protect the rainforest. It is overwhelmingly in the parties’ interest to enforce them. So too for China, which is anxious about global warming and needs Brazilian agriculture to feed its livestock. Rich signatories of the Paris agreement, who pledged to pay developing ones to plant carbon-consuming trees, ought to do so. Deforestation accounts for 8% of global greenhouse-gas emissions but attracts only 3% of the aid earmarked for combating climate change.

The wood and the trees

If there is a green shoot in Mr Bolsonaro’s scorched-earth tactics towards the rainforest, it is that they have made the Amazon’s plight harder to ignore—and not just for outsiders. Brazil’s agriculture minister urged Mr Bolsonaro to stay in the Paris agreement. Unchecked deforestation could end up hurting Brazilian farmers if it leads to foreign boycotts of Brazilian farm goods. Ordinary Brazilians should press their president to reverse course. They have been blessed with a unique planetary patrimony, whose value is intrinsic and life-sustaining as much as it is commercial. Letting it perish would be a needless catastrophe. 

A Guerra Fria Econômica entre os EUA e a China se aprofunda - The Economist

Huawei Has Been Cut off From American Technology

The ban will be excruciating at best, and fatal at worst

The EconomistMay 23

America is no fan of Huawei. Its officials have spent months warning that the Chinese giant’s smartphones and networking gear could be Trojan horses for Chinese spies (something Huawei has repeatedly denied). They have threatened to withhold intelligence from any ally that allows the firm in. On May 15th they raised the stakes. President Donald Trump barred American firms from using telecoms equipment made by firms posing a “risk to national security”. His order named no names. But its target was plain.

For all the drama, the import ban hardly matters. Huawei has long been barred from America, in practice if not on paper. More significant was the announcement by the Commerce Department, on the same day, that it was adding Huawei to a list of firms with which American companies cannot do business without official permission. That amounts to a prohibition on exports of American technology to Huawei.

It is a seismic decision, for no technology firm is an island. Supply chains are highly specialised and globally connected. Cutting them off — “weaponising interdependence”, in the jargon — can cause serious disruption. When ZTE, another Chinese technology company, received the same treatment in 2018 for violating American sanctions on Iran, it was brought to the brink of ruin. It survived only because Mr Trump intervened, claiming it was a favour to Xi Jinping, China’s president.

Huawei matters more than ZTE. It is China’s biggest high-tech company, and is seen as a national champion. Its name translates roughly as “Chinese achievement”. Revenues of $105bn put it in the same league as Microsoft. Only Samsung, a South Korean firm, sells more smartphones. Huawei holds many crucial patents on superfast 5G mobile networks, and is the largest manufacturer of telecoms equipment. Were it to go under, the shock waves would rattle all of tech world.

By May 20th the impact of the ban was becoming clear. Google said it had stopped supplying the proprietary components of its Android mobile operating system to Huawei. A string of American chipmakers, including Intel, Qualcomm and Micron, have also ceased sales. Later that day the Commerce Department softened its line slightly, saying that firms could continue to supply Huawei for 90 days, but for existing products — for instance, with software updates for Huawei phones already in use. New sales, on which Huawei’s future revenue depends, remain banned.

Interdependence, of course, cuts both ways (see chart). Shares in American technology firms fell after the announcement, because Huawei is a big customer. Qorvo, which employs 8,600 people and makes wireless communication chips, derives 15% of its revenue from Huawei. Micron is in the memory business, of which Huawei is a big consumer. A report from the Information Technology & Innovation Foundation, a think-tank, also released on May 20th, guessed export controls could cost American firms up to $56bn in lost sales over five years.

Unlike Intel, Qualcomm or ZTE, Huawei is privately owned, so lacks listed shares whose price swing would hint at the extent of its distress — though the price of its listed bonds has dropped to 94 cents on the dollar. In public, the firm is staying calm. Ren Zhengfei, Huawei’s founder, said it would be “fine” without access to American technology. Huawei has spoken of activating a “Plan B” designed to keep it in business despite American sanctions. It has been stockpiling crucial components for months, and has made a conscious push to become less reliant on American technology over the past few years. Its phones in particular make extensive use of chips designed by HiSilicon, its in-house chipdesign unit.

Yet few analysts are as sanguine as Mr Ren. Three business areas in particular look vulnerable. Without Google’s co-operation, new Huawei phones will lack the latest versions of Android, and popular apps such as Gmail or Maps. That may not matter in China, where Google’s apps are forbidden. But it could be crippling in Europe, Huawei’s second-biggest market. Its telecoms business needs beefy server chips from Intel. The supply of software to manage those networks could dry up too. Huawei is developing replacements for all three, but they are far from ready.

Two questions will determine whether or not Huawei can weather the storm, says Dieter Ernst, a chip expert and China-watcher at the East-West Centre, a think-tank in Honolulu. The first concerns America’s motives. The timing of the ban, a few days after broader trade talks between China and America had broken down, was suggestive. On one reading, it is a tactical move designed to wring concessions from China. If so, it might prove short-lived, and Huawei’s stockpiles may tide it over.

Paul Triolo of Eurasia Group, a political-risk consultancy, is doubtful. Rather than a negotiating tactic, he sees the ban as “the logical end-game of the US campaign to take down Huawei”. A long-lasting ban would force the firm to look for alternative chips and software that Chinese suppliers would struggle to provide.

The second question concerns the reach of American power. The tangled nature of chip-industry supply chains, says Mr Ernst, means that many non-American companies make use of American parts or intellectual property. They may therefore consider themselves covered, wholly or partially, by the ban. Take Arm, a Britain-based firm whose technology powers chips in virtually every phone in the world, including those made by HiSilicon. Arm says that it will comply with the Commerce Department’s rules. That suggests that Arm will not grant Huawei new licences. It is unclear if Arm will offer support for existing licences, however. As Arm’s technology advances, Huawei risks being left behind.

Other non-American companies are as important. One industry insider with contacts in Taiwan says that American officials are pressing Taiwan Semiconductor Manufacturing Company (TSMC), a big and cutting-edge chipmaker, to drop Huawei, which is its third-biggest customer. That would be a crushing blow, for Chinese chip factories are not up to the task of manufacturing HiSilicon’s sophisticated designs. TSMC’s only peer is Samsung — and South Korea is another of America’s allies. TSMC said on May 23rd that it would continue supplying Huawei for now.

Even if the optimists are right, and the ban is lifted in exchange for trade concessions, a return to business as usual seems unlikely. America has twice demonstrated a willingness to throttle big Chinese companies. Trust in American technology firms has been eroded, says Mr Triolo. China has already committed billions of dollars to efforts to boost its domestic capabilities in chipmaking and technology. For its rulers, America’s bans highlight the urgency of that policy. Catching up will not be easy, believes Mr Ernst, for chips and software are the most complicated products that humans make. But, he says, if you talk to people in China’s tech industry they all say the same thing: “We no longer have any other option.”

Facebook is creating Libra, a global digital currency - The Economist

Facebook wants to create a worldwide digital currency

Libra could be massively disruptive—including to the social network itself

The Economist, June 18th 2019

Libra could be massively disruptive—including to the social network itself

A GLOBAL DIGITAL currency would make sending money across the world as easy as texting. It would do away with fees, delays and other barriers to the flow of cash. It would give those in less developed countries access to the financial system and a way to protect hard-earned wages against runaway inflation. It could trigger a wave of innovation in finance, much like the internet did in online services.

That, in a nutshell, is what on June 18th Facebook promised to launch within a year. Libra, as the social network’s new currency is to be known in honour of an ancient Roman unit of mass (and the word for “pound” in many romance languages), professes to be all about “empower[ing] billions of people”.

The potential is indeed enormous. If each of Facebook’s 2.4bn users converted a slice of their savings into libras, it could immediately become one of the world’s most circulated currencies. It could also, if widely adopted, vest unprecedented power in the hands of its issuer. In a tacit acknowledgment that its mishandling of user data, condoning the spread of misinformation and other sins have devalued its stock with policymakers, users and potential partners—though not investors—Facebook wants to outsource the running of Libra to a consortium of trustworthies recruited from the world of finance, technology and NGOs. The consequences for the global financial system could be far-reaching. So could the impact on Facebook’s business.

If the project lives up to the mock-ups, buying, selling, holding, sending and receiving libras will be a doddle. It can be done in Facebook’s Messenger app or WhatsApp, another messaging-service-cum-social-network it owns—and, later next year, in a standalone app. All at a tap of a smartphone.

So far, so familiar. Messenger already offers payments to Americans. WhatsApp is testing a similar function in India. But these services do not cross borders, and require users to have a bank account. Fintech firms like TransferWise, which offer international transfers to the banked, take a 4-5% cut to wire $200—a third less than Western Union but not nothing. Libra will be global and cheap, and require no bank accounts: more bitcoin than Venmo.

Except that, unlike bitcoins and other cryptocurrencies, libras will change hands in seconds, not minutes, for next to nothing, not a few dollars. The system should handle 1,000 transactions a second at its launch, and more later, compared with no more than seven a second for bitcoin. The virtual coins will be bought with real money, which will top up the reserve backing the currency. This should prevent wild price swings from bitcoin-like speculation.

If it works, Libra could be a money-spinner for Facebook, albeit not directly. Notional transaction fees would not generate much revenue. But libras should allow Facebook to charge more for online ads, by making purchases of advertised products quicker and simpler. It could furnish a new source of data to target adverts, making up for user information Facebook will forgo with the “pivot to privacy”, which Mark Zuckerberg, its boss, proclaimed in March with respect to messaging. Libra would let his company catch up with WeChat, a Chinese super-app which offers payments and other financial services, and whose foreign ambitions are on hold as the Sino-American trade war rages on.

Technically and financially, Facebook could probably pull off such an ambitious undertaking on its own. Not politically. Its culture is more measured than it was in its early years, when it aspired to “move fast and break things”—but only a bit. Chary consumers may choose not to entrust their money to a social network which has, until recently, leaked their personal data left and right. Unless users appear on board, merchants may be reluctant to embrace the currency, however hassle-free.

Enter the Libra consortium. The association, to be based in reassuringly staid Geneva, will take over from Facebook before the first libra has been spent and manage the hard-currency reserves. Facebook has enlisted 28 prospective founding members out of an envisaged 100, each with equal voting rights and operating a node in a decentralised system which issues coins. They include financial firms (Visa and Stripe, among others), online services (Spotify, Uber), cryptocurrency wallets (Anchorage, Coinbase), venture capitalists (Andreessen Horowitz, Union Square Ventures) and charities (Kiva, Mercy Corps)—though, for the time being, no banks. Not a libertarian alternative to the existing financial system, in other words, but a complement.

To add credibility to its promise, broken in the past, to keep social and financial data strictly separate, Facebook has created a subsidiary, Calibra, to run Libra services within its apps. It is unlikely to face hurdles to uptake from Apple or Google. It is impossible to imagine them expelling Messenger and WhatsApp—and later other providers Facebook is inviting to the open-source project—from their app stores, as they have done with other cryptocurrency offerings, many of which have turned out to be scams.

To get Libra going, the consortium will pay merchants to offer discounts to customers who pay in the new currency, financed by a $10m one-off fee each member pays for a seat at the table. Eventually, Facebook would like anybody, not just the consortium, to be able to generate the currency, move it and offer services on top of its “blockchain” (crypto-speak for the database that keeps track of who owns what). At that point, Libra would truly turn into Bitcoin, minus the kinks and the libertarianism.

Hard currency
With a project with so many moving parts, much can go wrong. Although Facebook says it has a working prototype, the technology is untested; sceptics doubt that a 100-node system, let alone a bigger one, could process thousands of transactions per second. Hackers are doubtless champing at the bit.

Then there are consortium dynamics. Facebook will have to prove to the other 99 Libra members that it is truly prepared to give up control. At the same time, because important decisions need a two-thirds majority, someone has to knock heads together. The history of information technology is littered with initiatives which collapsed under the weight of internal conflict.

The biggest barrier may be political. Facebook has apparently consulted many regulators. Initially they should be able to keep tabs on Libra. The providers of digital wallets will have to comply with national rules, like those against money-laundering. Calibra, whose integration into Messenger and WhatsApp will initially make it the dominant wallet, is bound to stoke competition concerns. These may recede as the currency grows bigger and more decentralised, only to be replaced by worries about financial stability.

Libra’s success, then, is far from assured. But it could prove useful even if it flops, for it offers a blueprint for how Facebook itself could one day be governed. The Libra Association’s main task is to oversee the blockchain, ensuring, for instance, that Calibra does not enjoy privileged access to it. An equivalent Facebook Association, some observers have ventured, could be composed of representatives of users, advertisers, data-protection authorities and so on. Their job could be to oversee the “social graph”, another database, which lists all of Facebook’s users and the links between them—and to guarantee that Facebook users can post to another social network and vice versa.

Calls for a Facebook constitution along these lines have grown louder as the social network’s influence on world affairs, from election-meddling in America to genocide in Myanmar, has become apparent. Mr Zuckerberg is no stranger to such thinking. In 2009 Facebook let users vote on big changes in its privacy policies but abandoned the experiment with global democracy a few years later. Last year Mr Zuckerberg announced that Facebook wanted to set up a “content review board” of independent experts—a kind of “Supreme Court”, in his words, which would make “the final judgment call on what should be acceptable speech”.

Asked whether Libra could serve as a model for Facebook, David Marcus, who is in charge of the project, replies that it marks “a coming of age, the moment we recognise that there are some things that we shouldn’t control—and a radical departure from the traditional way of operating things”. Perhaps. But checks and balances would almost certainly make Facebook less profitable. It would be ironic if a new digital currency marked the beginning of the end of Facebook’s money-minting days.

A nova direita europeia quer criar uma academia do conservadorismo mundial na Italia - The Economist

A nova direita europeia é uma mistura da velha direita – sim, existem remanescentes de antigos partidos fascistas e até saudosistas do hitlerismo, pois sempre os há – com novos reacionários, aqueles que "reacionam" contra os imigrantes, sobretudo os islâmicos, achando que estes vão "conspurcar" as sagradas tradições do cristianismo europeu, aquele mesmo que, em tempos recuados, promovia pogroms, perseguições e até massacres indiscriminados contra judeus, considerados os "assassinos de Cristo". Ainda não mudaram tanto assim as consciências, ou as "ignorâncias", em certos meios...
Paulo Roberto de Almeida

Steve Bannon’s monastic academy denies monkey business

Donald Trump’s ex-strategist dismisses allegations of a forged letter as “dust kicked up by the left”

The Economist, May 22nd 2019

Donald Trump’s ex-strategist dismisses allegations of a forged letter as “dust kicked up by the left”

A PLAN BY Steve Bannon, Donald Trump’s former chief strategist, to launch an alt-right academy in an Italian monastery now risks being scotched by the authorities. Evidence has emerged that a key document used to secure tenancy of the property was forged.

Mr Bannon is paying the €100,000-a-year ($111,000) rent on a former Carthusian monastery, the Certosa di Trisulti, in the mountains east of Rome. The property belongs to the state. But in February 2018 Italy’s arts and heritage ministry granted a 19-year lease to a Catholic non-profit organisation then based in Rome, the Dignitatis Humanae Institute (DHI), of which Mr Bannon is a trustee. Two official bodies are investigating the concession: the Attorney General’s department and the regional auditors’ court in Lazio, the region around Rome in which the monastery is situated. An official says the ministry is not ruling out revoking the lease.

Mr Bannon has described the Academy for the Judaeo-Christian West that the institute plans to open at its monastery in the autumn as a “gladiator school for cultural warriors”. Benjamin Harnwell, the director of the DHI, says that his institute will offer a master’s course that includes teaching in philosophy, theology, history and economics. Mr Bannon will be personally responsible for additional tuition in the practical aspects of political leadership.

The DHI took over the monastery following a competitive tender. Accompanying the institute’s bid was a business plan and a letter endorsing it, apparently provided by the Gibraltar branch of a Danish financial institution, Jyske Bank. But on May 7th La Repubblica, an Italian daily, reported a statement by Jyske Bank declaring the letter to be fraudulent. The managing director of Jyske Bank in Gibraltar, Lars Jensen, confirms the statement. “It is a fraudulent letter, put together by I don’t know who,” he told The Economist this week. The signature purported to be that of “a lady who hasn’t been in the bank for years. Her role was that of an assistant and in that letter she’s a director or something like that. So it is obviously fraudulent,” he said.

Mr Harnwell admits that news of the bank’s statement “hit me sideways”. But Mr Bannon told The Economist that “Everything actually is totally legitimate…all of this stuff is just dust being kicked up by the left.” The business plan, however, was crucial to the success of DHI’s bid, which the ministry assessed using a points system. To qualify for the tender, the Institute needed at least 60 points. It secured 72.6. But of those, 17.8 were awarded for its business plan. So if that plan is ruled invalid because the “letter of certification” from its bank is found to have been forged, the authorities could revoke the lease.

The controversy over the DHI’s business plan is only the latest of several blows to the institute in recent months. Since December, the DHI’s chairman, Luca Volontè, a former Christian Democrat politician, has been on trial in Milan, charged with taking a €2.4m bribe from private and public sources in Azerbaijan. Mr Volontè was allegedly paid for helping to block criticism of human-rights abuses in Azerbaijan while a member of the parliamentary assembly of the Council of Europe. Mr Volontè denies any wrongdoing. 

Mr Harnwell founded the DHI in 2008 and won support from a variety of prominent Catholics. They included conservatives such as Austin Ruse, president of the Centre for Family and Human Rights in America, and liberals like Lord Alton, a British peer and former Liberal Democrat politician. But Mr Harnwell admits that, as Mr Bannon has taken an increasingly visible role, several of his liberal members and officials, including Lord Alton, have quit. The latest to go was a high-ranking Vatican prelate, Cardinal Peter Turkson.

As Mr Harnwell readily agrees, the Institute’s stewardship of the Certosa, or Charterhouse, of Trisulti has brought with it daunting responsibilities. Founded in the early 13th century amid woodlands in a part of Italy renowned for its hermits and mystics, abbeys and convents, the complex covers 86,000 square metres—the size of 12 football pitches. It houses a watermill, a herbal pharmacy, an elaborately frescoed church and a topiary maze.

But many of its roofs are in urgent need of repair, and there is water infiltration in several places. The DHI committed itself in its bid to spend an additional €1.9m on restoration. Mr Bannon says that more than the row over the lease, the bigger concern “is making sure I can pull together all the resources needed to restore the monastery to what it should be”.

The local authority has presented a further challenge by demanding €86,000 a year in property tax and for waste collection. Mr Bannon remains unfazed by all this. “I couldn’t be more excited,” he says. More excitement is probably to come.