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31. A golden opportunity for a US-Taiwan free trade agreement

Author:
Dan Blumenthal and Michael Mazza
Publication Date:
02-2019
Content Type:
Special Report
Institution:
American Enterprise Institute for Public Policy Research
Abstract:
The United States and Taiwan can create a free trade agreement (FTA) that serves the interests of both sides. Taiwan should seek to set the gold standard in economic openness, as well as in the legal, regulatory, and standards frameworks that will govern emerging technologies and industries such as 5G, the internet of things (IOT), artificial intelligence (AI), and the future industries to be built upon them. In pursuit of the United States’ vision for a “free and open” Indo-Pacific, it would be wise for the US to enlist in its effort countries that are, themselves, already free and open. Taiwan should be considered a crucial partner in the Trump administration’s strategy. This monograph serves to provide a framework for a US-Taiwan free trade agreement (FTA), outlining areas of concern for the United States, in addition to areas that provide opportunities for closer bilateral cooperation. Importantly, such cooperation could give greater impetus for free trade negotiations, advance the Trump administration’s Indo-Pacific strategy, and bolster the United States’ National Security Strategy. In order to deepen economic ties and to, at the same time, advance the Indo-Pacific strategy, the United States should prioritize a free trade agreement (FTA) with Taiwan. The US has not completed or ratified a free trade agreement since the U.S.-Korea deal. It is now negotiating with Japan and the Philippines. But, as this paper will show, an FTA with Taiwan would have substantial strategic benefits and would, moreover, be far easier to conclude than other agreements under discussion.
Topic:
Foreign Policy, Bilateral Relations, Free Trade, and Trade
Political Geography:
Taiwan, Asia, North America, and United States of America

32. The US-China economic relationship: A comprehensive approach

Author:
Neena Shenai and Joshua P. Meltzer
Publication Date:
02-2019
Content Type:
Special Report
Institution:
American Enterprise Institute for Public Policy Research
Abstract:
The US–China economic relationship has reached a critical juncture. Over the past year, the US has imposed tariffs on $250 billion worth of Chinese imports and China has retaliated, raising tariffs on a similar amount of US exports. At the G-20 leaders’ summit in November 2018, Presidents Trump and Xi agreed to resolve the trade dispute within 90 days—by March 1, 2019, though this deadline has been recently extended. The US concerns that underpin these bilateral trade tensions stem from specific practices endemic to China’s economic model that systematically tilt the playing field in favor of Chinese companies domestically and globally. Progress on specific trade issues will require China to comply with its World Trade Organization (WTO) commitments and to make certain reforms that will likely touch on areas of state control over the economy. In addition, new trade rules are needed to address China’s economic practices not covered by its WTO commitments, including in areas such as state-owned enterprises (SOEs), certain subsidies, and digital trade. These issues also come at a time of increasing US concern over the national security risks China presents, particularly with respect to technology access. All of these matters underscore the complexity of US-China bilateral negotiations as well as the stakes at play. Resolving US-China differences in a meaningful way will take time. This policy brief assesses the state of the US-China trade relationship by first looking at the economic impact on the US The policy brief then looks at why the Chinese economic model is so concerning. Despite the challenges the US has had at the WTO, the policy brief argues that the WTO should be central to resolving US-China trade tensions. We outline a multi-prong strategy, including bilateral, multilateral, and unilateral actions as well as working with allies that together would constitute positive next steps for this critical economic relationship. In taking this multifaceted approach, the US needs to stay true to its values and not accept short-term gains or “fig leaf” deals. In particular, creating a managed trade relationship with China would not be a constructive outcome. Instead, the US should work with China to agree on long term solutions. The resulting deal should address the real issues at hand in a free market manner and strengthen the multilateral global trading system and rule of law that the US has championed in the post-World War II era.
Topic:
Foreign Policy, Globalization, Bilateral Relations, and Trade
Political Geography:
China, Asia, North America, and United States of America

33. Authoritarianism in the heart of Europe

Author:
Dalibor Rohac
Publication Date:
08-2018
Content Type:
Special Report
Institution:
American Enterprise Institute for Public Policy Research
Abstract:
What distinguishes the governments of Hungary and Poland are not their views on immigration nor their defense of national sovereignty or Europe’s Judeo-Christian heritage. Rather, it is their distinctly authoritarian and anti-market features. With a new Fundamental Law, electoral reform, and other far-reaching changes adopted in Hungary on strictly partisan lines, as well as a politicization of the judiciary and attacks on free media and civil society in both countries, the Law and Justice Party (PiS) and Fidesz governments have sought to entrench themselves and prevent meaningful democratic contestation of their power. In both countries, key achievements of the post-1989 transition to the free enterprise system are being reversed. In Poland, for example, 40 percent of all banking-sector assets are now held by the government. Hungarian and Polish authoritarianism, as well as the rise of political kleptocracy in Hungary, pose a direct threat to the values on which the transatlantic alliance was built and America’s interest in the region. The United States cannot afford to become a cheerleader for either Fidesz or PiS, no matter how convincing their conservative bona fides might seem.
Topic:
Foreign Policy, Government, Politics, and Authoritarianism
Political Geography:
Europe, Eurasia, Poland, and Hungary

34. An American strategy for Southeast Asia

Author:
Michael Mazza
Publication Date:
08-2018
Content Type:
Special Report
Institution:
American Enterprise Institute for Public Policy Research
Abstract:
Southeast Asia is no mere strategic sideshow. For centuries, it has been geopolitically important due to the sea lanes that pass through it, its proximity to and abutment of India and China, and the resources to which it plays host. The United States should strive to shape a Southeast Asia that is at peace with itself and its neighbors; is characterized by states that are strong, independent, and prosperous; and is home to governments that are resilient, responsive, and accountable. Washington should adopt a comprehensive strategy—with security, economic, and governance pillars—to achieve those ends. Should the United States succeed, it will ensure a regional balance of power favorable to the United States and its friends and allies, shore up the liberal international order, deepen prosperity at home and in Southeast Asia, and advance freedom in the region.
Topic:
Foreign Policy, Geopolitics, and Economy
Political Geography:
Asia, Southeast Asia, and United States of America

35. The difficult promise of economic reform in the Gulf

Author:
Karen E. Young
Publication Date:
09-2018
Content Type:
Special Report
Institution:
American Enterprise Institute for Public Policy Research
Abstract:
The six states of the Gulf Cooperation Council (GCC)—Saudi Arabia, Qatar, Kuwait, Bahrain, the United Arab Emirates (UAE), and Oman—are in a period of profound change, both economic and social. The economic changes are a long overdue reaction to natural resource revenue dependency in their fiscal policies, while the social changes are a reaction to compounded migration and demographic shifts. The resilience of Gulf political economies will be defined by the ability to change both fiscal governance and policies of inclusion. Inclusion, in the context of Gulf political economies, means social protection for vulnerable groups, but it also means access to compete in a rule-based economy. The promise of economic reform, therefore, is a promise to reconfigure relations between citizen and state, and to renegotiate the provision of benefits to citizens in the form of subsidies of fuel, electricity, and water, as well as generous health and education services. And there will be taxes and new fees on everything from toll roads to sugary drinks to tobacco, and employment fees for foreigners. In exchange, citizens are promised—in some way—a retreat of the state from its predatory control over economies, though not its control over the political space and activism. Nonetheless, for many political economies of the GCC, the opening of opportunities in private ownership and investment in the sale of state assets—such as power and water plants, ports, and airports, as well as schools and hospitals—poses a challenge to the state’s track record in the provision of services. These privatizations also pose a risk to a constituency unaccustomed to fees-based service and corporate liability. Will citizens accept services from private entities at cost? Will citizens jump at the opportunity to own new companies that meet the needs of their compatriots for profit? And, perhaps most importantly, who will be left behind? The concept of resilience is often used in the literature on economic development to describe how governments can protect both citizens and their economies from external shocks, whether in the form of natural disasters, black swan events, or dramatic policy shifts. The regulatory environment and the capacity of the state to react and respond to different needs of its population, especially vulnerable groups, are key. For Gulf states, the current reform agenda is not so much a shock as a delayed reaction to a problem identified long ago. Diversification from oil-based revenue is necessary, and population growth has created an oversupply of candidates for public-sector employment that is not very productive. Generating growth has to shift, in its source and its deployment among a larger and more diverse population. The Gulf states have created their own middle-income development trap. This paper offers a wide-ranging analysis of some aspects of the reform agenda underway across the GCC. It explores specific case analyses of challenges facing individual countries (Saudi Arabia and Oman), and the organization of the GCC as a whole. It also addresses subsidy reform, the introduction of taxes and fees, and some experimental policies related to regulating labor markets and encouraging citizens to move out of public-sector employment.
Topic:
Foreign Policy
Political Geography:
Middle East, Kuwait, Saudi Arabia, Bahrain, Qatar, United Arab Emirates, and Gulf Cooperation Council

36. French hard power: Living on the strategic edge

Author:
Dorothée Fouchaux
Publication Date:
02-2014
Content Type:
Policy Brief
Institution:
American Enterprise Institute for Public Policy Research
Abstract:
The following National Security Outlook is the ninth in AEI's Hard Power series, a project of the Marilyn Ware Center for Security Studies. In it, Dorothée Fouchaux examines the state of French forces and France's most recent effort to prioritize its strategic goals and square them with its military capabilities.1 Certainly since Charles de Gaulle's presidency, France has maintained a tradition of thinking strategically for itself-often, admittedly, to the aggravation of its allies. This tradition remains strong and, if anything, has been reinforced in recent years by the sense that the United States is pivoting away from Europe and would like to reduce its footprint in Europe's troubled periphery. With its latest defense white paper, Paris has laid out a program to maintain its "strategic autonomy" through a combination of nuclear deterrence, enhanced intelligence efforts, and discrete power-projection capabilities. But France faces flat defense budgets, the increased cost of its military interventions in Africa, and prospects that budget shortfalls will not be overcome by the sale of public shares of national defense companies or export sales of military hardware. Consequently, some doubt that an even smaller French force will have sufficient resources to address existing problems in readiness and needed capabilities while sustaining a defense research-anddevelopment base sufficient to keep future French forces armed with advanced equipment. In short, France really is living on the strategic edge.
Topic:
Foreign Policy and Defense Policy
Political Geography:
Europe and France

37. Azerbaijan's Iran problem

Author:
Michael Rubin
Publication Date:
01-2014
Content Type:
Policy Brief
Institution:
American Enterprise Institute for Public Policy Research
Abstract:
Since Azerbaijan regained its independence in 1991, it has been only the world's second Shi'ite-led state after Iran. Azerbaijan respects separation of mosque and state, and despite pressure from its neighbors, remains independent from political domination. Given its strategic importance, safeguarding the country's independence remains a US priority. And the threat from Iranian meddling is particularly acute. From Tehran's perspective, the combination of Azerbaijan's pre-19th-century Iranian past, modern Azerbaijan's embrace of secularism, and its relative economic success challenge Iran's legitimacy. As Iranian authorities have sought to undermine and destabilize Azerbaijan through political, clerical, charitable, and media channels, Azerbaijan's counterstrategy has been both restrained and effective.
Topic:
Foreign Policy, Islam, Sovereignty, and Governance
Political Geography:
United States, Iran, and Middle East

38. America vs. Iran: The competition for the future of the Middle East

Author:
Danielle Pletka, Frederick W. Kagan, and J. Matthew McInnis
Publication Date:
02-2014
Content Type:
Working Paper
Institution:
American Enterprise Institute for Public Policy Research
Abstract:
A review of the soft-power strategies of both the United States and the Islamic Republic of Iran in the Middle East and Afghanistan makes clear a disturbing fact: Tehran has a coherent, if sometimes ineffective strategy to advance its aims in the Middle East and around the world. The United States does not. This project began with two tour d'horizon reviews of Iranian activities throughout areas Iran has, by its actions, defined as its sphere of influence. From the Persian Gulf through the Levant and into neighboring Afghanistan, the Islamic Republic has consistently invested in soft- and hard-power activities designed not only to extend its own influence but also to limit both American and hostile Arab aims. And while the latter part of the Ahmadinejad administration saw waning rewards for Tehran's efforts-a result more of the growing Sunni-Shia divide in the Middle East than of changes in strategy-the continued existence of a coherent Iranian strategy to dominate or destabilize the region should not be ignored. This report, the culmination of a process of both examining Iranian actions and surveying American policy, policy responses, and soft-power strategies in the region, focuses on the US side of the equation. Despite the Obama administration's commitment to replace hard power with smart power, what the United States pursues in the Middle East is a set of incoherent, ineffective, and increasingly irrelevant policies.
Topic:
Foreign Policy, Defense Policy, Islam, and Bilateral Relations
Political Geography:
Iran, Central Asia, and Middle East

39. China invests (somewhat) more in the world

Author:
Derek M. Scissors
Publication Date:
01-2014
Content Type:
Policy Brief
Institution:
American Enterprise Institute for Public Policy Research
Abstract:
New data published in the American Enterprise Institute-Heritage Foundation China Global Investment Tracker show that China continues to invest heavily around the world. Outward investment excluding bonds stood at $85 billion in 2013 and is likely to reach $100 billion annually by 2015. Energy, metals, and real estate are the prime targets. The United States in particular received a record of more than $14 billion in Chinese investment in 2013. Although China has shown a pattern of focusing on one region for a time then moving on to the next, the United States could prove to be a viable long-term investment location. The economic benefits of this investment flow are notable, but US policymakers (and those in other countries) should consider national security, the treatment of state-owned enterprises, and reciprocity when deciding to encourage or limit future Chinese investment.
Topic:
Security, Foreign Policy, Development, Economics, Emerging Markets, International Trade and Finance, Foreign Direct Investment, and Sovereign Wealth Funds
Political Geography:
United States, China, and Asia

40. Khamenei's team of rivals: Iranian decision-making, June-July 2014

Author:
Frederick W. Kagan
Publication Date:
07-2014
Content Type:
Working Paper
Institution:
American Enterprise Institute for Public Policy Research
Abstract:
Iran's national security decision-making process is not remotely as opaque as it sometimes appears. The recent crisis in Iraq and the nuclear negotiations in Geneva have opened a fascinating window into the efforts of Supreme Leader Ayatollah Ali Khamenei to bring rival groups within his government together behind a single set of policies. He appears to have been remarkably successful in mediating tensions between President Hassan Rouhani and the Islamic Revolutionary Guard Corps senior leaders. They have come together, at least for the moment, behind a coherent set of strategies for dealing with a number of thorny problems in Iraq, the nuclear negotiations, and even economic reforms. It remains to be seen if these accommodations will survive the current crisis, of course, but the success of Khamenei's efforts so far is impressive.
Topic:
Security, Foreign Policy, Diplomacy, Nuclear Weapons, Politics, Governance, and Nuclear Power
Political Geography:
Iran