International Trade Pacific Alliance captures

International Trade

Pacific Alliance captures zeitgeist in era of ‘mega’ trade agreements

This article discusses a recent agreement between four Latin American countries (Chile, Columbia, Peru and Mexico) to lower tariff and non-tariff barriers and create a commercial framework that can increase and substantiate the connections and economic links between these countries. The overall objective of such an agreement is to make all four economies more competitive in the international arena, more able to compete with rising Asian economies.

The article looks in detail at the premises of such a deal, pointing out correctly that most of the large commercial blocks (the EU, the U.S., Japan etc.) have grown tired of the inconsistency of negotiations and, particularly, of the results of the latest Doha Round within the WTO. As a consequence, many of them are looking at bypassing the WTO by working out big, strategic, regional deals. Examples in this sense include the Transatlantic Trade and Investment Partnership (TTIP), between the EU and the U.S., or the Trans-Pacific Partnership.

Within that context and against this background, the article aims to place the Pacific Alliance, between the four states previously mentioned. On one hand, these countries are not isolated: they are part of the Trans-Pacific Partnership negotiations and many, if not all, have separate free trade agreement with either the U.S. Or the EU or both. So, their own commercial partnership is formed on the background of a larger, more ample context of commercial cooperation.

Second, initiatives such as the Pacific Alliance are an intelligent way of building small in order to get bigger. Rather than reaching the large multilateral trade agreements previously discussed in single-handed negotiations, another way to get there is to have smaller agreements, such as this, that could eventually be linked with others to build the whole.

Obama Highlights Need for U.S.-EU Energy Cooperation

This article focuses on a particular area of interest for the commercial relationship between the U.S. And the EU, namely the energy sector. This is a timely discussion, in the context in which Europe is depending on Russian gas for a large part of its energy needs and in which the Russians are playing a strong political hand in Ukraine and the region.

President Obama declared that including energy into the trans-Atlantic free trade deal would be a most important step in solving the energy dependency problem that the European Union has. The president emphasized that it is necessary to place this in a free trade agreement framework, because this would allow facilities in terms of export licenses for energy such as liquefied gas.

The article shows that the fact that the Europeans could change their primary source of energy (Russia supplies about 33% of the total energy needs in Europe) would make sanctions such as the ones that Europe has applied due to Russia’s policy in Ukraine, more efficient.

An interesting fact that the article reveals is that, while this appears to be a helpful, outstretched hand by the U.S. To the Europeans, it provides several advantages for the Americans. On one hand, they would have an additional instrument of negotiations that they can use. The commercial talks about the trade agreement are likely to be very complicated and the Americans could obtain important concessions in areas ranging from agriculture to the film industry.

On the other hand, it would allow the U.S. To access a huge and very profitable market, capable of absorbing important exports of energy from U.S. producers. This would come at the right time, since the U.S. is expected to be self-sufficient in terms of energy production and consumption and producers would need to turn to foreign markets such as the European one.

Taiwan’s protesters are fighting for the very democracy of the island

This is a very interesting article that looks at some of the negative results of a free trade agreement signed between China and Taiwan. It does so indirectly, by discussing the arguments against this that demonstrators who have taken the streets have used. The article refers to political and economic arguments, against the background of the complicated relationships between Taiwan and Mainland China.

The worries that the protesters have are both political and economical. On the political side, a free trade agreement allows Chinese media companies to enter the Taiwanese market by purchasing local media outlets. Given the fact that Chinese media is not entirely free, the political worries are that this is something that would be, in time, replicated in Taiwan as well.

On the economic side, the threats that the Taiwanese perceive are similar to those in the case of any free trade agreements. A free trade agreement will give opportunities for big capital to enter the market, something that could seriously affect smaller producers and businesses, including in the agricultural sector. Unions and leftist intellectuals also pointed out, including in Taiwan that a free trade agreement will lead to a rise in unemployment, particularly with cheaper available labor in Mainland China.

The article approaches the discussion from only one perspective, namely what the free trade agreement could do negatively. However, it should also look at some of the positive effects that more capital entries could have, as well as what the agreement does in terms of access for Taiwanese companies on the Chinese market.

Bibliography

1. Baetz, Jurgen, Casert, Raf, (2014). Obama Highlights Need for U.S.-EU Energy Cooperation. ABC News. On the Internet at http://abcnews.go.com/International/wireStory/obama-important-reach-free-trade-deal-eu-23064302. Last retrieved on April 2, 2014

2. Hsiao-Hung, Pai, (2014). Taiwan’s protesters are fighting for the very democracy of the island. The Guardian. On the Internet at http://www.theguardian.com/commentisfree/2014/mar/25/taiwans-protesters-democracy-china-taiwan-strait. Last retrieved on April 2, 2014

3. Donnan, Shawn, (2014). Pacific Alliance captures zeitgeist in era of ‘mega’ trade agreements. Financial Times. On the Internet at http://www.ft.com/international/cms/s/0/17754b8a-aec3-11e3-a088-00144feab7de.html. Last retrieved on April 2, 2014

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