Monthly Archives: November 2009

Quick Hits

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Things you might find interesting, but I haven’t had the time or inclination to blog about:

  • Do you ever wonder about China’s always positive economic statistics? I have long thought they are too good to be true, so I generally ignore them in thinking about business plans for China.  My suspicions appear to be well-placed, but don’t take my word for it.  Take a look at Gordon Chang’s October 23 column in Forbes.  Don’t know why I missed it at the time, but it is still a timely read.
  • I posted early in November about the WTO case brought against China for restricting exports of important raw materials.  The case was brought by the European Union, the United States and Mexico after bilateral talks with China broke down.  The first step in a WTO case, after bilaterals, is to request that a panel of experts be established to review the charges, counter-charges and facts of the case.  Last Thursday, China vetoed establishment of such a panel, as it has the right to do under WTO procedures.  That won’t delay things for long as the complainants can ask again and the request can only be vetoed once.  The next opportunity to ask for a panel comes at a meeting in Geneva on December 21.
  • The WTO did set up a panel Thursday to look at a complaint by the United States about a European Union ban on imports of American poultry.  The EU says that U.S. poultry treated with an antimicrobial chlorine rinse is unsafe.  Washington says that the EU action is protectionist and unscientific.  A second panel was created to address Canadian and Mexican complaints against U.S. country of origin labeling rules for meat.  This is all normal stuff and sure beats trade wars.
  • The National Foreign Trade Council called last Tuesday for Congress to streamline the various preferential programs the United States uses to help developing countries.  Let’s see, we have the Generalized System of Preferences, the Caribbean Basin Initiative, special programs for Africa – and probably others I don’t know about.  They all seem to run for different periods, expire at different times, and Congress never acts on them until the last possible second.  (GSP is due to expire the end of next month.)  Streamlining and combining seems to make sense.  Nothing kills business more than uncertainty, and uncertainty is what we’ve got.

Is There There There?

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I have been reluctant to post about President Obama’s trip to Asia because I haven’t seen much of a concrete nature on trade issues.  The President and the heads of state he met with all seem to be playing nicey-nice on trade, but as Gertrude Stein famously said about Oakland, “There’s no there there.”  Maybe I’m just in a sour mood.

U.S.-Korea FTA

U.S.-Korea FTA

Finally, in Seoul, we may see the glimmerings of something solid, though I have my doubts.  President Obama and South Korea’s President Lee Myung-bak said on Thursday that a free trade agreement “could” be reached between the two countries.  That’s confusing.  Agreement on an FTA was reached 2 1/2 years ago, but the FTA is still waiting to be ratified.  It sounds like Obama and Lee may have decided to re-open the existing agreement to mollify U.S. auto exporters and Korean farmers, but I haven’t seen a clear statement of this.  Any re-opening will delay the FTA for months, perhaps years.

President Lee made the point that Korea’s new FTA with the European Union will bring in more competition for American exporters, but time will tell if President Obama was listening.  In view of the Korea-EU agreement, wouldn’t it make sense to implement the Korea-U.S. FTA and agree to tinker with it after the overall agreement is in place?

Mr. Obama did say that he will “challenge” the U.S. Congress to display more sophistication on trade issues, something on which I wish him the best of luck.

The U.S.-Korea FTA could have huge positive impact for U.S. exporters and jobs (see The Kim Chee Gets Deeper).  Pity our politicians can’t see it.

Clean It Up, Hungary!

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Budapest Police: No Wonder They Don't Move!

Budapest Police: No Wonder They Don't Move!

Ah, Hungary …   Bull’s Blood, the Gellert baths, hussars, bribery, paprika, St. Stephen, corruption, the Austro-Hungarian Empire, Chain Bridge, crime, Haydn …  It’s time to clean up your act, guys!

In an extraordinary undertaking, the Budapest embassies of nine major trading partners have jointly issued a press release condemning corruption in Hungary.  Extraordinary in at least two ways: countries don’t work together like this, and embassies never want to embarrass their host governments in public.  The level of corruption must be intolerable, or the embassies are working with a faction within Hungary that wishes to push an anti-corruption drive.  Or both.

The press release is titled “Joint Statement on Transparency“,  a euphemism.  Transparency is code for not being able to tell what is happening, with the implication that there is skulduggery behind the scenes.  I am not sure what deal was the action-forcing event, but it is clear from the press release that something underhanded has happened concerning major investments in transportation, utilities and broadcasting.  I know from experience and friends that there was considerable foul play in Hungary’s privatization of state-owned enterprises, and that the local mafia is strong.  The release makes the valid point that if things aren’t cleaned up, and quickly, investors will go elsewhere, putting Hungary’s already slow recovery in jeopardy.  The countries issuing the press release account for the majority of Hungary’s foreign direct investment: the United States, Belgium, France, Germany, Japan, Norway, Switzerland, the Netherlands and the United Kingdom.  Not to be ignored.

Old friend and colleague John Fogarasi felt compelled to lead an American Embassy effort for good corporate governance in Hungary more than a decade ago.  John has moved on, but it sounds like the campaign is getting into high gear again.