“It makes no sense for us to buy rice from Asia when we could buy it from the United States,” Cuba’s ex-Foreign Trade Minister Raul de la Nuez

Acting on the water-tight reasoning of the recently deposed de la Nuez, US Senator Max Baucus is expected to announce legislation this week that would increase US agricultural exports to Cuba. Those working to drop the embargo no doubt appreciate the agricultural interests at the heart of Baucus’ move.

Indeed, for all the contradictions of the Cuban embargo, this is perhaps the most novel: the grassroots and big business share a common ground. But where activists see a moral issue, big business sees a lucrative market — before the 1962 embargo, Cuba was the top destination for US rice. If trade circumstances become favorable once again, the industry predicts that exports to Cuba could reach 400,000 metric tons per year.

The WTO has issued the latest ruling in its longest running trade dispute — EU banana imports.

In a case brought by Ecuador the World Trade Organization ruled that the EU’s historical, formalized trade preference for bananas from its former colonies in Africa, the Caribbean, and the Pacific rim, constitute unfair trade practices against Latin America, a decision which may allow Ecuador to issue trade sanctions against the EU. More commentary here.

Also in Europe…this week in the UK a new law came into effect that will make it easier for corporations to be prosecuted and fined for manslaughter. The Corporate Manslaughter and Corporate Homicide Act lessens the burden of proof necessary and raises possible fines in cases where companies are charged with negligence.

But many observers view the act as insufficient because it still precludes individuals in corporate management from physically going to jail if a company is found guilty of manslaughter. One union representative of construction workers — 77 of whom died on the job in the UK in 2007 — told the BBC the law was “the dampest of damp squibs” (whatever that means), because it relied on financial penalties to alter the culture of corporate neglect for human health and safety.

(Personally, I 100% agree with the squib man. Executives should absolutely be made to do jail time if they are found to neglect human health and safety. Moreover, my favorite thing about this new Act, which I fully advocate bringing to the US: “Firms may also be made to take out adverts in newspapers publicizing their guilt.”)

Finally, golden stuff from Think Progress on John McCain’s purported support for veterans:

Not only has he refused to support the 21st Century GI Bill, which the Veterans of Foreign Wars endorsed last June, he has consistently voted against increasing funding for the Veterans’ Administration, which oversees all medical care for veterans:

– Voted AGAINST an amendment providing $20 billion to the VA’s medical facilities. [5/4/06]

– Voted AGAINST providing $430 million to the VA for outpatient care “and treatment for veterans,” one of only 13 senators to do so. [4/26/06]

– Voted AGAINST increasing VA funding by $1.5 billion by closing corporate loopholes. [3/14/06]

– Voted AGAINST increasing VA funding by $1.8 billion by ending “abusive tax loopholes.” [3/10/04]

– Voted AGAINST a $650 million increase in veterans’ medical care funding. [8/1/01]

What have you read today?

The dollar is hovering near record lows, as investors are concerned about drops in the prices of durable goods made in the US. Analysts are worried about stagflation. Many eyes are watching Bernanke. British economic growth is slowing as well.

The silver lining, Reuters says, is that investors are betting on the dollar to rise this year against foreign currencies.

One view, expounded by Investec Asset Management, has it that no matter how the U.S. and global economies proceed, the dollar does well.

Under scenario one, the U.S. has a mild recession but recovers quickly with the help of lower interest rates from the U.S. Federal Reserve. Once the Fed stops cutting, investors buy the dollar because rates and the economy will be heading up.

The second scenario is that the U.S. economy suffers a heavy downturn and drags the global economy with it. This would prompt U.S. investors to bring their money home and global investors to seek safety, both of which would boost the dollar.

“For the second part of the year we expect it to be win-win for the dollar,” said Thanos Papasavvas, Investec AM’s head of currency management, adding that he expects the dollar to remain weaken before then.

But is what’s good for the dollar good for the country? Or is it just that certain parasitic elements will benefit no matter what? Paging all economists…

Continued from part 1

(cross posted at nirmalm.com)

Broadly, there are two dimensions of the “free trade” argument: economic and moral. The economic argument boils down to whether free trade is good for the domestic economy or not. The moral argument is, of course, about whether the effects of free trade policy are desirable from a moral standpoint.

Individual attitudes on free trade based on moral and economic arguments are further complicated by differing definitions of what “free trade” is, and perceptions of how free trade affects that individual person’s life. The survey questions unfortunately don’t fit into this framework of looking at the free trade debate, but we can keep it in mind when examining the data.

Here are the responses to each attitude question vs. the overall feeling about free trade:

While the phrase “black market” tends to summon up a vision of backalley grenade deals, most commerce in the black market is simply normal exchanges of goods and services without any governmental oversight. Black market transactions can be as simple as paying a man for a ride in his family car or buying a sack of oranges from an old woman in a train station, or as complex as the sale of nuclear or biological weapons.

But the trade in illegal goods is of course the most lucrative sector of the black market. So for all you get-rich-quick schemers out there, here’s a rundown of what’s hot to smuggle in 2008.

Gauging poverty is a lot like judging beauty. Oftentimes, it lies in the eye of the beholder. Different polls use different measurements and not everyone is willing to admit their real income when quizzed by some stranger donning a clipboard. This makes it difficult to pin down exactly how many people are living in poverty. However, economic polls like this one are useful for showing trends—especially when they use the same measurements year after year. And if we are to believe the latest trends, Ohio’s economy is headed straight for the drain—especially for those of us in our 30’s and 40’s.

Oh, and just in case you think Ohio is unique or a trend setter, don’t. Mark Twain didn’t allegedly say he wanted to be in Cincinnati when the world ended for nothing. He said it because Cincinnati “is always 20 years behind the times.” So it’s safe to assume something happening in Ohio is probably happening elsewhere too—particularly in the Midwest.

Since World War II the international community has been steadily working to formally liberalize world trade, first through the General Agreement on Tariffs and Trade (GATT) and now through its successor, the World Trade Organization (WTO).

The economic justification for world trade is straightforward and widely accepted: when countries specialize and trade, overall economic wealth increases. From this growth, pro-trade advocates argue, all other ails can be addressed.

But apart from the unrealistic nature of this last statement, one of the chief criticisms levied against the WTO is its lack of discrimination between “good” traders and “bad” traders.

Take for example, China. In 2001 history was made when the WTO admitted China after 15 years of negotiations. The negotiations focused on reducing barriers to imported goods so that both foreign and domestic producers were treated equally in the Chinese economy.

The negotiations did not focus, however, on establishing minimum standards for things like democracy, human rights, and environmental protection. China has been accused of government-sanctioned human rights abuses, exploitative labor laws, suppression of freedom of speech, intense press censorship, and horrific environmental degradation and animal rights neglect. It has also been accused of building and stockpiling biological, chemical, and nuclear weapons, and of selling these and small arms to countries such as Iran, Sudan, and Burma. According to many, China is illegally occupying Taiwan and Tibet.

But China’s trade surplus reached nearly $180 billion in 2006, meaning it sold $180 billion more in goods than it bought globally. The US-China deficit reached an all-time high in 2006 of $214 billion, meaning Americans bought $214 billion more in goods from China than it sold to China.

Regardless of how you feel about trade deficits (economists bicker about whether they are bad or good for our economy) these figures tell us that we Americans, as well as the rest of the world, fund China by buying its products. By trading with China we become complicit in its activities.

(cross-posted from nirmalm.com)

It has been over fourteen years since Congress first debated the economic impact of NAFTA on the United States. After fourteen years of NAFTA, where does the American public stand on free trade? In December 2006, the Pew Research Center asked a nationally representative survey of 1,502 adults this very question.

According to the survey results, nearly half (44%) of Americans believe that free trade agreements like NAFTA are a “good thing,” whereas 35% feel that free trade agreements are a “bad thing” and 21% are unsure:

Back in the early 90s, as negotiations evolved concerning NAFTA, US environmentalists assumed a new role in American politics. Their concerns over the consequences of the proposed free trade agreement prompted a vigorous response, and resulted in their participation in a domain previously dominated by economists. The idea they acted upon — that trade liberalization, particularly between developed and developing countries, was potentially disastrous for the environment — both was and is a legitimate concern for large segments of the population.

NAFTA indeed posed many threats; that companies would sidestep stricter regulatory standards in the US by moving south of the border; that foods grown with pesticides banned in the US but not in Mexico would end up in our markets and bloodstreams; that NAFTA would not only allow the exploitation of looser standards elsewhere, it would encourage the drafting of weaker standards as a means of attracting economic investment.

NAFTA, it was stressed, could potentially nullify more than three decades of work by US environmentalists.

So the greens got tough, pushing Congress to prevent fast track authorization for the deal, and forcing debate on the particulars of the agreement. Their efforts bore fruit; representatives from five green NGOs were placed on a top-level NAFTA advisory committee, and the White House pledged to conduct parallel negotiations concerning environmental effects.

The Clinton administration was true to that word, and declined to send NAFTA to Congress for ratification until the side agreement was reached. Among other things, that agreement barred any nation involved from lowering standards in order to attract business, and gave domestic law precedence over international trade agreements — the need for which was demonstrated by the dolphin / tuna ruling of GATT, the precursor to the WTO.

Still, many organizations, including the Sierra Club and Public Citizen, remained opposed to NAFTA. But others groups, such as the Audubon Society and the World Wildlife Federation, agreed to support it in exchange for the opportunity to help shape the terms described above.

Though the final agreement left many dissatisfied, the participation of the environmental lobby was an important step. It forced legislators to address NAFTA’s ramifications outside the economic realm, and underscored one particular element of trade liberalization; it brings national environmental policy into the view of the international community.

China’s outreach to Africa, one part neocolonialism, one part proactive development, offers a vision of superpower involvement in the developing world that is remarkably different from America’s.

In recent years, China has unveiled massive aid packages for African countries, forgiven enormous amounts of debt, and pumped funds into vast infrastructure projects. Around 750,000 Chinese workers live in Africa. Trade levels have jumped dramatically. In an indication of China’s growing role on the continent, World Bank head Robert Zoellick and Chinese leaders recently agreed to begin jointly funding development programs in Africa. The EU also cooperates with China on delivering aid to Africa.

The west has not wholeheartedly welcomed China’s involvement. In fact, one way to understand China’s policy in Africa is to look at the tensions between Europe and China on the question of development:

While China’s business-first approach is undermining EU efforts to boost sustainability and governance standards, its investments have benefited African economies. China has increasingly regarded Africa as an opportunity, while Europe has long regarded the continent as a burden.

Some have gone even further in their criticism of China, calling it a colonial menace. Others raise objections to the essentially amoral nature of the Chinese presence, especially China’s silence on issues related to Darfur, its willingness to supply weapons to the Sudanese government, and its relationship with dictators like Zimbabwe’s Robert Mugabe.