Tag: g20 summit

Upcoming G20 Summit in Seoul Raises Stakes for U.S.-Korea Trade Deal

The next G20 Summit, to be held November 11-12 in South Korea, is right around the corner. For free traders, the summit has taken on added meaning because of the promise President Obama made during the most recent G20 Summit held last June in Toronto to advance the U.S.-Korea free trade agreement (FTA):

The last time I was in Korea, I said that I would be committed to moving [the FTA] forward. And today I indicated to President Lee that it is time that our United States Trade Representative work very closely with his counterpart from the ROK to make sure that we set a path, a road, so that I can present this FTA to Congress…. I want to make sure that everything is lined up properly by the time that I visit Korea in November. And then in the few months that follow that, I intend to present it to Congress. It is the right thing to do for our country.

We agree, Mr. President. To help policymakers understand the high stakes and potential gains of the agreement, Cato Senior Fellow Doug Bandow has authored the new Cato Trade Briefing Paper, “A Free Trade Agreement with South Korea Would Promote Both Prosperity and Security,” released today.

A preview of Doug’s analysis also was published yesterday in the Daily Caller, under the title “South Korea Free Trade Agreement Key to Prosperity and Security.”

Australian Trade Scholars Offer Perfect Cure for ‘Protectionitis’

Earlier this month, the Lowy Institute in Australia published a paper offering some very sound and, obviously, very timely advice about how to contain, and ultimately, eradicate protectionism. The paper is being circulated among the G20 delegations, who will undoubtedly discuss the topic of trade and protectionism in Pittsburgh next week. So for those of you interested in getting a sense of what will probably be the single best idea on (or at least near) the table at the G20 summit, I highly recommend this 20-pager.

The solution proposed by the authors boils down to a two-word phrase: “Domestic Transparency.” What is meant by that phrase is that “defeating protectionism begins at home.” And by that slogan, the authors mean that the key to reducing, and ultimately eliminating, protectionism is not external pressure from other countries, mercantilist trade negotiations, or filing trade complaints at the WTO, but rather greater awareness at home of the real costs of protectionism. I couldn’t agree more. (In fact better transparency is one of our recommendations in this paper).

When governments impose trade barriers at the behest of special interests, they usually justify that protectionism with diversionary rhetoric concerning some vague conception of the “national interest,” and the imperative of shielding domestic business from unfair competition and other vagaries of the globalized economy. That the protectionist measure itself—the product of special interests diverting productive resources from economic to political ends—forces involuntary and usually unknowing subsidization of those protection-seekers by the same citizens at large who are expected to buy into the national interest canard is a detail about which most people remain in the dark.

The central theme of the Lowy paper is that once people become informed about the costs of protectionism, not only to the broader economy, but in terms of what it means for their own personal budgets, politicians and lobbyists will find it much more difficult to concoct protectionist schemes.

That this paper is written by Australians is no accident. The Aussies have experience and credibility implementing a successful domestic transparency regime, which entailed the establishment of an independent authority (independent from the levers of government and business) to provide advice to governments that is “disinterested, open to public scrutiny, and formulated from the perspective of national welfare rather than the needs of particular producer groups.” The establishment of that agency (oddly named the “Industries Assistance Commission”—one of the authors, Bill Carmichael, is the former Chairman of the IAC) in 1974 and its successor agency (also oddly named the “Productivity Commission”) are widely credited with exposing the costs of protectionism to Australians, who subsequently supported dramatic waves of trade liberalization and have since been skeptical of efforts of industries to secure protection.

In this country, the U.S. International Trade Commission is an agency with a stable of economists that measures the welfare effects of trade liberalization and protectionism. While it may have the resources to conduct the analyses, it doesn’t have the independence. Regrettably, ITC studies are often subject to the whims of politics, particularly when the objectivity and facts in their reports don’t comport with politicians’ “expectations.” We need something similar to Australia’s domestic transparency institution in the United States, and in other countries, too.

G20 members should seriously consider the proposal in this excellent Lowy paper.

Switzerland, Austria, and Luxembourg Defend Financial Privacy…and Get Support from the Czech Republic

The Birmingham Star reports on how Switzerland, Austria, and Luxembourg are defending their human rights policies of protecting financial privacy:

Switzerland, Luxembourg and Austria are fighting attempts to put them on blacklist for being tax havens and over-secretive in banking rules. Luxembourg officials hosted discussions with the Swiss and Austrian finance ministers over the weekend, resulting in a demand for involvement in talks on the issue prior to the G20 summit next month. Luxembourg treasury officials said the small European group wanted to be involved in the debates about bank secrecy which were currently being discussed in meetings to which they did not belong, such as the G20.

Equally important, the Czech Republic is standing up for the sovereign right of jurisdictions to have strong human rights laws. The Finance Minister correctly explains that Switzerland’s laws should not be sacrificed on the altar of bigger government. The EU Business reports:

Czech Foreign Minister Karel Schwarzenberg defended Switzerland on Sunday against threats by EU member states to put it on a tax haven blacklist, saying sovereignty is “worth more” than lost taxes. “Certainly tax coffers here and there miss out on a couple of million euros… The independence of a country and the traditions of an independent, neutral Switzerland is however worth more than that,” Schwarzenberg said. “Why must one spoil that at all cost?” he added in an interview with the Swiss newspaper NZZ am Sonntag. The Czech Republic holds the rotating presidency of the European Union, and Switzerland has come under intense pressure in recent months over its banking secrecy laws.