Friday, November 18, 2011
Enough is enough, Obama tells Beijing
In a surprising bout of candour, United States President Barack Obama lashed out at Chinese authorities over the alleged undervaluation of the Yuan, saying most economists estimated it was devalued by 20 to 25 per cent and that it was time for China to move towards a market-based system for their currency.
Speaking at the end of the Asia-Pacific Economic Cooperation organisation meeting in Hawaii, Mr. Obama poured scorn over China for breaking some rules and implied that it was trying to game the system.
“The problem is, is that you've got a bunch of export producers in China who like the system as it is, and making changes are difficult for them politically. I get it. But the U.S. and other countries, I think understandably, feel that enough is enough,” said Mr. Obama.
“Play by the rules”
He underscored his intention to ensure that China played by the rules of the game, especially since, in addition to the currency valuation issue, intellectual property rights and protections for U.S. companies in China were also proving problematic.
“We are going to continue to be firm in insisting that they operate by the same rules that everybody else operates under. We do not want them taking advantage of the U.S. or U.S. businesses,” he said.
While the U.S. has made its concerns about the alleged undervaluation of the Yuan known for several years now, China has repeatedly said the issue is a red herring and that the U.S. economic woes stem from deeper, domestic causes.
Senate bill
The U.S. Senate last month passed a bill, the “Currency Exchange Rate Oversight Reform Act of 2011”, aimed at punishing China for allegedly manipulating its currency and holding it at an artificially low level.
Yet that bill came under fire even from Republican Party leaders, who are often on the front foot when it comes to critiquing Chinese monetary policies. John Boehner, the Speaker of the House, denounced the bill a day after it passed the Senate, saying it posed a “very severe risk” of starting a trade war between the world's two biggest economies.
Earlier this year Chinese President Hu Jintao deflected criticism away from China's currency, suggesting instead that efforts by the U.S. Federal Reserve to stimulate growth through huge bond purchases were fuelling inflation in emerging economies.
Labels: China, Chinese Yuan, currency manipulation, currency valuation, United States
Tuesday, August 23, 2011
Clinton calls for Indian sanctions on Syrian o
From The Hindu
Indian government officials can expect heavy diplomatic pressure from their United States counterparts in the coming days on the question of imposing sanctions on the regime of Bashar al-Assad in Syria.
In an interview with CBS News, U.S. Secretary of State Hillary Clinton lashed out against Indian and Chinese involvement in the oil and gas industry in Syria, a key source of revenue for the country. “We want to see India [take steps towards imposing sanctions alongside the U.S.], because India and China have large energy investments inside of Syria,” Ms. Clinton said.
The U.S. has upped the ante on Syria following a brutal crackdown by Mr. Assad's forces on pro-democracy protestors. According to some sources approximately 1,700 demonstrators have died with “tens of thousands” reportedly arrested. On Friday there were reports of a fresh crackdown with troops opening fire on “thousands of protesters” in the north and east of the country.
When asked about the U.S. role in the Syrian oil and gas sector, Ms. Clinton said: “We have such a small stake in what they produce and what they market. The real trick is to convince the Europeans and the Arabs and the Chinese and the Indians and others... We have been upping the sanctions... but we want others to follow, because Syria was not one of our major economic partners.”
While the U.S. has relatively few economic links with Syria and hence lacks any real leverage, this week it tightened its economic noose around Syria slapping the Commercial Bank of Syria, the Syrian Lebanese Commercial Bank and Syriatel, the largest mobile phone operator in Syria, with sanctions.
Indian government officials can expect heavy diplomatic pressure from their United States counterparts in the coming days on the question of imposing sanctions on the regime of Bashar al-Assad in Syria.
In an interview with CBS News, U.S. Secretary of State Hillary Clinton lashed out against Indian and Chinese involvement in the oil and gas industry in Syria, a key source of revenue for the country. “We want to see India [take steps towards imposing sanctions alongside the U.S.], because India and China have large energy investments inside of Syria,” Ms. Clinton said.
The U.S. has upped the ante on Syria following a brutal crackdown by Mr. Assad's forces on pro-democracy protestors. According to some sources approximately 1,700 demonstrators have died with “tens of thousands” reportedly arrested. On Friday there were reports of a fresh crackdown with troops opening fire on “thousands of protesters” in the north and east of the country.
When asked about the U.S. role in the Syrian oil and gas sector, Ms. Clinton said: “We have such a small stake in what they produce and what they market. The real trick is to convince the Europeans and the Arabs and the Chinese and the Indians and others... We have been upping the sanctions... but we want others to follow, because Syria was not one of our major economic partners.”
While the U.S. has relatively few economic links with Syria and hence lacks any real leverage, this week it tightened its economic noose around Syria slapping the Commercial Bank of Syria, the Syrian Lebanese Commercial Bank and Syriatel, the largest mobile phone operator in Syria, with sanctions.
Labels: Barack Obama administration, China, India, Secretary of State Hillary Clinton, Syria unrest, U.S.
Friday, June 03, 2011
U.S. not trying to hold China down: Gates
Taking forward the United States' conciliatory approach towards China, possibly in anticipation of a major fighter aircraft sale to Taiwan later this year, U.S. Defence Secretary Robert Gates said that his country was “not trying to hold China down.”
Speaking to media on the eve of the Shangri-La talks between the U.S. and East Asian nations, Mr. Gates said China had been a “great power for thousands of years.” He added that China “is a global power and will be a global power.” The Secretary's comments came in the wake of recent moves between the U.S. and China, to bring greater rapprochement to a bilateral relationship that hit a frosty low last year. Following U.S. President Barack Obama's announcement of a major weapons sale to Taiwan in January 2010, Beijing severed all military ties with Washington.
Notwithstanding Mr. Gates' efforts, history could well be on the brink of repeating itself as last week 45 Senators from both sides of the U.S. Congress urged the White House to press forward with the sale of 66 new F-16 C/D fighters to Taiwan.
“Without new fighter aircraft and upgrades to its existing fleet of F-16s, Taiwan will be dangerously exposed to Chinese military threats, aggression and provocation, which pose significant national security implications for the United States,” said the Senators in their letter.
Mr. Gates echoed similar sentiments on the U.S.' interests in Taiwan, however treading a careful line with regards to the implications of this for China. He said while the U.S. did have obligations under the Taiwan Relations Act, under both the Bush and Obama administrations, it had tried to “thread the needle pretty carefully in terms of Taiwan's defensive capabilities, but at the same time being aware of China's sensitivities.”
When the U.S. invited the People's Liberation Army Chief of General Staff Chen Bingde to Washington recently as part of the broader attempt to reset military-to-military relations, the Chinese General was reported to have “renewed his objection to any U.S. arms sales to Taiwan.” Yet even General Bingde sought to water down recent calls in the U.S. for more transparency in Chinese military capabilities, particularly in terms of their focus on Taiwan. Arguing that American claims of Chinese military capabilities are exaggerated, the General said “China's efforts to enhance... military capabilities is mainly targeted at separatist forces ... who have attempted to split Taiwan away from China.”
Speaking to media on the eve of the Shangri-La talks between the U.S. and East Asian nations, Mr. Gates said China had been a “great power for thousands of years.” He added that China “is a global power and will be a global power.” The Secretary's comments came in the wake of recent moves between the U.S. and China, to bring greater rapprochement to a bilateral relationship that hit a frosty low last year. Following U.S. President Barack Obama's announcement of a major weapons sale to Taiwan in January 2010, Beijing severed all military ties with Washington.
Notwithstanding Mr. Gates' efforts, history could well be on the brink of repeating itself as last week 45 Senators from both sides of the U.S. Congress urged the White House to press forward with the sale of 66 new F-16 C/D fighters to Taiwan.
“Without new fighter aircraft and upgrades to its existing fleet of F-16s, Taiwan will be dangerously exposed to Chinese military threats, aggression and provocation, which pose significant national security implications for the United States,” said the Senators in their letter.
Mr. Gates echoed similar sentiments on the U.S.' interests in Taiwan, however treading a careful line with regards to the implications of this for China. He said while the U.S. did have obligations under the Taiwan Relations Act, under both the Bush and Obama administrations, it had tried to “thread the needle pretty carefully in terms of Taiwan's defensive capabilities, but at the same time being aware of China's sensitivities.”
When the U.S. invited the People's Liberation Army Chief of General Staff Chen Bingde to Washington recently as part of the broader attempt to reset military-to-military relations, the Chinese General was reported to have “renewed his objection to any U.S. arms sales to Taiwan.” Yet even General Bingde sought to water down recent calls in the U.S. for more transparency in Chinese military capabilities, particularly in terms of their focus on Taiwan. Arguing that American claims of Chinese military capabilities are exaggerated, the General said “China's efforts to enhance... military capabilities is mainly targeted at separatist forces ... who have attempted to split Taiwan away from China.”
Labels: bilateral ties, China, Robert Gates, U.S., U.S. Defence Secretary
Sunday, April 24, 2011
Gary Locke likely next U.S. Ambassador to China
Gary Locke, currently Commerce Secretary of the United States, is likely to be appointed the next U.S. Ambassador to China, according to reports.
The White House said that U.S. President Barack Obama would announce Mr. Locke’s nomination for the top job in Beijing this week and possibly as early as Wednesday.
His nomination would follow the retirement of Jon Huntsman, the current Ambassador, from the role. Mr. Huntsman is rumoured to be considering joining the 2012 Republican presidential primary race.
Mr. Locke was formerly the Governor of Washington State, and only the second ever Asian-American Governor in U.S. history.
As Commerce Secretary the Chinese-American Mr. Locke played a key role in advancing the U.S.’ trade with India, travelling to India both with Mr. Obama last November and again as part of a trade delegation in February.
Labels: China, US ambassador
Thursday, January 20, 2011
Willing to have dialogue on rights: Hu
From The Hindu
Technical problems with simultaneous translations plagued the post-state visit press conference with United States President Barack Obama and Chinese President Hu Jintao on Wednesday.
Yet the fact that many of the technical snags occurred when Mr. Hu faced questions on China’s human rights record was a fact that left many observers wondering about their timing.
The first set of comments on the thorny bilateral issue of human rights in China, by President Obama, passed through the sound systems unscathed.
Clearly enunciating the U.S. support for human rights and expressing hope that China would do the same, Mr. Obama said that during the state visit, “I reaffirmed America’s fundamental commitment to the universal rights of all people. That includes basic human rights like freedom of speech, of the press, of assembly, of association and demonstration, and of religion – rights that are recognized in the Chinese constitution.”
On the steps forward, he added the U.S. and China had agreed to move ahead with a formal dialogue on human rights and new exchanges to advance the rule of law “while acknowledging there are going to be areas where we disagree.”
He was quick, however, to add that the U.S. recognised that “Tibet is part of the People’s Republic of China, [and] the U.S. continues to support further dialogue between the government of China and the representatives of the Dalai Lama to resolve concerns and differences, including the preservation of the religious and cultural identity of the Tibetan people.”
Yet the reporter to whom Mr. Obama had responded had also asked Mr. Hu about how he would justify China’s record on human rights, and if Mr. Hu thought that was a legitimate concern of the American people – yet no answer was forthcoming from the Chinese President, who instead responded a question from another reporter.
But there was no avoiding the issue when a second reporter reiterated his colleagues question and specifically requested a response from President Hu, who then replied, “First, I would like to clarify, because of the technical translation and interpretation problem, I did not hear the question about the human rights... As you raise this question, and I heard the question properly, certainly I am in a position to answer that question.”
Mr. Hu then explained that in over eight meetings he had held thus far with Mr. Obama, China had not shied away from discussing human rights and its position was that “China recognises and also respects the universality of human rights. And at the same time, we do believe that we also need to take into account the different and national circumstances when it comes to the universal value of human rights.”
However while he stressed that China was a developing country that was currently in a “crucial stage of reform,” and still faced many challenges in economic and social development, he conceded, “And a lot still needs to be done in China, in terms of human rights.”
China was willing to continue to have exchanges and dialogue with other countries in terms of human rights, and we are also willing to learn from each other in terms of the good practices, Mr. Hu said, specifically saying that although there were “disagreements between China and the U.S. on the issue of human rights, China is willing to engage in dialogue and exchanges with the U.S. on the basis of mutual respect and the principle of non-interference in each other’s internal affairs.”
Labels: bilateral ties, China, China President Hu Jintao, human rights, joint press conference, President Barack Obama, U.S.
Slew of U.S.-China commercial deals inked
From The Hindu
This week the state visit of Chinese President Hu Jintao here witnessed a slew of bilateral trade and defence deals being inked across industries, with the White House noting that “China is a key market for U.S. exports. Those exports are generating jobs in every corner of the U.S. and across every major sector.”
The deals signed involved some of the U.S’ largest companies, but also an increasing number of small and medium-sized enterprises, according to officials, who underscored in particular an agreement for the sale of 200 Boeing airplanes valued at $19 billion.
Officials further said that Chinese companies had signed 70 contracts for $25 billion in U.S. exports from 12 states. “These included sectors ranging from auto parts to agriculture, machinery to chemicals,” according to a statement.
The White House also issued a statement noting that 11 investment contracts were signed worth $3.24 billion and additional transactions were announced or showcased, exceeding $12 billion in total value with approximately $986.8 million in U.S. export content.
Linking these deals to job creation in the U.S. economy, officials noted that the export-boosting transactions would in particular “help support an estimated 235,000 jobs” besides their overall impact of underpinning the “[expansion of] the U.S.-China commercial partnership, contributing to economic growth and development in both countries.”
Touching upon environmentally sustainable dimension of the deals Chinese and U.S. officials said that many of these transactions “highlight the increased collaboration in such areas as clean energy and green technologies.”
Notable among these in the transportation sector is a letter of intent, between the Chinese Ministry of Rail and General Electric, regarding expanding an existing strategic partnership to bring Chinese high-speed rail technology to the U.S.
GE and China South Locomotive and Rolling Stock Corporation Limited plan to form a joint venture in the U.S. to manufacture high- and medium-speed electric multiple unit trains, officials confirmed, and this venture could support up to 3,500 U.S. jobs. Overall this plan would support efforts to capture new business opportunities valued at up to $1.4 billion with an estimated $360 million in U.S. export content, a White House statement said.
Other commercial agreements associated with President Hu’s visit to Washington include: General Electric-Shenhua Gasification joint venture; General Electric-Huadian Joint Collaboration Agreement on decentralized energy combined heat and power projects; General Electric-AVIC Avionics joint venture agreement; UPC Management Wind Power agreements; Honeywell—Haier Group Memorandum of Understanding for global strategic cooperation; LP Amina MOU with Beijing Energy; LanzaTech--Bao Steel joint venture to build an ethanol plant; MVP RV – Winston Battery Limited Recreational Vehicle MoU; Caterpillar Inc. – Caterpillar China Investment Co. Ltd. business agreement; LP Amina MOU with Yixing Union Congregation Co. Ltd.; Optimax Systems, Inc – Shanghai Micro-Electronics Equipment Co., Ltd. Precision Optics Sale; Westinghouse Electric Company -- China Baotou Nuclear Fuel (CBNF) Fuel Fabrication Agreement; Westinghouse Electric Company-- China State Nuclear Power Technology Corporation (SNPTC) Nuclear Cooperation Agreement; Alcoa and the China Power Investment Corporation MoU; Emberclear and Clean Energy Research Institute Licensing Agreement; and American Electric Power Company – State Grid Corporation of China.
Labels: China, China President Hu Jintao, commercial deals, President Barack Obama, U.S.
Wednesday, January 19, 2011
Tough negotiations ahead for Hu, Obama
From The Hindu
Since he arrived in Washington on Tuesday Chinese President Hu Jintao’s state visit has entirely dominated the attention of the White House’s protocol army. However if recent statements by senior administration officials are anything to go by, official bonhomie may give way to tense negotiations by Wednesday evening, when Mr. Hu will attend a press conference with United States President Barack Obama.
In their opening remarks at the South Lawn of the White House the Chinese President clearly emphasised his hope that his visit would “increase mutual trust, enhance friendship, deepen cooperation, and push forward the positive, cooperative, and comprehensive China-U.S. relationship for the 21st century.”
He added that “China and the U.S. should respect each other’s choice of development path and each other’s core interests,” possibly an oblique reference to China’s interest in Taiwan. Until recently China had suspended all military-to-military ties with the U.S. after the latter sold arms to Taiwan in 2009.
In turn Mr. Obama struck a positive but balanced tone in his remarks saying that, while “The previous 30 years had been a time of estrangement for our two countries... the 30 years since have been a time of growing exchanges and understanding.”
He also hinted at the U.S.’ concerns on human rights in China when he noted, “History shows that societies are more harmonious, nations are more successful, and the world is more just, when the rights and responsibilities of all nations and all people are upheld, including the universal rights of every human being.”
The tenor of Mr. Obama’s comments appeared to jibe with recent comments made by senior officials in his administration who have, in the past few weeks, underscored policy dissonance on thorny economic, social and military issues between the two countries.
Last week U.S. Treasury Secretary Timothy Geithner reiterated the U.S. view that “a stronger yuan is in China's own best interests, because it would help tame rising inflation that has become a key risk to China's rapid growth,” according to reports. Official anxiety regarding trade imbalances has also grown, focussing in particular on U.S. companies’ lack of access to China’s markets.
Similarly Secretary of State Hillary Clinton said in a speech on Friday that China’s human rights record needed to improve, in particular criticising in particular its imprisonment of Nobel Peace Prize winner Liu Xiaobo.
In a similar critical message issued during a meeting with Chinese Minister of National Defence General Liang Guanglie, U.S. Defence Secretary Robert Gates hinted that the China’s development of a stealth aircraft and its growing assertiveness in the South China Sea were matters of serious concern.
While trade, currency, human rights and military development issues are clearly of much concern in the Obama White House, it may find itself groping for levers to persuade Mr. Hu to make concessions where it matters.
A litmus test of how willing Mr. Hu is to consider please for policy reform will come later on Wednesday when, along with Mr. Obama, he will interact with a group of 18 American and Chinese CEOs and hear their requests for greater market access in China.
Labels: bilateral ties, China, China President, Hu Jintao, international relations, President Barack Obama, U.S., U.S.-China relations
Tuesday, January 18, 2011
U.S. monetary policy fuelling inflation: Hu
From The Hindu
Two days before his much-anticipated visit to the United States, Chinese President Hu Jintao said that U.S. monetary policy “has a major impact on global liquidity and capital flows and therefore, the liquidity of the U.S. dollar should be kept at a reasonable and stable level.”
In rare comments made directly to U.S. media Mr. Hu deflected criticism away from China’s currency, which senior U.S. officials have persistently said was overvalued. Instead, he suggested to The Wall Street Journal and Washington Post, efforts by the U.S. Federal Reserve to stimulate growth through huge bond purchases were fuelling inflation in emerging economies.
However while Mr. Hu acknowledged “some differences and sensitive issues between us,” his tone was described as “generally compromising, and he avoided specific mention of some of the controversial issues that have dogged relations with the U.S. over the past year or so.”
These include the U.S.’ arms sales to Taiwan, which resulted in a suspension of military-to-military ties between the two countries, imprisoned Nobel Peace Prize winner Liu Xiaobo, China’s expanding naval prowess and complaints about cyber-attacks by Google and other internet-related entities in China.
Yet tensions were recently evident during a series of meetings in Beijing between U.S. Defence Secretary Robert Gates and his Chinese counterpart General Liang Guanglie, particularly regarding China’s alleged development of a stealth aircraft and the 2009 arms sales to Taiwan.
In the weeks leading to Mr. Hu’s visit U.S. Treasury Secretary Timothy Geithner also reiterated the U.S. view that “a stronger yuan is in China's own best interests, because it would help tame rising inflation that has become a key risk to China's rapid growth,” the Journal reported.
Mr. Hu however was said to have dismissed Mr. Geithner’s claim arguing that China was combating inflation with an integrated policies including interest-rate hikes, and “inflation can hardly be the main factor in determining the exchange rate policy.”
The Post noted that during Mr. Hu’s visit the Obama administration would also seek to refocus attention on China’s record on human rights and political freedoms, which re-entered spotlight late last year following the Nobel Committee awarding its 2010 Peace Prize to a Mr. Liu.
In his recent comments Mr. Hu nevertheless hinted that China would continue to develop “socialist democracy.” Political reform, Mr. Hu said to the Post, must “meet people's growing enthusiasm for participating in political affairs.”
He added that China would “define the institutions, standards and procedures for socialist democracy, expand people’s ordinary participation in political affairs at each level and in every field, mobilize and organize the people as extensively as possible.”
Labels: China, Hu Jintao, inflation, monetary policy, U.S.
Tuesday, January 11, 2011
U.S.-China military discussions reveal frictions
From The Hindu
In comments to media made in Beijing, United States Defence Secretary Robert Gates and Chinese Minister of National Defence General Liang Guanglie suggested that they had broad agreement on the need for stronger bilateral military ties. Yet they respectively hinted that China’s development of a stealth aircraft and the U.S.’ arms sales to Taiwan last year were points of disagreement.
Following a series of meetings between top defence officials from the two countries this week, a precursor to Chinese President Hu Jintao’s visit to Washington on January 19, Mr. Gates said that “In order to reduce the chances of miscommunication, misunderstanding or miscalculation, it is important that our military-to-military ties are solid, consistent and not subject to shifting political winds.”
Regarding China’s development of a new, fifth-generation stealth fighter, which was said to have demonstrated anti-satellite and anti-ship ballistic missile capability, the American Forces Press Services quoted a U.S. defence official saying, “China must defend itself, but... the Chinese should be clear about their strategy and doctrine. That would go a long way toward dispelling concerns about the Chinese military.”
At a press briefing, Mr. Liang responded to the issue arguing that the gap between the Chinese military and more advanced countries was “at least two or three decades,” and that the military improvements were not targeting any one nation.
Touching upon the U.S.’ arms sales to Taiwan last year, following which Beijing broke off military-to-military contact with Washington, Minister Liang noted, “On that our position has been clear and consistent: We are against it, because the U.S. arms sales to Taiwan seriously damaged China's core interests.”
Mr. Liang added, “We do not want to see that happen again. Neither do we want the U.S. arms sales to Taiwan [to] again and further disrupt the development of our military-to-military relationship.”
Yet both leaders noted that the high-level meetings this week laid down a “very solid foundation for the settlement of our differences and the future progress of our relations.”
In particular they expressed solidarity regarding discussions on North Korea and the crisis in the Korean peninsula. Mr. Gates said the U.S. and China could “work to maintain peace and security on the Korean peninsula by facilitating engagement between the two Koreas and working toward the de-nuclearisation of the Korean peninsula.”
The AFPS also reported that Mr. Gates assured Chinese military officials that “American exercises off the Korean coast are not in any way directed at the Chinese, but rather are driven by growing concern over North Korea.”
He was quoted as saying “Our efforts have been directed at deterring further provocations on the part of North Korea... This is an area where the U.S. and China have worked together cooperatively, and we acknowledge and appreciate China's constructive actions late last fall in terms of trying to tamp down tensions on the peninsula.”
Labels: China, U.S.-China ties, United States
Hillary, Yang discuss Hu Jintao's visit
From The Hindu
Chinese Foreign Minister Yang Jiechi met United States Secretary of State Hillary Clinton this week to lay the ground for Chinese President Hu Jintao's visit to Washington on January 19 and to advance their discussions on the North Korean crisis.
Mr. Yang, who also met U.S. National Security Advisor Tom Donilon, said in joint remarks with Ms. Clinton on Wednesday that Mr. Hu's visit would occur against the backdrop of an “ever-evolving international situation”.
The remarks were said to be a reference to tensions between North and South Korea, which escalated after an exchange of artillery fire in November led to civilian casualties on Yeonpyeong Island near the countries' shared border.
Ms. Clinton said during the briefing that she felt “a great sense of responsibility to ensure that it continues the positive, cooperative, comprehensive relationship between our two countries”.
Trade imbalance
Regarding the meeting between Mr. Yang and Mr. Donilon, the White House said Mr. Donilon had “stressed the importance of effective efforts to reduce imbalances in both the global economy as well as in U.S.-China trade”.
The two officials also touched upon ways to advance non-proliferation objectives, including issues relating to Iran and North Korea. They also agreed on the importance of ensuring that the referendum on southern Sudan proceeds peacefully.
State Department spokesman, Philip Crowley, was quoted in media as expressing hope that China and the U.S. would “reach agreement on addressing the crisis”, during Mr. Hu's visit to Washington.
Chinese Foreign Minister Yang Jiechi met United States Secretary of State Hillary Clinton this week to lay the ground for Chinese President Hu Jintao's visit to Washington on January 19 and to advance their discussions on the North Korean crisis.
Mr. Yang, who also met U.S. National Security Advisor Tom Donilon, said in joint remarks with Ms. Clinton on Wednesday that Mr. Hu's visit would occur against the backdrop of an “ever-evolving international situation”.
The remarks were said to be a reference to tensions between North and South Korea, which escalated after an exchange of artillery fire in November led to civilian casualties on Yeonpyeong Island near the countries' shared border.
Ms. Clinton said during the briefing that she felt “a great sense of responsibility to ensure that it continues the positive, cooperative, comprehensive relationship between our two countries”.
Trade imbalance
Regarding the meeting between Mr. Yang and Mr. Donilon, the White House said Mr. Donilon had “stressed the importance of effective efforts to reduce imbalances in both the global economy as well as in U.S.-China trade”.
The two officials also touched upon ways to advance non-proliferation objectives, including issues relating to Iran and North Korea. They also agreed on the importance of ensuring that the referendum on southern Sudan proceeds peacefully.
State Department spokesman, Philip Crowley, was quoted in media as expressing hope that China and the U.S. would “reach agreement on addressing the crisis”, during Mr. Hu's visit to Washington.
Labels: China, U.S.-China ties, United States
Tuesday, December 14, 2010
China blocked U.N. sanctions against terror group at Pakistan's behest
From The Hindu
Until the Mumbai terror attacks of November 2008, China, “at the behest of Pakistan,” blocked the United Nations Security Council from listing Jamaat-ud-Dawa, widely acknowledged as a front for the militant group Lashkar-e-Taiba, under the UNSC Resolution 1267. LeT has been held responsible for the Mumbai attacks.
The United States' frustration with China for impeding sanctions against JuD through the UN Committee on al-Qaeda- and Taliban-associated entities was made evident in a recent cable, classified as “Secret,” from U.S. Secretary of State Hillary Clinton.
The cable also noted that while JuD chief Hafiz Muhammed Saeed served as the head of LeT too, the LeT's operational commander was Zaki ur-Rehman Lakvi, responsible for the group's military operations budget of approximately $5.2 million.
Issued to the U.S. embassies in Islamabad and elsewhere, the cable was dated August 10, 2009 and was published online by WikiLeaks, a whistleblower website, over the weekend.
Part of negotiation
China's actions on the UNSC prior to the Mumbai attacks were outlined as part of a broader process of negotiation in which the U.S. government sought to oppose a request by the JuD for “focal point de-listing,” under which a window of UN Secretariat could be approached by entities listed UNSC Resolution 1730 to petition for de-listing.
Commenting on the background of U.S. efforts to block the de-listing petition filed by lawyers representing JuD, the State Department cable noted that the UNSC Committee had added LeT to its Consolidated List in 2005, citing its affiliation with al-Qaeda.
The cable went on to note that while the addition of JuD and its leader, Muhammad Saeed, “followed closely on the heels of the LeT-perpetrated attacks in Mumbai,” the U.S.' request, preceding the attacks, “were placed on hold by China at the behest of Pakistan.”
The cable further indicated the U.S.' frustration with the pace of Pakistani efforts to curb the activities of JuD in the aftermath of its listing, contrary to numerous official comments in Washington at the time.
“Raise funds freely'
According to the cable, “In spite of Pakistani acquiescence to the listings in December 2008, we continue to see reporting indicating that JuD is still operating in multiple locations in Pakistan, and that the group continues to openly raise funds.”
The State Department added that it was unclear what steps, if any, the government of Pakistan has taken to freeze JuD assets or otherwise implement UN 1267 sanctions, which included an asset freeze, a travel ban, and an arms embargo. Defending its decision to oppose the JuD petition for de-listing, U.S. officials said in the cable that the intelligence community assessed that LeT used the JuD name as an alias and JuD “provides cover and protection for LeT's militant activities in Pakistan.”
Same entity
The cable further noted that LeT and JuD shared many senior leaders and both organisations stemmed from the same original entity, Markaz-ud-Dawawal-Irshad, founded around 1986.
Until the Mumbai terror attacks of November 2008, China, “at the behest of Pakistan,” blocked the United Nations Security Council from listing Jamaat-ud-Dawa, widely acknowledged as a front for the militant group Lashkar-e-Taiba, under the UNSC Resolution 1267. LeT has been held responsible for the Mumbai attacks.
The United States' frustration with China for impeding sanctions against JuD through the UN Committee on al-Qaeda- and Taliban-associated entities was made evident in a recent cable, classified as “Secret,” from U.S. Secretary of State Hillary Clinton.
The cable also noted that while JuD chief Hafiz Muhammed Saeed served as the head of LeT too, the LeT's operational commander was Zaki ur-Rehman Lakvi, responsible for the group's military operations budget of approximately $5.2 million.
Issued to the U.S. embassies in Islamabad and elsewhere, the cable was dated August 10, 2009 and was published online by WikiLeaks, a whistleblower website, over the weekend.
Part of negotiation
China's actions on the UNSC prior to the Mumbai attacks were outlined as part of a broader process of negotiation in which the U.S. government sought to oppose a request by the JuD for “focal point de-listing,” under which a window of UN Secretariat could be approached by entities listed UNSC Resolution 1730 to petition for de-listing.
Commenting on the background of U.S. efforts to block the de-listing petition filed by lawyers representing JuD, the State Department cable noted that the UNSC Committee had added LeT to its Consolidated List in 2005, citing its affiliation with al-Qaeda.
The cable went on to note that while the addition of JuD and its leader, Muhammad Saeed, “followed closely on the heels of the LeT-perpetrated attacks in Mumbai,” the U.S.' request, preceding the attacks, “were placed on hold by China at the behest of Pakistan.”
The cable further indicated the U.S.' frustration with the pace of Pakistani efforts to curb the activities of JuD in the aftermath of its listing, contrary to numerous official comments in Washington at the time.
“Raise funds freely'
According to the cable, “In spite of Pakistani acquiescence to the listings in December 2008, we continue to see reporting indicating that JuD is still operating in multiple locations in Pakistan, and that the group continues to openly raise funds.”
The State Department added that it was unclear what steps, if any, the government of Pakistan has taken to freeze JuD assets or otherwise implement UN 1267 sanctions, which included an asset freeze, a travel ban, and an arms embargo. Defending its decision to oppose the JuD petition for de-listing, U.S. officials said in the cable that the intelligence community assessed that LeT used the JuD name as an alias and JuD “provides cover and protection for LeT's militant activities in Pakistan.”
Same entity
The cable further noted that LeT and JuD shared many senior leaders and both organisations stemmed from the same original entity, Markaz-ud-Dawawal-Irshad, founded around 1986.
Labels: cablegate, China, terrorism, U.S. secret cables, UN sanctions, Wikileaks
Sunday, July 11, 2010
IMF hikes growth forecast, warns of "strong clouds"
From The Hindu
The International Monetary Fund (IMF) has raised its world economic growth forecast from 4 per cent to 4.5 per cent, reflecting the positive impact of economic activity in the first half of the year as much as it did the “strong clouds [that] have appeared on the horizon,” according to an official statement.
Offering comments on the release of the updated forecast, Olivier Blanchard, Chief Economist at the Fund, said, “While we remain cautiously optimistic about the pace of recovery, there are clear dangers and policy challenges ahead.”
In particular, there were concerns about how Europe would deal with fiscal and financial problems, the progress that advanced countries make with fiscal consolidation, and the efforts of emerging countries to rebalance their economies, Mr. Blanchard noted.
On the upside, the Fund report said, the numbers on economic activity for the first half of the year “have come in strong, indeed somewhat stronger than we had forecast”. These would give reasons to be more optimistic than the fund had been earlier, Mr. Blanchard added, referring to an April forecast for growth according to which world economic output was expected to expand at 4 per cent.
Specifically the Fund was cheered by the fact that the world economy expanded at an annualised rate of over 5 per cent in the first quarter of 2010 and that growth was stronger than expected in most countries, including the United States, Europe, Japan, Brazil, and India. “A good sign for the future,” according to the IMF was the finding that in most cases, such growth reflected stronger private demand.
Yet on the downside Mr. Blanchard cautioned that the strong clouds that had appeared on the horizon present “real dangers and serious policy challenges, and give reasons to be less optimistic than we were earlier”.
Clouds threaten global economy
The clouds started building over Greece, but quickly extended to Europe, Mr. Blanchard explained, underscoring that these clouds threatened to cover the entire global economy. He argued that worries about fiscal solvency in Greece got transmitted to fiscal solvency concerns elsewhere and this in turn led to doubts about “the solvency of banks… financial turbulence, disruptions in market financing and a freeze in the interbank market in Europe”.
Despite striking this ominous note for the future, the IMF still noted that its forecast for 2011 would remain broadly unchanged, at about 4.25 per cent. It added that both this and the 2010 growth rates however “hide a large difference between and within advanced and emerging and developing economies”.
In particular, the IMF forecasted growth for advanced countries at 2.6 per cent for 2010 and 2.4 per cent for 2011, emphasising that these low growth rates implied that high unemployment would remain a central issue.
In significant contrast however, the Fund’s growth projection for emerging and developing economies was 6.8 per cent in 2010 and 6.4 per cent in 2011, which included an upward revision of 0.5 per cent for 2010 and a downward revision of 0.1 per cent for 2011.
The IMF also called upon emerging countries such as India to deal with capital flows, expected to increase in the aftermath of the crisis in Europe, because such flows were “largely driven by good fundamentals, and likely to be long lasting.” Mr. Blanchard said that limiting their size through controls, or fighting their effect on the exchange rate through reserve accumulation, may prove “difficult and eventually self defeating”.
The Fund also recommended that emerging market countries focus on shifting from external to internal demand, as that would permit them to maintain growth in the face of lower exports to advanced countries, and to better satisfy domestic needs. This would require both structural reforms and exchange rate appreciations, the fund said.
Labels: ASEAN, China, IMF, India, International Monetary Fund, Olivier Blanchard, World Economic Outlook
Thursday, March 11, 2010
We will not accept China censorship: Google
From The Hindu, with Ananth Krishnan
At a Congressional hearing in Washington, Google Inc. Vice President Nicole Wong said, “We no longer feel comfortable censoring our search results in China”, adding that Google would “resist government censorship and other acts to chill speech even when that decision is hard”.
The company's executives on Wednesday testified before a House Committee on Foreign Affairs hearing on “The Google Predicament: Transforming US Cyberspace Policy to Advance Democracy, Security and Trade.”
In January, Google announced it would stop censoring results on its Chinese-language search engine, following concerns over a spate of “highly sophisticated” cyber-attacks targeting the E-mail accounts of several Chinese human rights activists.
Those concerns were reiterated at the Congressional hearing, with Larry M. Wortzel, Commissioner at the U.S.-China Economic and Security Review Commission, saying “China is the origin of extensive and malicious cyber activities that target the United States”. The vast majority of this activity was directed by the Chinese government, according to Mr. Wortzel.
Ms. Wong also underscored Google's unwillingness to tolerate censorship of its search results saying “ [if] the option is that we will shutter our .cn property and leave the country, we are prepared to do that.”
However the Committee also challenged some of Google's statements at the hearing. “Google is yet to follow through and stop self-censoring. Our praise shouldn't be for an intent, our praise should be for accomplishing [what was intended]”, said Committee member Dana Rohrabacher.
According to reports, Google Chief Executive Eric Schmidt said, “We're in active talks with the Chinese government, and we have no specific timetable, but something will happen soon.”
Chinese officials have so far refused to comment on the talks, but have rejected claims by investigators that the attacks were traced to two Chinese universities. Foreign ministry spokesperson Qin Gang said the claims were “totally groundless”, and that accusations of the Chinese government's involvement were “irresponsible and driven by ulterior motives.”
Speaking after the hearing Mr. Rohrabacher further said, “Unfortunately corporate America cannot be trusted to make moral decisions, based on freedom and democracy, when it comes to their corporate profits.” Committee Chairman Howard Berman said the U.S. government should “think more carefully” before jumping into bilateral sanctions over the Google issue.
However Mr. Rohrabacher added that the U.S. should do everything it could to ensure that corporations do not acquiesce to the mandates of a dictatorship in Beijing.
With more than 384 million Internet users, China has the world's biggest and fastest-growing market for Internet search. Google initially agreed to follow the government's censorship policies when it launched its Chinese search-engine in 2006. But even after four years, the company has struggled to expand its presence in the country, with local search-engine Baidu enjoying a 70 per cent market share.
At a Congressional hearing in Washington, Google Inc. Vice President Nicole Wong said, “We no longer feel comfortable censoring our search results in China”, adding that Google would “resist government censorship and other acts to chill speech even when that decision is hard”.
The company's executives on Wednesday testified before a House Committee on Foreign Affairs hearing on “The Google Predicament: Transforming US Cyberspace Policy to Advance Democracy, Security and Trade.”
In January, Google announced it would stop censoring results on its Chinese-language search engine, following concerns over a spate of “highly sophisticated” cyber-attacks targeting the E-mail accounts of several Chinese human rights activists.
Those concerns were reiterated at the Congressional hearing, with Larry M. Wortzel, Commissioner at the U.S.-China Economic and Security Review Commission, saying “China is the origin of extensive and malicious cyber activities that target the United States”. The vast majority of this activity was directed by the Chinese government, according to Mr. Wortzel.
Ms. Wong also underscored Google's unwillingness to tolerate censorship of its search results saying “ [if] the option is that we will shutter our .cn property and leave the country, we are prepared to do that.”
However the Committee also challenged some of Google's statements at the hearing. “Google is yet to follow through and stop self-censoring. Our praise shouldn't be for an intent, our praise should be for accomplishing [what was intended]”, said Committee member Dana Rohrabacher.
According to reports, Google Chief Executive Eric Schmidt said, “We're in active talks with the Chinese government, and we have no specific timetable, but something will happen soon.”
Chinese officials have so far refused to comment on the talks, but have rejected claims by investigators that the attacks were traced to two Chinese universities. Foreign ministry spokesperson Qin Gang said the claims were “totally groundless”, and that accusations of the Chinese government's involvement were “irresponsible and driven by ulterior motives.”
Speaking after the hearing Mr. Rohrabacher further said, “Unfortunately corporate America cannot be trusted to make moral decisions, based on freedom and democracy, when it comes to their corporate profits.” Committee Chairman Howard Berman said the U.S. government should “think more carefully” before jumping into bilateral sanctions over the Google issue.
However Mr. Rohrabacher added that the U.S. should do everything it could to ensure that corporations do not acquiesce to the mandates of a dictatorship in Beijing.
With more than 384 million Internet users, China has the world's biggest and fastest-growing market for Internet search. Google initially agreed to follow the government's censorship policies when it launched its Chinese search-engine in 2006. But even after four years, the company has struggled to expand its presence in the country, with local search-engine Baidu enjoying a 70 per cent market share.
Labels: censorship, China, Eric Schmidt, Google, Google Chief Executive, Nicole Wong, U.S., Vice President
Monday, September 21, 2009
Staying competitive key challenge for India, says Venu Srinivasan
From The Hindu
Photo: Bijoy Ghosh
Photo: Bijoy Ghosh
CHENNAI: Venu Srinivasan, president of the Confederation of Indian Industry, on Monday said his “biggest concern today” is where India will derive future competitiveness from in world markets, especially vis-À-vis competitors such as China and Indonesia.
Speaking to The Hindu, Mr. Srinivasan emphasised the role of reform in several key areas of the economy, including the labour market and the tax code, if India is to retain and strengthen its competitive edge in industry.
Touching upon the growing labour supply in India, he said, “For India to become competitive we need to create 15 million jobs. This is the single point that we need to consider.”
“Ultimately we are competing for the same space as large population countries like China, Indonesia and Brazil,” Mr. Srinivasan pointed out, suggesting that failure to improve competitiveness may lead to more jobs going to these countries than India.
“With fiscal deficits being high, we will not have investment in infrastructure. Our social infrastructure is creaking. So is our education system. If you go to schools run by government or primary health centres and hospitals, they are terrible,” he said.
In some areas such as value-added manufacturing, however, India is more competitive than China, he added. “This is because our design inputs are higher than China’s. While China is the biggest manufacturer of cell phones and washing machines, their value addition on exports is as low as 10% on electronics and maybe 15-18% on manufactures. India is close to 25% and is much higher in IT,” he said.
Emphasising that India could compete and get a fair share of the world market, he said, “China does see India as a competitive threat, not a political or military threat. Certainly as a competing country they would like to ensure that you are not as competitive as them and you cannot blame them for it. It is for us to make ourselves competitive and not for China to give way.”
On the labour market, Mr. Srinivasan said that despite labour union activity being low during the last few years of rapid growth, India had still not touched labour reform. “We are not talking about hire and fire. In fact, I have always maintained the view that hire and fire will create too much of a social discord in a country like India. But you should have the ability to continuously improve productivity and settle disputes quickly.”
Regarding tax reform, Mr. Srinivasan argued for a reduction in “multiple levels of taxation accumulating and making industry uncomfortable.” Such laws hinder the free movement of goods and services even across States, he said.
The direct tax code is well intended and the tax rates have been reduced. Yet a minimum investment or wealth tax could be a disincentive, for example, to foreign investment in infrastructure, Mr. Srinivasan said. “This has to be debated further,” he said, adding it was still not quite clear why this tax on assets has been imposed.
Mr. Srinivasan underlined the overall concern of labour market disparities across States, saying that while conditions for rural labour have improved in Tamil Nadu, in part due to policies such as the National Rural Employment Guarantee Scheme, in States in eastern and northern India, there would appear to be stagnation.
Labels: Brazil, China, CII, Indonesia, labour market, labour unions, NREGS, tax code, Venu Srinivasan
Tuesday, August 04, 2009
India should accept climate change flow obligations, ask for superfund: Jagdish Bhagwati
Quid pro quo in services sector negotiations is needed. But so are rules on hiring and firing.
Jagdish Bhagwati, University Professor at Columbia University and Senior Fellow in International Economics at the Council on Foreign Relations, is regarded as one of the foremost international trade economists of his generation. He has been Economic Policy Adviser to Arthur Dunkel, Director General of GATT (1991-93), Special Adviser to the UN on Globalization, and External Adviser to the WTO. In this interview to The Hindu in Chennai, Professor Bhagwati outlined some of the key challenges that remain for India in the climate change discussions in Copenhagen in December 2009 and in the upcoming negotiations on the Doha Round. Edited excerpts
On climate change: how much progress do the recent discussions, including agreeing a cap on global temperature rises, represent for countries like India and China? In some cases domestic constituencies may be hard to convince on the actions required to meet targets.
If you look back at Kyoto, we have two problems. One is that there is a carbon sink up there and the bulk of it, something like 80 per cent, has come from the West, predominantly from the United States and the European Union (EU). So you have that as one fact. The other fact is the current flow obligation. Call the carbon sink the stock problem. Then we have the flow problem because we are currently discharging CO2 into the air. That is where China in particular, in gross emissions, is almost exceeding the U.S. now and we are the third or the fourth.
There the compromise was arrived at when people said, “You have been doing a lot [of polluting] in the past, you have damaged the environment, do not blame us, we should have no obligations now” – that was taken at face value. Tim Wirth, who represented the U.S., and Madeleine Albright, agreed that the way to fix this disparity between flow and stock obligations is to say “You do not have to pay anything now.” That was stalled in the Senate. Senator Byrd and Senator Hagel led the fight in the bipartisan [debate]. But the resolution was passed 95-0; they said: “We should not let off India and China; it will affect the competitiveness of our industries.”
I came up with the idea that we should address the stock problem separately from the flow problem. We should expect India and China to assume flow obligations but part of that solution has to be that the stock obligation is fulfilled by the West. Then I found that the Americans themselves have what they call a “Superfund,” under which strict liability is assigned for past damage – they have a tort liability.
But this addresses the stock side; what do you propose for the flow side?
If we say that the West has to give us money for us to adopt new technologies, why should they want to do that? They are all saying “No” right now. But if you say “You have got to pay for past damages if you want us to accept current obligations;” that is fair and equitable. Then that money, once the superfund is established, can be used for exactly the kind of things India is asking for — for mitigation, for accommodation, and for financing the creation of public goods and so on.
I have also tried hard to get the Indian side to accept this. I have sent my paper to the Prime Minister. Sometimes they say “But we have already asked for funds.” But that is not the issue. If you simply ask for funds, that sounds like asking for aid. This is not aid – it is really a matter of what the West owes if they want us also to do something. That is fair and equitable. So I think that is an area where you can really make progress on this issue. We will also have to decide what the current flow obligations we take on are. On the stock side, I think it should really be a way to get at this problem.
The U.S. has taken the approach of the Waxman-Markey Bill which was just passed in the Congress House. They are going to use cap and trade, which is the quantitative equivalent of a carbon tax. If India, for example, does not have a similar carbon tax, then they will put in a tax adjustment, meaning essentially it is a tariff against the Indians, thereby making them pay for it. At one level it is a matter of intimidation. I do not think it will work when we are objecting to it.
Supposing we lose [this debate] — do we then surrender? We cannot go against the WTO but the only thing we have to and should say is, “We can also take WTO action against you, if you start playing this game.” For one thing, we can say our petroleum tax is much higher than that of the U.S. and we can call it a carbon tax as it does relate to carbon also. So we can say “We will put a tax on your exports to us.” We can do that. We can play the same game within the carbon game or we can shift the two nuclear reactor sites under the G8 to the French or the Russians. We are now big enough, in my opinion, to contemplate such options.
Recent reports have indicated that 83 new measures that go against free trade principles have been enacted across countries. Are you not worried that these will be difficult to roll back?
Most of the actions reported are safeguard actions and anti-dumping actions. Those are actions where you are exercising your rights. One wishes they were not doing so, but you cannot really object to them as such exit strategies are built into WTO rules, at least on a temporary basis. Especially when things get rough – and right now they are – the ability to toe the line is being strained in many democratic countries. So that part does not really bother me that much. But if you go beyond that and look at protectionist interventions where you are violating your obligations, by doing things that you agreed not to do, that is something that is still not on a scale that you need to worry about.
In terms of effects on trade, are they any different from actions that violate WTO rules?
The effect would be identical. But the effect in terms of the prospective impact may not. When you undermine rules, people feel they can do a variety of things and they are not constrained. Therefore the expectations you set up are important. This is the problem about settling the Doha trade negotiations. Therefore the rules such as we have built in will get undermined. That is what people are worried about – the effect on the system. It is hard to quantify that because that is actually a matter of how the situation will unfold.
Do you not think protectionist “Buy American”-type clauses associated with the bailout funds will stall the Doha process further?
If you look at all these actions, it is a matter of what value of trade they cover. Look at anti-dumping actions. You find, typically in the literature, the argument that India is the worst user of anti-dumping actions, not the U.S. or the EU. But when you actually look at the value of trade you discover that it is minuscule compared to what [the U.S. and the EU] are doing. So you have to put it into some perspective like that. I do not think in the value of the trade covered, it amounts to anything very substantial.
[Regarding policies] like “Buy American”, they are going to realise as soon as they are out of trouble that this is not really what they want to do because there has been so much criticism. Even Obama, because of all these criticisms coming particularly from people who are worried about export markets, like Caterpillar and GE and so on, put in a rider or qualifier saying it has to be consistent with our WTO obligations.
What would be the elements of the open world economy? You mentioned trade and investment and the movement of natural persons.
What we are talking about is temporary immigration. We should be able to export services, but embodied in people. That is what we call the movement of natural persons. We are talking about service transactions. So the second leg is GATS, the General Agreement on Trade and Services.
These are some of the issues that can be put into the Doha Round but so far we have no real concessions on these issues. It is something which could be taken up by the Indian administration. But against that you have to give something in the services sector. What would we give? In areas like banking and insurance we are sufficiently developed and resilient to be able to offer something. It is difficult to offer, in my view, any entry subject to a given level of protection simply because we do not have a safeguard clause in the services sector.
This is what we could do – have a service sector quid pro quo, where both countries would be better off. But I think we need rules also on hiring and firing because that is where everybody is going now. Even in India there is great pressure. Is not that what the recent trouble in the airline industry is about?
Longer version of article
Jagdish Bhagwati, University Professor at Columbia University and Senior Fellow in International Economics at the Council on Foreign Relations, is regarded as one of the foremost international trade economists of his generation. He has been Economic Policy Adviser to Arthur Dunkel, Director General of GATT (1991-93), Special Adviser to the UN on Globalization, and External Adviser to the WTO. In this interview to The Hindu in Chennai, Professor Bhagwati outlined some of the key challenges that remain for India in the climate change discussions in Copenhagen in December 2009 and in the upcoming negotiations on the Doha Round. Edited excerpts
On climate change: how much progress do the recent discussions, including agreeing a cap on global temperature rises, represent for countries like India and China? In some cases domestic constituencies may be hard to convince on the actions required to meet targets.
If you look back at Kyoto, we have two problems. One is that there is a carbon sink up there and the bulk of it, something like 80 per cent, has come from the West, predominantly from the United States and the European Union (EU). So you have that as one fact. The other fact is the current flow obligation. Call the carbon sink the stock problem. Then we have the flow problem because we are currently discharging CO2 into the air. That is where China in particular, in gross emissions, is almost exceeding the U.S. now and we are the third or the fourth.
There the compromise was arrived at when people said, “You have been doing a lot [of polluting] in the past, you have damaged the environment, do not blame us, we should have no obligations now” – that was taken at face value. Tim Wirth, who represented the U.S., and Madeleine Albright, agreed that the way to fix this disparity between flow and stock obligations is to say “You do not have to pay anything now.” That was stalled in the Senate. Senator Byrd and Senator Hagel led the fight in the bipartisan [debate]. But the resolution was passed 95-0; they said: “We should not let off India and China; it will affect the competitiveness of our industries.”
I came up with the idea that we should address the stock problem separately from the flow problem. We should expect India and China to assume flow obligations but part of that solution has to be that the stock obligation is fulfilled by the West. Then I found that the Americans themselves have what they call a “Superfund,” under which strict liability is assigned for past damage – they have a tort liability.
But this addresses the stock side; what do you propose for the flow side?
If we say that the West has to give us money for us to adopt new technologies, why should they want to do that? They are all saying “No” right now. But if you say “You have got to pay for past damages if you want us to accept current obligations;” that is fair and equitable. Then that money, once the superfund is established, can be used for exactly the kind of things India is asking for — for mitigation, for accommodation, and for financing the creation of public goods and so on.
I have also tried hard to get the Indian side to accept this. I have sent my paper to the Prime Minister. Sometimes they say “But we have already asked for funds.” But that is not the issue. If you simply ask for funds, that sounds like asking for aid. This is not aid – it is really a matter of what the West owes if they want us also to do something. That is fair and equitable. So I think that is an area where you can really make progress on this issue. We will also have to decide what the current flow obligations we take on are. On the stock side, I think it should really be a way to get at this problem.
The U.S. has taken the approach of the Waxman-Markey Bill which was just passed in the Congress House. They are going to use cap and trade, which is the quantitative equivalent of a carbon tax. If India, for example, does not have a similar carbon tax, then they will put in a tax adjustment, meaning essentially it is a tariff against the Indians, thereby making them pay for it. At one level it is a matter of intimidation. I do not think it will work when we are objecting to it.
Supposing we lose [this debate] — do we then surrender? We cannot go against the WTO but the only thing we have to and should say is, “We can also take WTO action against you, if you start playing this game.” For one thing, we can say our petroleum tax is much higher than that of the U.S. and we can call it a carbon tax as it does relate to carbon also. So we can say “We will put a tax on your exports to us.” We can do that. We can play the same game within the carbon game or we can shift the two nuclear reactor sites under the G8 to the French or the Russians. We are now big enough, in my opinion, to contemplate such options.
Recent reports have indicated that 83 new measures that go against free trade principles have been enacted across countries. Are you not worried that these will be difficult to roll back?
Most of the actions reported are safeguard actions and anti-dumping actions. Those are actions where you are exercising your rights. One wishes they were not doing so, but you cannot really object to them as such exit strategies are built into WTO rules, at least on a temporary basis. Especially when things get rough – and right now they are – the ability to toe the line is being strained in many democratic countries. So that part does not really bother me that much. But if you go beyond that and look at protectionist interventions where you are violating your obligations, by doing things that you agreed not to do, that is something that is still not on a scale that you need to worry about.
In terms of effects on trade, are they any different from actions that violate WTO rules?
The effect would be identical. But the effect in terms of the prospective impact may not. When you undermine rules, people feel they can do a variety of things and they are not constrained. Therefore the expectations you set up are important. This is the problem about settling the Doha trade negotiations. Therefore the rules such as we have built in will get undermined. That is what people are worried about – the effect on the system. It is hard to quantify that because that is actually a matter of how the situation will unfold.
Do you not think protectionist “Buy American”-type clauses associated with the bailout funds will stall the Doha process further?
If you look at all these actions, it is a matter of what value of trade they cover. Look at anti-dumping actions. You find, typically in the literature, the argument that India is the worst user of anti-dumping actions, not the U.S. or the EU. But when you actually look at the value of trade you discover that it is minuscule compared to what [the U.S. and the EU] are doing. So you have to put it into some perspective like that. I do not think in the value of the trade covered, it amounts to anything very substantial.
[Regarding policies] like “Buy American”, they are going to realise as soon as they are out of trouble that this is not really what they want to do because there has been so much criticism. Even Obama, because of all these criticisms coming particularly from people who are worried about export markets, like Caterpillar and GE and so on, put in a rider or qualifier saying it has to be consistent with our WTO obligations.
What would be the elements of the open world economy? You mentioned trade and investment and the movement of natural persons.
What we are talking about is temporary immigration. We should be able to export services, but embodied in people. That is what we call the movement of natural persons. We are talking about service transactions. So the second leg is GATS, the General Agreement on Trade and Services.
These are some of the issues that can be put into the Doha Round but so far we have no real concessions on these issues. It is something which could be taken up by the Indian administration. But against that you have to give something in the services sector. What would we give? In areas like banking and insurance we are sufficiently developed and resilient to be able to offer something. It is difficult to offer, in my view, any entry subject to a given level of protection simply because we do not have a safeguard clause in the services sector.
This is what we could do – have a service sector quid pro quo, where both countries would be better off. But I think we need rules also on hiring and firing because that is where everybody is going now. Even in India there is great pressure. Is not that what the recent trouble in the airline industry is about?
Longer version of article
Labels: Buy American, China, climate change, CO2, Columbia, Congress, emissions, G8, GATS, India, Jagdish Bhagwati, multilateralism, pollution, superfund, WTO
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