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91. Economic Dominance, Financial Technology, and the Future of U.S. Economic Coercion

Author:
Peter Harrell and Elizabeth Rosenberg
Publication Date:
04-2019
Content Type:
Special Report
Institution:
Center for a New American Security (CNAS)
Abstract:
Coercive economic measures, such as sanctions, investment restrictions, trade controls, and tariffs, have become an increasingly important tool of U.S. foreign policy in recent years. Recent years have witnessed a strengthening of U.S. coercive economic measures, which are likely to remain powerful in the near and medium term. Over the longer term, purely commercial factors are likely to support continued U.S. coercive economic power. However, choices by both U.S. policymakers and foreign governments will be the primary determinant of whether coercive economic measures remain powerful tools of U.S. foreign policy over the longer term. Shifts in the nature of U.S. coercive economic power could prompt some shifts in the balance and nature of the type of coercive economic measures the United States deploys.
Topic:
Foreign Policy, Economics, Science and Technology, Tariffs, and Trade
Political Geography:
North America and United States of America

92. Addressing China's Rising Influence in Africa

Author:
Michael Tiboris
Publication Date:
05-2019
Content Type:
Special Report
Institution:
Chicago Council on Global Affairs
Abstract:
Addressing China's Rising Influence in Africa MAY 21, 2019 By: Michael Tiboris, Nonresident Fellow, Global Water Key facts and figures China is now the largest trading partner for the African continent, and China’s Export-Import Bank aims to invest more than $1 trillion in the continent by 2025. In addition, China has now surpassed the United States government in total agriculture R&D funding. China has increased its presence in African development—a trend that will persist because its model is extremely attractive to both China and many African nations. China’s growing contributions to African development should not automatically be feared, but their increased presence should create a recalibration in US approaches to development. Current US National Security Advisor and former Ambassador John Bolton in his announcement of the administration’s Prosper Africa initiative cast China’s presence in Africa as a strategic challenge for the United States. The market opportunities on the African continent are enormous. Consumer expenditure is expected to reach $2.1 trillion by 2025 and $2.5 trillion by 2030. The World Bank estimates that the African food market alone could be worth $1 trillion by 2030, more than tripling the current $300 million market. China’s ability to directly finance and construct infrastructure projects with fewer conditions is unique and has raised worries in some quarters about the expropriation of natural resources, environmental hazards, labor displacement, unstable debt burdens, and land grabs. In addition, China’s investment strategy leaves notable gaps that the United States, leaning on its expertise, can fill. The most direct and sustainable mechanism for moving people out of poverty is investment in agriculture—in particular, smallholder agriculture. US leadership on global water, food, and nutrition security is essential to catalyze the innovations and development necessary to achieve US foreign policy and development goals on the continent. To maintain its global leadership in this strategically important continent, the United States should consider prioritizing technical assistance for water sustainability and thereby support sanitation and agricultural growth. The United States must also continue to find ways to deepen its relationships with African partners to demonstrate US commitment to building resilience and self-reliance in these communities for the long term. Simultaneously, the United States and its allies should work through international institutions to encourage China to adopt policies that achieve shared global objectives in economic development, security, human welfare, and sustainability.
Topic:
Infrastructure, Banks, Trade, and Strategic Competition
Political Geography:
Africa, China, Asia, North America, and United States of America

93. Petro Dollar. Petro Yuan. Petro Rupee?

Author:
Amit Bhandari
Publication Date:
08-2019
Content Type:
Working Paper
Institution:
Gateway House: Indian Council on Global Relations
Abstract:
Over the last two decades, every component of the global energy scenario has changed: demand, supply and energy-type. The only constant has been the U.S. Dollar as the currency of energy trade. Lately, the Chinese Yuan has emerged to challenge the Dollar. Can the Indian Rupee be a third player? India is now the world’s third-largest consumer and second-largest importer of energy. Its open market, transparent regulation and growing demand give it an opportunity to become the hub of a vibrant new oil market, simultaneously ensuring its energy security and raising the international profile of the Rupee. This paper explores the possibility the Rupee could be the third currency in which energy is traded, and the challenges and opportunities it presents.
Topic:
Security, Energy Policy, Markets, Oil, Currency, and Trade
Political Geography:
China, South Asia, India, Asia, North America, and United States of America

94. The Importance of WTO Reform from a Transatlantic Perspective

Author:
Thomas J. Duesterberg
Publication Date:
02-2019
Content Type:
Special Report
Institution:
Hudson Institute
Abstract:
Trade is at the forefront of international tensions in 2019. Political developments in the United States and Europe, and the rise of China as a peer competitor to the transatlantic economies, have led many to question the fundamental assumptions and operations supporting the World Trade Organization (WTO). Chinese mercantilism, the Trump administration’s aggressive use of unilateral tariff measures, and the inability of WTO members to reach consensus on expanding its disciplines to important new sectors and forms of commerce in the modern economy reinforce the critique of the WTO. Expansion in global trade, one of the great engines of growth and progress in bringing billions of people out of poverty since 1945, has slowed considerably in the last two decades. In 2018, however, several constructive efforts to craft reforms for this successor institution of the Bretton Woods system are engendering some hope that the WTO can be adapted to meet the needs of the contemporary economy. The first basket of problems revolves around a lack of WTO disciplines for newer sectors like services, including those associated with the emerging digital economy; for state-owned enterprises; for intellectual property protection; and for cross-border investments. The other main issues concern the sometimes ineffective and bounded operations of the WTO itself. Questions have been raised, notably by the United States, over the slow and inconsistent enforcement of existing WTO rules, and over rulings by judges in the Appellate Body which overstep the limits of existing WTO rules, undertake interpretations of domestic laws, and reinterpret facts established by earlier dispute panel decisions. This is the biggest issue now dividing U.S. and EU thinking on the reform of the WTO. The EU, Canada, Japan, the United States and other members have begun offering concrete proposals for addressing these problems, and the G20 political leaders gave a strong endorsement to their efforts in the December 2018 communique of the Buenos Aires summit. Ideas for new rules are being tested in sub-global trade agreements like the new North American and Trans-Pacific pacts and EU free trade agreements with Canada and Japan. Incorporation of new rules into the global WTO is extremely difficult; full consensus among its 164 members is required for the adoption of any new disciplines or internal operations. To overcome that impediment, this paper suggests that plurilateral agreements, like the Information Technology Agreement of 1997, be employed to establish and test new rules needed for the 21st-century economy. Some use of supermajority decision making instead of the consensus rule may also help advance the creation of new rules and redress weaknesses in WTO operations. The role of transatlantic leadership, finally, is emphasized as a key to building broad political support needed to achieve substantive reform.
Topic:
International Relations, World Trade Organization, Reform, Trade, and Transatlantic Relations
Political Geography:
Europe, North America, and United States of America

95. Journal of Advanced Military Studies: Economics of Defense

Author:
Patrick Callaway, James Lockhart, Nikolas Gardner, Rebecca Jensen, Ian Brown, J. Craig Stone, Lauren Mackenzie, and Kristin Post
Publication Date:
03-2019
Content Type:
Journal Article
Journal:
Journal of Advanced Military Studies
Institution:
Marine Corps University Press, National Defense University
Abstract:
During the past two decades, the U.S. government infrastructure has ground to a halt for a variety of reasons, particularly due to deficit reductions, military spending, health care, and overall party-line budget disagreements, but even more recently on border security and immigration. Regardless of party politics and the daily administrative drama in the White House, how does one of the wealthiest countries in the world prepare for the impact of making war and defending peace within these economic and political constraints? Authors for this issue of MCU Journal address the economics of defense and how those costs impact nations. Aside from the economic costs the United States bears for its defense, the articles in the Spring issue of MCU Journal will demonstrate there are other costs and unique limitations faced by America and other nation-states. For example, smaller nations such as Oman must rely on technologically advanced allies for their defense support. Long-term political costs also may apply to these nations, as James Lockhart’s article on the Central Intelligence Agency’s intervention in Chilean politics discusses. There are also other ways to wage “war” that are discussed in this issue; for example, looking to the past, President Thomas Jefferson attempted to wage a trade war against Great Britain and France to maintain U.S. trade neutrality and, looking to the present and future, governments must address the real costs of cyberwar. Finally, we must consider the political and diplomatic costs associated with U.S. servicemembers and their work in foreign states, but also the relationship repair they must rely on to keep the peace.
Topic:
Defense Policy, Counterinsurgency, Culture, Armed Forces, Military Affairs, Authoritarianism, Cybersecurity, Weapons, Economy, Military Spending, History, Coup, Trade, Central Intelligence Agency (CIA), and Augusto Pinochet
Political Geography:
Britain, Afghanistan, China, South Asia, Canada, Asia, South America, North America, Chile, Oman, and United States of America

96. China, Like the US, Faces Challenges in Achieving Inclusive Growth Through Manufacturing

Author:
Robert Z. Lawrence
Publication Date:
08-2019
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
For more than three decades the goal of becoming “the factory of the world” has been at the core of China’s development strategy. This strategy, in combination with high rates of domestic investment and low rates of consumption, made Chinese production the most manufacturing intensive in the world. But as its wages have risen, China’s competitiveness in the most labor-intensive manufacturing industries has eroded. Its ability to assemble products remains a major source of its exports, but it has also tried to shift toward more sophisticated value-added production domestically. Chinese domestic spending has shifted away from investment toward more consumption as citizens’ incomes have grown. Like Americans, Chinese people are also spending more on services than on manufactured goods. All these changes are fundamentally altering the structure of China’s production, reducing the role of manufacturing, and increasing the skill levels of workers in manufacturing. This Policy Brief reviews the challenges posed by these developments for China’s long-term goal of achieving more inclusive growth. It presents evidence that commonly held perceptions that Chinese manufacturing employment growth is robust are wrong. In fact, such growth has peaked and China is now following the pattern of structural change that is typical of a more mature emerging economy, in which the share of employment in manufacturing declines as workers are increasingly employed in services.
Topic:
Economic Growth, Manufacturing, and Trade
Political Geography:
China, Asia, North America, and United States of America

97. Assessing President Trump’s Trade Priorities

Author:
Daniel Griswold
Publication Date:
01-2019
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
President Trump has delivered on his promise to shake up Washington, arguably nowhere more so than in the policy space of international trade. President Trump’s trade agenda has challenged more than seven decades of bipartisan policy commitment to seeking lower trade barriers at home and abroad through negotiated agreements. While President Trump pays lip service to pursuing free trade and eliminating tariffs, his trade policies so far have been marked by higher U.S. duties on a range of products, from washing machines to steel. Under Section 301 of the Trade Act of 1974, the administration has imposed duties on $250 billion of imports from China, with those duties set to escalate in 2019 absent an agreement with China. And under Section 232 of the Trade Expansion Act of 1962, the president is threatening to impose a 25 percent duty on imported automobiles in the name of national security. The Trump administration has renegotiated existing trade agreements with Canada, Mexico, and South Korea, but its modifications are as likely to restrict trade as expand it. One of the president’s first actions after assuming office was to withdraw the United States from the pending Trans-Pacific Partnership, which would have eliminated almost all duties with 11 trading partners around the Pacific Rim, including Japan.
Topic:
Economy, Tariffs, Trade, and Donald Trump
Political Geography:
North America and United States of America

98. U.S.-China Relations: The Way Forward

Author:
P. H. Yu
Publication Date:
01-2019
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
As confrontation looms over Washington and Beijing, it is critical to identify the true nature of this challenge from an international relations perspective before any attempt to devise a counter measure. Wrong presumptions or prejudicial interpretations may lead to dire consequences of unforeseeable magnitude. One past example would be the U.S. government’s belief that Iraq was developing weapons of mass destruction (WMDs) before the American invasion in 2003. A more current example would be the American nuclear anxiety on North Korea and how President Trump bypassed conventional American strategic thinking and circumvented hawkish threats of preemptive nuclear annihilation to resolve a “draconian crisis” via “smart diplomacy.” These examples may shed light on a pathway to resolution for the current U.S.-China trade conflict. The United States and China have ample experience of weathering a crisis on the brink of war, whether it was on the Korean Peninsula or in Indochina. China today remains on the U.S. sanctions list for certain high-tech products and military equipment. Both the Trump administration and Congress continue to criticize China regularly, ranging from human rights to religious rights, from the rule of law to the autocratic political system, from the state-owned banks to restrictive market access to foreign corporations, and from currency manipulation to unfair trade practices.
Topic:
International Relations, Bilateral Relations, Trade Wars, and Trade
Political Geography:
China, Asia, North America, and United States of America

99. Trade in Trouble: How the Asia Pacific Can Step Up and Lead Reforms

Author:
Wendy Cutler, Peter Grey, Kim Jong-Hoon, Mari Pangestu, Yoichi Sozuki, and Tu Xinquan
Publication Date:
05-2019
Content Type:
Working Paper
Institution:
Asia Society
Abstract:
The U.S.-China trade dispute has dominated headlines over the past year, disrupting trade and investment flows and increasing uncertainty at a time when the global economy is already facing headwinds. The conflict has left many countries in the Asia Pacific feeling caught in the crossfire seeking to navigate the tensions without alienating either country. While the World Trade Organization (WTO) would ideally help reduce the frictions, it has not been up to the task. The paralysis at the WTO points to a deeper problem: it’s inability to keep up with the pace of change or address the challenges of new developments in advanced technologies and the digital economy. Simply put, the trade regime is in trouble and in need of reform. At this dynamic and uncertain time in trade, the Asia Society Policy Institute (ASPI) convened a group of leading trade experts and former trade officials from across the Asia Pacific, led by ASPI Vice President Wendy Cutler. In this issue paper, the authors examine the major developments in the international trading system, including the U.S.-China trade dispute, FTA activity in the Asia Pacific, and efforts to reform the WTO. In this challenging environment, the authors find that the Asia Pacific is uniquely well-positioned to lead reforms to get the system back on track. This paper is the latest product of the ASPI initiative, “Building a High Standard and Inclusive Asia-Pacific Trade Architecture.” It builds on the work of two previous reports published in March 2017 and January 2018.
Topic:
Economy, Trade Wars, Trade, and WTO
Political Geography:
China, Asia, North America, and United States of America

100. Advancing the U.S.-Korea Economic Agenda

Author:
Wendy Cutler and Hyemin Lee
Publication Date:
01-2019
Content Type:
Working Paper
Institution:
Asia Society
Abstract:
For nearly 70 years, the United States-Republic of Korea alliance has remained strong, built mainly on shared strategic and national security interests. While the North Korean nuclear threat has long dominated political discussions and media headlines, the economic pillar of the relationship is no less important. With amendments to the U.S.-Korea Free Trade Agreement (KORUS) now in place, it is an opportune time for both countries to look beyond KORUS and expand their bilateral economic engagement to new and evolving areas. This closer cooperation can serve as an engine for growth in a slowing Korean economy, as an opportunity for job creation in the United States, and as a vehicle for jointly writing the rules for the technologies of the Fourth Industrial Revolution. As policymakers in Washington and Seoul look to the future, the Asia Society Policy Institute (ASPI) charts a possible path forward in its newest issue paper, Advancing the U.S.-Korea Economic Agenda. This paper presents a range of concrete actions that the United States and South Korea can take to advance and strengthen their bilateral economic relationship in the areas of trade and investment, energy, digital economy and advanced technologies, infrastructure, and women’s economic empowerment. The recommendations included in this paper are based partly on two roundtables ASPI organized with South Korean and American experts in Seoul in June 2018, with support from the Korea Institute for International Economic Policy, and in Washington, D.C., in October 2018. The ideas are also based on discussions with government officials, business leaders, and think tank experts.
Topic:
National Security, Treaties and Agreements, Bilateral Relations, Alliance, and Trade
Political Geography:
Asia, South Korea, North America, and United States of America