Trade Triangulation?

Hillary Clinton says she will support the Peru FTA but not agreements with Colombia or Panama. From Bloomberg:

Clinton said she's opposing the Colombia deal because she's concerned about violence against trade unionists in the country and can't support the Panama agreement because the head of the nation's National Assembly is a fugitive from justice in the U.S.

"I have long said that we need smart trade policies that advance labor rights, the environment and our economic standing in the world,'' Clinton said in a statement released by her campaign. "As president, in my first months in office, I will take a time-out from new trade deals to assess their impact before going forward.''

It looks like we are starting to see a clearer picture of the future of U.S. trade policy (read the Policy Innovations article on this topic here)--something like trade triangulation.

Beauty and the Buck

It's hard to tell if this is a leading or lagging indicator, but Brazilian supermodel Gisele Bundchen is refusing to be paid in dollars.

How long before Wen Jiabao demands the same?

Nos-RATO-damus?

Stocks got a pummelling this afternoon, in part due to uncertainty in international currency markets. From the New York Times:

Investors were alarmed by a report this morning that a top Chinese government official said China would shift its foreign currency reserves away from the “weak” United States dollar, further eroding confidence in the currency and sending it to a new low against the euro.

Just a few weeks ago, in one of his last speech's before handing the reigns of the IMF over to Dominique Strauss-Kahn, Rodrigo de Rato warned of a potentially unsettling plunge in the greenback's value.

Up to now, movements in exchange rates have been orderly and in line with fundamentals. But there are risks that an abrupt fall in the dollar could either be triggered by, or itself trigger, a loss of confidence in dollar assets.

Are we watching Rato's dire prediction unfold before our eyes? Events like today's add weight to Thomas Palley's call for managed exchange rates. If, as Palley suggests, the US is getting out-gamed by savvier players in currency markets (ahem, I wonder who that could be), then perhaps it's time to start considering "outdated" approaches. Especially if they can restore a measure of fairness to the current exchange rate system. Thus far, the pain of the credit crisis in the US has been somewhat offset by the continued buoyancy of financial markets. But there will be a rising chorus calling for change if the so-called "real economy" starts to get sucked under. That corner may have been turned today.

Globalization's Squeaky Wheels

What is the obssesion with giant ferris wheels?

Reuters is reporting that a $290 million "Great Wheel of China" is about to be built in eastern Beijing.

The giant ferris wheel will have 48 air conditioned observation capsules, each of which can carry up to 40 passengers, and on a good day even the Great Wall is expected to be visible in the mountains to Beijing's north.

The Singapore Flyer takes online reservations and the London Eye offers a Christmas package of mulled wine and mince pies at altitude. The Great Wheel Corporation is building or planning to build wheels in Berlin, Dubai, Orlando, and Qingdao.

Is this the new, must-have international status symbol? What happened to building and supporting world-class cultural institutions?

Rethinking "National Interest"

A question emerging from my current trip to Japan and Russia has been deceptively simple: In this era of global problems, what is "national interest?"

I got into a long discussion with a prominent Japanese political scientist in Tokyo after I asked him, is it in Japan's national interest to pursue the abductee issue with North Korea as a priority?

Clearly, this issue is extremely emotional. But even the Japanese Prime Minister has said recently that if it comes down to disabling North Korea's nuclear capacity and sticking to Japan's principled position on the abductees, Japan may have to redefine success or at least adjust expectations. The Japanese scholar told me that the abductee issue was in Japan's national interest indeed because it is so emotional. If a democratic polity is telling its leadership to pursue a particular policy, that should define national interest, he suggested.

But that then calls into question what leadership is. One scholar in Moscow told me this morning that--thankfully--the Russian public has little impact on policy. I would offer that leadership is looking beyond short term political interests to pursue long term benefit. That's the difficult, ethical discussion. Sometimes as politicians become trapped by their constituencies, bureaucrats, businessmen, and civil society can look to the longer term, pushing an agenda of peace. Broadening the concept of security can help us here. If we understand security as global security rather than national, we can develop a framework from which to to develop more ethical policies.

Which brings me to the session this morning in Moscow. We heard from U.S. Ambassador to Russia William Burns and Victor Kremenyuk of the Russian Academy of Sciences. A theme of their talks was finding common interests shared among the U.S. and Russia. We were told that when the United States suffers economic or political problems, many Russians become "euphoric." Exchanges between scholars, think tanks, NGOs, and others can facilitate the effort toward peace even when bilateral political relations are deteriorating.

In order to avoid conflict, a global "paradigm" must be found, suggested Kremenyuk. He suggested several areas in which the two countries might cooperate:

• Nonproliferation, particularly given the current instability in Pakistan
• Energy management to stabilize prices
  
• Climate change since Europe can't tackle it alone; we must avoid catastrophe
  
• Economic imbalances
• Combating terrorism

How do we define national interest today? Whose interest should governments pursue?

Globalization as Tea

I am just finishing a week in Japan on a Center for Global Partnership and Ministry of Foreign Affairs sponsored delegation. A major theme of the discussions we had here was whether globalization and traditional culture are compatible. Some argued that Japan may be the best example of a developed, globalized economy that maintains strong traditions. Nevertheless, a lot of anxiety persists about it.

A revealing essay appears in the Daily Yomiuri highlighting this anxiety titled "'Headless monster' changing society." The headless monster is societal revolution and change that can come about without leadership, such as the blog-fueled movement in China that forced the closure of the Starbucks in Beijing's Forbidden City. An interesting, if not ironic, excerpt is here:

History has been full of fads and trends. It has not been unusual to experience one major social change after another with a majority of society quickly latching on to these new phenomena. Rumors, popular songs and fashions of the past can be seen as the works of headless monsters. But a new type of monster is now affecting social issues and politics as well, a situation that may be a new phenomenon.

This new century has seen the emergence of factors that are increasingly favorable for this new monster. First, we are seeing the death of traditional ideologies, which means that human beings no longer have a stable guides to follow even though they are still prone being swayed by latent feelings of anger and disgust. In China, the state's enforcement of communist ideology has been waning. Japan's Marxism-inspired political parties do not even bring up the name of Karl Marx anymore.

It is curious that the writer associates traditional Chinese culture with communism rather than Confucianism.

Yesterday, we spent the afternoon at a tea ceremony in Kyoto. The hosts, the descendants and disciples of tea masters, said that tea ceremony of today in Japan would be unrecognizable to its practitioners of hundreds of years ago. Society changes, culture changes, and tea adapts. It is, like a stream, not at all like the way it started although its essence remains. One of the tradition's characteristics is to balance formality with relaxation, rigidity with flexibility, so that a balance is obtained.

It seems to me that Japan's approach to globalization is instructive to those who can afford to learn. Adaptation and innovation have found harmony with a sense of fairness and tradition.

Photo by El Fotopakismo.

Talk About Free Riders!

"[London]'s congestion pricing for drivers is heralded around the world for reducing traffic and pollution. It's also causing an unintended effect: a sharp jump in thieves stealing or counterfeiting license plates. Thieves are pinching plates by the dozens every day to fool the city's traffic cameras, which enforce the £8 ($16) daily charge to drive in central London as well as other traffic infractions."

- Niraj Sheth, Wall Street Journal, Friday 11/02/07, B1

An unfortunate, but acceptable byproduct of good policy? Or evidence that congestion pricing is merely a tax that clever drivers will find away around? These are important questions to consider as policy successes make their way around the world.