|
|
November 11 by M. Ulric Killion. According to the Office of the United States Trade Representative (USTR), Ron Kirk, the “United States has free trade agreements in force with 17 countries.” These countries as listed by the USTR are: The USTR also reports that the “United States has signed free trade agreements with Colombia, Korea, and Panama, but Congress must enact legislation to approve and implement each individual agreement in order for them to go into effect.” Source: Office of the United States Trade Representative. According to the Office of the United States Trade Representative: Summaries and Text >>See Full Text of the Agreement (English) here. >>See Full Text of the Agreement (Spanish) here. Reports on the Agreement >>See ITC Report here. >>See Interim Environmental Review here. >>See Final Text of United States-Korea Free Trade Agreement (KORUS FTA) here. -
The United States and Panama signed a trade promotion agreement, sometimes called a Free Trade Agreement (FTA), on June 28, 2007. Panama approved the TPA on July 11, 2007. The United States has not yet approved the TPA. >>See Final Text of the United States and Panama Trade Promotion Agreement here. The Office of the United States Trade Representative has also received “Public Comments Concerning the Pending Colombia and Korea Free Trade Agreements.” According to the USTR, “United States Trade Representative Ronald Kirk announced today that USTR has received more than five hundred responses to requests for public comment on the free trade agreements that have been negotiated with Colombia and the Republic of Korea. USTR had issued notices at the end of July inviting comment by interested parties by noon today, September 15. In its ongoing effort to identify and resolve outstanding issues related to the pending free trade agreements, USTR sought comments on stakeholders' views of the costs and benefits of the FTAs, how well they accomplished the objectives of the 2002 Trade Promotion Authority Act, and what concerns they may have with the agreements.” . . . . >>Read full text of USTR Receives Public Comments Concerning the Pending Colombia and Korea Free Trade Agreements here. As earlier mentioned, the free trade agreements, though signed, with the Republic of Korea and Columbia are pending ratification by U.S. Congressional approval. Despite the importance of ratifying both of these pending FTAs, the decision concerning ratification, thus bring into effect these agreements, will, ultimately, resolve to a political decision by the U.S. Congress. Moreover, a U.S. Congressional decision to ratify these critical FTAs will serve as a measure of the United States’ commitment to multilateral world trade. Additionally, the following articles and essays discuss the politics of the ratification of both the KORUS FTA and the United States-Colombia Trade Promotion Agreement, notwithstanding the critical economic and diplomatic significance of these pending FTAs. EU, Korea failed to finalize trade pact in London, JoongAng Ilbo, Korea, 4 April 2009. Lawmakers Postpone Korea-U.S. FTA Bill, Chosun Ilbo (Arirang News), March 5, 2009. Korea-Singapore Trade Doubles Since 2005 FTA, Chosun Ilbo (Arirang News), March 2, 2009. Dan Griswold, NAFTA at 10: An Economic and Foreign Policy Success, Cato Institute, Free Trade Bulletin, No. 1: December 17, 2002, >> Read full article - PDF version of Free Trade Bulletin No. 1. Chung Hae-kwan, The Korea-Chile FTA: Significance and Implications, East Asia Review, Vol. 15, No. 1, Spring 2003, pp. 71-86, >> Read full article – PDF version. Free Trade Agreement between EFTA and South Korea,(European Free Trade Association), European Reports, September 4, 2006. Renowned professor calls for KORUS FTA renegotiation, The Hankyoreh, March 19, 2009. Korea-EU FTA to Be Concluded Next Month, Dong-a Ilbo, March 16, 2009. Kang Hyun-kyung, Proposal Made to Implement FTA With EU Ahead of US, The Korean Times, November 12, 2009. 2). Senate confirmation of Ron Kirk as US trade representative may confirm path to greater protectionism, which cites the following sources: Jim Abrams, Former Dallas Mayor Ron Kirk confirmed as US trade representative, AP, March 18, 2009, (Chicago Tribune). Killion, M. Ulric. 2004. China’s Foreign Currency Regime: The Kagan Thesis and Legalification of the WTO Agreement, 14 Minn. J. Global Trade 43, (Winter). WTO NEWS: SPEECHES — DG PASCAL LAMY, March 2, 2009. Bettina Wassenger, Tentative Free Trade Deal for S. Korea and Europe, NY Times, March 24, 2009. Lawmakers Postpone Korea-U.S. FTA Bill, Chosun Ilbo (Arirang News), March 5, 2009. Korea-Singapore Trade Doubles Since 2005 FTA, Chosun Ilbo (Arirang News), March 2, 2009. Dan Griswold, NAFTA at 10: An Economic and Foreign Policy Success, Cato Institute, Free Trade Bulletin, No. 1: December 17, 2002, >> Read full article - PDF version of Free Trade Bulletin No. 1. Chung Hae-kwan, The Korea-Chile FTA: Significance and Implications, East Asia Review, Vol. 15, No. 1, Spring 2003, pp. 71-86, >> Read full article – PDF version. Free Trade Agreement between EFTA and South Korea,(European Free Trade Association), European Reports, September 4, 2006. Korea-EU FTA to Be Concluded Next Month, Dong-a Ilbo, March 16, 2009. Kang Hyun-kyung, Proposal Made to Implement FTA With EU Ahead of US, The Korean Times, November 12, 2009. 4). Economic crisis is driving call for more aggressive US trade policy, which cites the following sources: Anthony Faiola, U.S. to Toughen Its Stance On Trade, Washington Post, March 10, 2009, A01. M. Ulric Killion, Regional Economic Integration, Aug. 2008. 5). Lawmakers postpone ratification of Korea-US Free Trade Agreement, which cites the following sources: Lawmakers Postpone Korea-U.S. FTA Bill, Chosun Ilbo (Arirang News), March 5, 2009. Korea-Singapore Trade Doubles Since 2005 FTA, Chosun Ilbo (Arirang News), March 2, 2009. Dan Griswold, NAFTA at 10: An Economic and Foreign Policy Success, Cato Institute, Free Trade Bulletin, No. 1: December 17, 2002, >> Read full article - PDF version of Free Trade Bulletin No. 1. Chung Hae-kwan, The Korea-Chile FTA: Significance and Implications, East Asia Review, Vol. 15, No. 1, Spring 2003, pp. 71-86, >> Read full article – PDF version. Free Trade Agreement between EFTA and South Korea,(European Free Trade Association), European Reports, September 4, 2006. Copyright © Protected - All Rights Reserved M. Ulric Killion. November 05 by M. Ulric Killion. A recently written short essay by Emrullah Uslu and titled “Judicial Opposition Criticizes the AKP Government,” and appearing in the Eurasia Daily Monitor, should be of interesting to those following modern judicial reforms in the Republic of Turkey (Turkey). The AKP government represents what hails as the Justice and Development Party or White Party (i.e., Turkish: Adalet ve Kalkınma Partisi). The issue of reforming Turkey’s judiciary system transcends domestic borders. This is because even the Bretton Woods Institutions (BWIs), such as The World Bank, continue to follow Turkey’s modern judicial reforms. A case in point is that during the December 10, 2004 – Program: Judicial Reform for Improving Governance in Turkey, several representatives of governments, international bodies, non-governmental organization and other institutions, including the World Bank, are in attendance as participants. The concluding remarks for the 2004-Program were actually delivered by Roberto Dañino, who was, then, the senior vice president and general counsel of the World Bank, before resigning in 2006. Demonstrating the international interests in judicial reforms in Turkey, the 2004-Program was actually a World Bank-funded program, and is only one of several judicial reform programs that have been funded by sources outside Turkey. Judicial Reform Projects in Turkey The “Judicial Modernization and Penal Reform” program was sponsored by the Council of Europe, and entails a budget of 10 million Euros, with a duration period from 2003-2005. For the period of 2006, there is the “EU/Phare Twinning Covenant Domstolsverket” program was sponsored by the SIDA (The SwedishInternational Development Cooperation Agency), which was implemented by the Domstolsverket - The Swedish National Courts Administration. For the duration of 2006, there was the “Pre-study in Turkey on Development of the Judiciary” program sponsored by the SIDA and implemented by the Swedish National Courts Administration (SNCA), though in partnership with the Ministry of Justice of Turkey. During the period from 2001- 2002, there was the “Judicial Sector Exchange Program” sponsored by the DRL (Bureau of Democracy, Human Rights and Labor, U.S. Department of State), with a budget of $400,000. For the years 2005-2006, there is the “Support to the Establishment of Courts of Appeal” program sponsored by the EU Development Projects and implemented by the Brussels 5 - EC institutions, with a budget of EUR 800,000. Then there is the Oct.-Dec. 2005 World Bank-sponsored “Judicial Reform Learning Program in Turkey” program that was implemented by the PREM and LEG. Earlier in 2000, there is the “Strengthening of the Judiciary I Southeast Europe (Albania, Bosnia & Herzegovina, Bulgaria, Croatia, FYROM, Greece, Romania, Turkey and where possible Yugoslavia)” program sponsored by the SELDI (Southeast European Legal Development Initiative) and implemented by the “The International Development Law Institute.” There is of course the earlier mentioned 2004- Judicial Reform for Improving Governance in Turkey program that was sponsored by the World Bank. During the period 2003-2006, there is the “Strengthening Human Rights Capacity in Turkey” program sponsored by the SIDA and implemented by the Raoul Wallenberg Institute of Human Rights and Humanitarian Law, with a budge of SEK 30 626 000. Judicial reform programs of this variety generally premise on a democracy promotion approach, thus, entailing an expectation of enhancing the institutional capacity of governments and their institutions. In the specific context of judicial reform, this generally means an expectation of improving institution capacity in areas such as access to justice, building networks, improving access to information, and improving the quality of judicial and legal education. The earlier mentioned programs, likewise, intend to improve the capacity of Turkey’s judicial system; i.e. carry out much-needed reforms, develop and implement strategies designed to address obstacles to reform. Notwithstanding judicial programs from the 1990s, the earlier mentioned judicial reform programs in the 2000s also intend to address gaps, as in comparison to developed countries and economies, in developmental goals. Notwithstanding good governance models or policy, these are the gaps (or lags) mostly occurring in the areas of agriculture, energy, finance, transportation, communication, health and education. Majid Mohammadi writes, “After decades of failures of developmental projects in authoritarian states, international community reached to this point that development will not be sustainable without reform in the areas of law, justice and public administration. Compared to billions of dollars spent on security and defense and hundreds of millions of dollars spent on infrastructural development, mostly funded (granted or loaned) by the international donors, millions of dollars spent on good governance is not noticeable.” In terms of modern judicial reforms in Turkey, International bodies funding various judicial reforms programs expect that Turkey will improve both the functionality and efficiency of its judiciary system. A problem, however, may be that these international bodies funding reforms also expect that improvements in functionality and efficiency should parallel Western standards, or more particularly, the EU (European Commission and the Council of Europe) model. In defense of international bodies funding these programs and urging judicial reforms in line with Western standards, it seems reasonably that closing the gap (lag) might necessitate that countries and economies, such as Turkey, should align the conditions of its judicial system with international standards, such as the United Nations and the EU models. Turkey’s Judicial Opposition Emrullah Uslu, in “Judicial Opposition Criticizes the AKP Government,” writes: The long standing dispute between Turkey's ruling Justice and Development Party (AKP) and the judiciary has once again resurfaced in recent weeks. Since 2007 the judiciary has led the opposition against the AKP. The constitutional court attempted to shut down the AKP and ban the prime minister from politics, while supreme court judges use every occasion to criticize the AKP government, and local courts file cases against President Abdullah Gul (EDM, January 13, May 20). Recently the Supreme Board of Judges and Prosecutors (HSYK) differed with the justice ministry's annual appointment lists. In the Turkish judicial structure the HYSK, which consists of five elected members from the supreme court and the council of state and two from the justice ministry (Justice Minister Saadullah Ergin and his undersecretary), has undisputed power to appoint judges and prosecutors on an annual basis. Judges and prosecutors' appointments usually occur in late June. This year, however, due to the disagreement between the justice ministry and the HSYK to determine who should be appointed and to which particular court, this process has suffered delays. The Turkish press reported that the conflict between the two centered on whether the prosecutors should remain in place, investigating the Ergenekon criminal network and the prosecutors who investigated unsolved political murder cases in the Kurdish region in 1990's and arrested Colonel Cemal Temizoz for his alleged involvement (Radikal, July 21). Justice ministry officials insist that the Ergenekon prosecutors and those who investigated the unsolved murder cases in the Kurdish region must remain in their posts to maintain their judicial independence. However, Ali Suat Ertoson a member of the HSYK, reportedly presented an alternative list to appoint new prosecutors to examine these issues (Star, July 24). While the crisis continues a photograph was leaked to the press showing Ertosun in a meeting with an Ergenekon suspect standing trial in the case (Yeni Safak, July 18). In addition, Ertosun has reportedly spent two days with Brigadier-General Ali Aydin, the commander of the Kayseri Regional Gendarmerie, where the suspect Colonel Temizoz works (Bugun, July 27). Consequently, the AKP government has pressured the HSYK to fire Ertosun (Yeni Safak, July 18). In response, the Deputy Head of the HSYK, Kadir Ozbek, released a statement refuting the allegations against Ertosun, and stating that his meeting with the Ergenekon suspect was a "normal procedure" (Cihan News Agency, July 27). . . After three weeks of deadlock, the HSYK suggested a possible compromise. The HSYK members agreed that the current Ergenekon judges and prosecutors would retain their positions on the condition that the ministry launches an inquiry into the complaints and charges against the Ergenekon prosecutors -if sufficient evidence exists. . . The HSYK, meanwhile, will be responsible for making a decision on the inquiry (Hurriyet Daily News, July 28). . . In the aftermath of this reconciliation, HSYK elected members issued a written statement criticizing the justice ministry, the AKP government and the media. . . The statement, however, did not mention whether the board has discussed replacements relating to Ergenekon and unsolved murder cases in the Kurdish region. The justice ministry responded to the HSYK's press statement by insisting that replacing the Ergenekon and unsolved murder case prosecutors violated the judicial independence of the prosecutors. It also accused the HSYK members of an unlawful attempt to use the authority of the justice ministry (Zaman, July 30). Uslu’s essay, though insightful, speaks to on-going problems of Turkey’s judicial model and judiciary reforms, including a Western perceived need for greater independence of Turkey’s judiciary. His essay also presents issues of the efficient and effective delivery of foreign aid by Western donors intending to promote judicial reforms in other countries. The Functional and Efficient Judiciary During his closing remarks at the earlier mentioned 2004-Program, Roberto Dañino (2004), in a review of the program modules, described six modules; i.e. Module 1, Module 2, etc. He also stated that there are “four essential dimensions for the process of reforms” which are “institutions, the legal system, enforcement and social commitment.” Dañino then went on to summarize each of the program modules. In Module 1, they (or participants) “examined the Principle Problem of the Judiciary establishing basic definitions, agreed on essential principles and also reviewed case load management, the practice of calling experts, and judicial personnel policy.” In Module 2, they “discussed Ethical standards, their Enforcement for Judges and the Legal Professionals and Accountability of the Judiciary.” In Module 3, they “reflected on the crucial role of Appointment, Promotion, Discipline and Removal of Judges and the complex nature of independence and accountability.” Module 3 also deserves further attention. This is because Dañino mentioned two important functions of judicial review. According to Dañino, “The first is to limit government power, and the second is to protect the rights of individuals. When a judiciary is truly independent, then its decisions are respected and enforced and the institution is less subject to political influence. However, judicial independence must be balanced by accountability of the judiciary and the obligation to carry out its duties while following the highest ethical standards. Judicial corruption ultimately destroys judicial independence.” In Module 4, they “focused on European Union Accession in relation to access to justice and continuing education.” In Module 5, they “discussed access to justice in relations to alternative dispute resolution (ADR) given that such services also improve the ability of a legal system to offer and deliver justice.” In Module 6, they reviewed they discussions, “noted points of fundamental agreement, and received” their “Action Plan which will become a useful guide for follow-up activities.” Nonetheless, as earlier mentioned, Uslu’s essay speaks to on-going problems of Turkey’s judicial model and judiciary reforms, including a Western perceived need for greater independence of Turkey’s judiciary. This also presents issues of the delivery of efficient and effective foreign aid that intends to promote legal reforms. The Issues of Legal Reform and Western Donors The issues of legal reforms are critical to all models of development. In the context of Turkey, it presents a challenge to a final accession to the EU. On April 14, 1963, Turkey submitted its application to accede to the EU (then the European Communities). In 1963, Turkey became an associate member of the EU. In 1995, Turkey signed a Customs Union agreement with the EU and, on December 12, 1999, at the Helsinki summit became an official candidate for full membership. A negotiation process addressing Turkey’s full membership actually commences on October 3, 2005 with most authorities perceiving that accession, and assuming resolution of pending issues (i.e., judicial reforms), predicting a process that may take as long as ten years from this date. Although Turkey also became a member of the Council of Europe in 1949, the Organization for Economic Co-operation and Development (OECD) in 1961, the Organization for Security and Co-operation in Europe (OSCE) in 1973, and an associate member of the Western European Union in 1962, Turkey’s membership bid to the EU remains pending (Cendrowicz, Time, Sept. 8, 2009). Borrowing from the title of Cendrowicz’s article, “Fifty Years On, Turkey Still Pines to Become European.” All of this, ultimately, presents issues of the efficient and effective delivery of foreign aid by Western donor countries intending to promote judicial reforms in other countries and economies, especially non-Western countries and economies. In this respect, the EU and other countries may be wise to take their lead from earlier suggestions of the Brookings Institution and the Center for Strategic and International Studies (CSIS). This is because, “in June 2006, a joint task force convened by the Brookings Institution and the Center for Strategic and International Studies (CSIS) released recommendations for reorganizing and reprioritizing U.S. foreign aid programs. The Brookings-CSIS Task Force called for a comprehensive review of foreign aid, led by Congress but involving key non-governmental organizations (NGOs) and government agencies, with the Goldwater-Nichols Defense Reorganization Act of 1986 serving as its model. The Brookings-CSIS Task Force advocates a U.S. development mission that is on parity with U.S. defense and diplomacy, which could result in the creation of a Department for Global Development for bringing together more than fifty U.S. government units involved in aid delivery. The task force also noted that U.S. spending on foreign assistance has seen its greatest increase in forty years, an expansion that also produced a growing incoherence in policy and a fragmentation in organization. What was observed to be a critical problem was the threat to hard power assets, resulting in the United States needing to deploy its soft power more effectively and efficiently” (Killion, 2007; Brookings-CSIS Task Force Releases New Recommendations on Transforming Foreign Aid, Brookings Inst., June 22, 2006). The 2006 report of the joint task force “centered on the United States failing to take fuller advantage of potential synergies, with these disparate efforts sometimes working at cross purposes. The task force essentially found that the United States punches well below its throw weight in the international community, which should be unmatched when measured in absolute aid dollars. For these reasons, U.S. foreign aid must move away from a one-size-fits-all approach and should be redirected by a unified framework fusing U.S. objectives supporting capable foreign powers and countering security, humanitarian and transnational threats with differentiation based on governance and economic capacities. As a result, U.S. aid programs must be customized to the capacity and need of beneficiary-countries, while also recognizing that beneficial-countries afflicted with poor governance routinely perform the worst in addressing human needs” (Killion, 2007). In the context of the efficient and effective delivery of U.S. foreign aid and legal reforms, there is the parallel example of U.S. foreign aid intending to promote legal reforms in Mainland China. This is because “United States foreign operations appropriations for China primarily support democracy-related programs, such legal training, legal aid, criminal defense, labor rights, the development of NGOs in China, monitoring human rights conditions in China from outside China, and preserving Tibetan culture. United States funding has been substantive in the area of legal reforms. The U.S. Congress has approved substantive funding for such programs, reflecting a growth from $10 million in 2002, to $23 million in 2006. From 1999 to 2006, U.S. government funding for democracy-related programs in China was about $110 million. Although the major recipients are Temple University (rule of law project), the International Republican Institute (village elections project) and the Asia Foundation (civil society project), many experts and authority suggest that U.S. congressional funding for legal reform efforts in China have produced limited benefits due to the lack of judicial independence, weak enforcement of laws, constraints on lawyers and political corruption” (Killion, 2007; Thomas Lum, U.S.-Funded Assistance Programs in China, CRS Report for Congress, May 18, 2007. General Accounting Office, Foreign Assistance: U.S. Funding for Democracy-Related Programs, Feb. 2004). For these reasons, the EU would be wise to follow the recommendations set forth in the 2006 report, especially concerning the delivery of foreign aid intending to effect legal reforms that align the conditions of Turkey’s judicial system with international standards, such as the EU models. As observed by the eminent Professor Stanley Lubman, in the context of China and legal reforms, “China’s difficult transition is reflected in its legal institutions” and “The United States can assist China to build its legal institutions without preaching” (Stanley Lubman: A letter to Obama, WSJ, Nov. 4, 2009). Nonetheless, Professor Lubman admittedly argued that the United States should increase its support for legal reforms. Professor Lubman writes: In recent years the U.S. government, including your predecessor’s administration, has increased the support that it has given to strengthen labor rights, legal aid, open government, and administrative law, augmenting the support for these and other institution-building efforts by multilateral and U.S. NGOs. The current administration ought to increase that support while restraining highly public calls that urge China to speed up its adherence to Western values. You might suggest creation of a modest program of U.S.-Chinese cooperation on legal issues” (Lubman, 2009). Conclusion It should now be understood, colloquially speaking, that Western donors should not simply throw vast sums of money at a problem without regard for issues such as efficiency and effectiveness, and even functionality. As previously mentioned, Western donors funding various judicial reforms programs expect that Turkey will improve both the functionality and efficiency of its judiciary system. A problem, however, are Western donors expecting that improvements in functionality and efficiency should parallel Western standards, or more particularly, the EU model. As the case of China and legal reforms arguably demonstrate, it may be unreasonable to expect that the closing of this gap necessitate that recipient-countries of donor aid will align the conditions of its judicial system with international standards, such as the EU models. Additionally, Professor Lubman’s argument for continued support for legal reforms is not contra distinguishable from the thesis of this essay. This is because the essay does not intend to urge a denial of all foreign aid directed to or intending to promote legal reforms in other countries such as China and Turkey. Rather, what is being called for is the efficient and effective delivery of foreign aid, including foreign aid intending to promote legal reforms in other countries. It is for these reasons, the earlier report from the 2006 joint task force, which was convened by the Brookings Institution and the Center for Strategic and International Studies (CSIS), provides invaluable insights to this historical problem of Western donors. Moreover, in the event, Turkey ever accedes to the EU one reasonably suspects that it will largely be a political-based decision (e.g., China’s 2001 accession to the WTO despite a Western-perceived-need for reform of its judiciary). Sources: Emrullah Uslu, Judicial Opposition Criticizes the AKP Government, Eurasia Daily Monitor -- Volume 6, Issue 146, July 30, 2009. Roberto Dañino, Concluding Remarks, Judicial Reform for Improving Governance in Turkey, Dec. 10, 2004. Majid Mohammadi, Judicial Reform Projects Sponsored by International Donors in Egypt and Turkey, USAID (http://www.usaid.gov), Oct. 17, 2006. Leo Cendrowicz, Fifty Years On, Turkey Still Pines to Become European, Time, Sept. 8, 2009. Brookings-CSIS Task Force Releases New Recommendations on Transforming Foreign Aid, Brookings Inst., June 22, 2006. Thomas Lum, U.S.-Funded Assistance Programs in China, CRS Report for Congress, May 18, 2007. General Accounting Office, Foreign Assistance: U.S. Funding for Democracy-Related Programs, Feb. 2004. Stanley Lubman: A letter to Obama, WSJ, Nov. 4, 2009. Ulric Killion, Modern Chinese Rules of Order (2007), Chapter 8. Copyright © Protected - All Rights Reserved M. Ulric Killion. October 18 by M. Ulric Killion. In a recent New York Times article, Clifford J. Levy (Russia’s Leaders See China as Template for Ruling, NY Times, Oct. 17, 2009), made the following observation. Levy writes: “Nearly two decades after the collapse of the Communist Party, Russia’s rulers have hit upon a model for future success: the Communist Party. Or at least, the one that reigns next door. Like an envious underachiever, Vladimir V. Putin’s party, United Russia, is increasingly examining how it can emulate the Chinese Communist Party, especially its skill in shepherding China through the financial crisis relatively unbowed. United Russia’s leaders even convened a special meeting this month with senior Chinese Communist Party officials to hear firsthand how they wield power. In truth, the Russians express no desire to return to Communism as a far-reaching Marxist-Leninist ideology, whether the Soviet version or the much attenuated one in Beijing. What they admire, it seems, is the Chinese ability to use a one-party system to keep tight control over the country while still driving significant economic growth.It is a historical turnabout that resonates, given that the Chinese Communists were inspired by the Soviets, before the two sides had a lengthy rift.” Levy, though perhaps inadvertently, is addressing the history, or perhaps even human geography, of a past and present China. In other words, he is addressing a history of the growth of the early Chinese communists and the Chinese Communist Party. It is also a history addressing an earlier vision of Mao Zedong, when he wrote, “The salvoes of the October Revolution [or Bolshevik Revolution] brought us Marxism-Leninism. The October Revolution helped progressives in China, as throughout the world, to adopt the proletarian world outlook as the instrument for studying a nation’s destiny and considering anew their own problems” (Mao Zedong, Selected Works, Foreign Language Press, 1961, Vol. IV, 413). In terms of the “May 30th Movement (1925) [“that pushed the May Fourth Movement into the past”] that is, generally, recognized as serving as the moment of crystallization, in terms of the pursuit of revolutionary policy by early Chinese communists,” for earlier “Chinese intellectuals pursuing Marxist ideology, the Bolshevik Revolution answered the question of whether a backward country could seize state power and commence the pursuit of modernization” (Ulric Killion, Modern Chinese Rules of Order (2007), Chapter 4). Then there is the historical relationship and struggles between the former Soviet Union and China. “In the 1920s and 1930s, the early Chinese communists would often succumb to Lenin’s insistence, and then to Stalin’s insistence, in order to avoid impairing the solidarity between China and the former Soviet Union, such as what occurred in the 1950 signing of the new Sino-Soviet Treaty of Friendship and Alliance, and it attendant subsidiary agreements. In the 1950s and 1960s, Chinese leaders for the sake of solidarity would succumb to Stalin, and then Khrushchev. In the interim, the influence of the Bolshevik Revolution and Marxism continued to grow in the China of the 1920s and 1930s, and in subsequent years” (Killion, at Chapter 4). In subsequent years, the relationship between China and the former Soviet Union and then later by Russia would experience profound changes; which is perhaps subsequent to the localization or even Sinicization of the Bolshevik Revolution. In other words, changes attributable to “the by-product of a Chinese phenomenon of taking borrowed and transplanted foreign concepts and ideas, such as Marxism and Leninism, and imbuing them with the Chinese revolutionary spirit, such as the continuing attempt to finalize the adaptation, Sinicization or localization of Marxism to the realities of traditional culture and society” (Killion, at Chapter 1). Levy rightly observes that: “Nearly two decades after the collapse of the Communist Party, Russia’s rulers have hit upon a model for future success: the Communist Party. Or at least, the one that reigns next door.” In a historical context, it is phenomenon commencing in the 1960s that is much more, however. This is because: “In the 1960s and 1970s, China began to emerge as a world player, as it plays the strategic game alongside the former Soviet Union and the United States, in the Asia region. In the years that followed, China became increasingly intolerant of succumbing to the insistence of the Soviet Union and its leaders, as it had done so in past eras” (Killion, at Chapter 4). In the context of International communism, the former Soviet Union and now Russia, the consequences of the historical growth and development of China and the Chinese Communist Party are obvious. “In the new millennium, it is China, and not the former Soviet Union or now Russia, which is evolving into the leading Marxist, communist or socialist country. From the 1920s to the new millennium, China evolved into a world player and is no longer a puppet of the former Soviet Union, or mere pawn in the international communist movement. Rather, China is now a leading world player in the international community. China has, in effect, adapted, Sinicized or localized the Bolshevik Revolution. As for Marxism, China after borrowing the Western philosophy of Marxist philosophy, gave it a Chinese name, Mao’s socialism, and then commences the process of adapting, Sinicizing or localizing Marxism, and is continuing to do so, in an attempt to finalize its adaptation, Sinicization or localization. China also borrowed Soviet models of industrialization and planning, and then jointly pursued a socialist-political polity and capitalist-economic policy. It is no less different than when China borrowed Buddhism during the Han Dynasty, because the Taoists, after accepting the heavens and hells from Buddhism, gave them Chinese names and invented Chinese Gods that would preside over them” (Killion, at Chapter 4). Copyright © Protected - All Rights Reserved M. Ulric Killion. September 23 by M. Ulric Killion. The Group of 20 (G20) financial summit convenes in Pittsburgh, Pennsylvania, from September 21 to 25, 2009. According to the The G20 Pittsburgh Summit Press Room, the selection of Pittsburgh as the site of the G20 summit is due to the city serving “as a model for economic and environmental transformation in the United States and abroad. The city has reinvented itself by building a balanced, innovation-driven economy based on its strengths in advanced manufacturing, financial services, information and communications technologies, health care and life sciences, education and research, and energy and environmental solutions.” The accomplishments of the city of Pittsburgh serve as a precursor to the critical issues confronting the G20 gathering. For those unaware of the many issues confronting the G20 Pittsburg-summit, what follows is a short list of essays and interviews, including transcripts, that address several of the critical issues confronting the world's financial representatives and leaders that have come together in Pittsburg to discuss economic policies and address the global financial crisis. The listing, though there are many other informative sources available, includes a list of informative and insightful interviews and essays from both the Brookings Institution and Peterson Institute for International Economics. From the Brookings Institution: To enhance global coordination and to implement effective financial recovery policies, Brookings experts provide recommendations on how the G-20 can overcome current global governance and economic challenges. Introduction » (PDF)
by Kemal Derviş, Vice President and Director, Global Economy and Development
Download the full report » (PDF) Articles The G-20 and the World Economy: Sink or Swim » (PDF)
Eswar Prasad recommends that the G-20 maintain momentum on reforming the international institutions and advance international regulatory reform for the betterment of the overall global economy. Confronting the Protectionism Spawned by the Crisis » (PDF)
Chad P. Bown makes the case for re-affirming the G-20 economies’ commitment to the World Trade Organization and curbing trade-restricting policies created by the crisis. The G-20 and IMF: Their Future Roles in the International Monetary System » (PDF)
Domenico Lombardi proposes that the G-20 should focus on supporting effective measures to reform the International Monetary Fund. To the G-20: Don’t Overlook Africa During the Recovery » (PDF)
Ernest Aryeetey, Mwangi Kimenyi and John Page assess the impact of the financial crisis on Africa and urge the G-20 leaders to support African economic recovery and growth. Welcome to the New Era of G-20 Global Leadership » (PDF)
Colin Bradford and Johannes Linn assess the effectiveness of the G-20 summits and how to move the G-20 forward as the global steering body.
International Financial Redesign: A Latin American Perspective » (PDF)
Mauricio Cárdenas calls for international financial regulatory reform in order to address Latin America’s need for greater financial development and to prevent future crises. The G-20 and Climate Change: Achieving Comparable Effort Through a Carbon Price Collar » (PDF)
Warwick McKibbin, Adele Morris and Peter Wilcoxen propose G-20 leaders to focus on the challenges associated with climate change negotiations leading up to the United Nations climate conference in December. From the Peterson Institute for International Economics: Peterson Perspectives: Interviews on Current issues  Peterson Perspectives: Interviews on Current Issues
Ahead of Pittsburgh, Little Progress on Financial Reform  Simon Johnson says the Obama administration is not doing much to fix the financial system, and the G-20 summit may do even less.
Before Pittsburgh, a US-China Trade Blowout Over Tires
 Nicholas R. Lardy, analyzing the origins of the dispute with China over tire imports, warns that the fight could imperil future US-China economic and political cooperation.
Toward a Global Financial Regulatory Regime
Morris Goldstein says that Treasury Secretary Geithner's proposals for regulatory reform are a step forward that could be endorsed in principle at the G-20 summit in Pittsburgh. See also Peterson Institute Update: Global Economic Prospects, Commentary on Pittsburgh G-20 Paper
Global Economic Prospects as of September 2009: Onward to Global Recovery [pdf]
Michael Mussa  The United States and the world economy have embarked on economic recoveries that will gather strength in the second half of 2009 and proceed fairly strongly through next year and into 2011. These recoveries may not be quite as vigorous as earlier postwar recoveries following deep recessions, but they will surpass almost all current forecasts on the upside and will once again illustrate that steep recoveries tend to follow deep recessions. While most economic forecasters expect a tepid recovery, and some fear a "double dip" in which economies fall back into recession at an early stage, Mussa expects "a V-shaped recovery" to be the most likely course. He forecasts that real GDP growth in the world will be 4.2 percent in 2010, spurred in part by greater than anticipated growth in developing countries and emerging markets. Real GDP growth in the United States will be 4 percent by the end of next year. The US unemployment rate in 2009 peaks at or a little below 10 percent but will fall below 9 percent by the end of 2010. China and India, which have been leading the global recovery, will register growth rates of 8.3 and 6.4 percent, respectively, in 2009 and 9 and 7.5 percent, respectively, in 2010. Mussa's forecast for 2009 is modestly above corresponding forecasts by the International Monetary Fund (IMF) but considerably higher than the IMF forecasts for 2010. Economic performance over the next 16 months will reveal whether Mussa's "conservatively optimistic" view is correct.
>> Read full paper [pdf]
Op-ed
How To Prevent an Unruly Rush
for the Exit
Adam S. Posen
  The G-20 is overlooking the more complex challenges that economic policy must confront as a result of the emergency measures undertaken since mid-2007. The exit strategy needs more international coordination in the form of: returning to a normal interest rate policy; shifting from discretionary fiscal stimulus to putting government budgets on sustainable paths; and withdrawing of banks' guarantees and state-ownership stakes. This type of international policy coordination is not only desirable but attainable, according to Adam Posen. He proposes that the G-20 leaders shed the notion that coordination gains are small, that the emphasis should be on discussion of policy measures and sequences, and that the measures agreed upon should consist of pragmatic steps. Working toward a pact on an exchange intervention standstill instead of a scheme for ongoing surveillance will ensure the G-20 gets through the exit from this crisis safely while providing the foundation for a more sound future regime.
>> Read full op-ed
Article
The Next Financial Crisis:
It's Coming—and We Just Made It Worse
Peter Boone and Simon Johnson  The United States has been in a bubble-bust-bailout cycle since the late 1920s. During the most recent crisis, Ben Bernanke saved the financial system in the short term while exacerbating the long-term pattern of bubble-bust-bailout. A proposal unveiled by Treasury Secretary Timothy Geithner to reduce the number of agencies carrying out regulation and giving new powers to the Fed is unlikely to work, according to Peter Boone and Simon Johnson, who cite the proposal's inability to alter banks' incentive to take excessive risks.
The authors propose a four-part solution to
the bubble-bust-bailout cycle that centers heavily on making bank owners more financially responsible for the risks they take. The first part of their solution is to sharply raise capital requirements at banks so shareholders have more at stake and feel that their money is truly at risk when a bank takes gambles. Second, the managers and boards of directors of financial institutions should be personally liable up to a reasonable sum when their companies fail—losing a portion of past salaries and bonuses while seeing their pensions reduced. Third, rules need to be put in place so that regulators and public servants are not financially conflicted. Finally, we need more assertive leadership at the Fed regarding broader system issues.
>> Read full article Op-ed
Transborder Migration: Licit and Illicit
Marcus Noland  While the effects of liberalized trade in goods have received much attention, research suggests that the gains from liberalized cross-border movements of labor would be much greater. But cross-border migration raises a number of economic and ethical issues, from individuals' right to seek a better situation for themselves and their families to the social externalities of increased migration both for sending and receiving countries. These issues are a source of growing controversy in countries around the globe, but the lack of a multilateral mechanism to address cross-border migration ensures that individual countries will continue to respond haphazardly to migration and its effects, while the number of migrants only grows.
>> Read full op-ed
See also from the Peterson Institute of International Economics: Pittsburgh G-20 Commentary America Cannot Resolve Global Imbalances on Its Own
C. Fred Bergsten and
Arvind Subramanian
Financial Times, August 19, 2009 The G-20: An Idea from India
Arvind Subramanian
Business Standard, August 26, 2009 Pittsburgh Priorities
Edwin M. Truman
RealTime Economic Issues Watch,
September 8, 2009 A Pat on the Back at Pittsburgh?
Michael Mussa
Peterson Perspectives Interview,
September 9, 2009 G-20 Summit in Pittsburgh, IMF Meeting: What to Expect?
Simon Johnson
RealTime Economic Issues Watch,
September 10, 2009 Making Capital Rules Work
Adam S. Posen
Welt am Sonntag, September 16, 2009 How To Prevent an Unruly Rush for the Exit
Adam S. Posen
Financial Times, September 17, 2009 Pressures on Obama at the G-20 in Pittsburgh
C. Fred Bergsten
Peterson Perspectives Interview,
September 21, 2009 G-20 Thinking: In the Medium Run We Are All Retired
Simon Johnson
RealTime Economic Issues Watch,
September 23, 2009 Copyright © Protected - All Rights Reserved M. Ulric Killion. September 16 by M. Ulric Killion. The China tires safeguard issue may still be pending final resolution. In Washington, on June 2, 2009, the ITC hearing commences. It is a case filed by the USW Union on April 20, 2009, which alleges that an increase in Chinese tire imports have cost 7,000 US jobs. In response, the USW wants the Obama Administration to more than halve the number of imports from 46 million units last year to 21 million. The USW also wants the Obama administration to employ section 421 of the Trade Act of 1974, which requires the ultimate approval or rejection of the president even after a ruling of the US International Trade Commission (M. Ulric Killion, ITC rules against China - finds tire import surge (dumping) in US, June 20, 2009, citing Alec Zhu, Sino-US trade ties face a tough tire test, China Daily, June 9, 2009). A decision by President Obama was due on or before September 17, 2009. On September 11, 2009, President Obama announced his decision, when affirming the earlier decision of the ITC, while also imposing additional duties on tire imports from China. According to the White House, “The new duty will take effect on September 26 and comes in addition to an existing 4 percent duty. It would fall to 30 percent in the second year and 25 percent in the third year” (M. Ulric Killion, Obama slaps duties on tire imports from China, Sept. 13, 2009). China believes that the measure by the US, which runs counter to relevant WTO rules, is a wrong practice abusing trade remedies,” the Chinese mission to the Geneva-based body said in a statement (M. Ulric Killion, China wants WTO talks on US tariffs, Sept. 15, 2009). China also requested a WTO panel to investigate and rule on the case. 
(China has termed the US move on tire imports as a serious act of trade protectionism; Photo/China Daily). In the interim, China also took steps toward imposing tariffs on American exports of automotive products and chicken meat; a move some characterize as “retaliation for President Obama’s decision late Friday to levy tariffs on tires from China” (M. Ulric Killion, China Moves to Retaliate Against U.S. Tire Tariff, Sept. 15, 2009). While “China quickly denounced the US move as a serious act of trade protectionism that violates WTO regulations” (China wants WTO talks on US tariffs), there are, of course, others such as some unions such as the USW, some US tire producers, some politicians and others that hail the decisions of both the ITC and Obama administration. For all of these reasons, the issue of China tire safeguards remains pending. Many anticipate that the present status of the issue and present US resolution may challenge future US trade relations, notwithstanding US credibility at the upcoming G20 meeting. Quoting a recent WTO news release (M. Ulric Killion, G20 governments refrain from extensive use of restrictive measures, but some slippage evident, 14 September 2009): G20 Governments have refrained from extensive use of restrictive trade and investment measures in recent months but have continued, in a limited way, to apply tariffs and non-tariff instruments that have hindered trade flows, the heads of the OECD, UNCTAD and the WTO indicated in a joint report to G-20 leaders meeting in Pittsburgh later this month. Secretary General Angel Gurria of OECD, WTO Director-General Pascal Lamy and UNCTAD Secretary General Supachai Panitchpakdi said trade rules and investment agreements have acted as a safety harness preventing the adoption of wide-scale protectionist policies. They welcomed the commitment by governments to continue open trade and investment policies while pointing out that world leaders, particularly those in the G-20, bear responsibility for ensuring that trade and international investment function as tools for economic recovery. The global crisis is not over, they said, and rising unemployment will undoubtedly spark further protectionist pressures in the years to come. “We welcome the G20 governments’ commitment to maintaining open trade and investment regimes and their ability to withstand domestic protectionist pressures. International rules for trade and investment agreements ... are a source of opportunity in times of economic growth and a restraining influence in times of difficulty. It is in this latter role that the rules are serving us particularly well right now,” they said. Tariffs, non-tariff measures, subsidies and burdensome administrative procedures regarding imports have been applied in recent months and these actions have acted as “sand in the gears of international trade that may retard the global recovery,” they said. “It is urgent that governments start planning a coordinated exit strategy that will eliminate these elements as soon as possible,” said the heads of the three organizations. _________________________________________________________________________________________ For readings regarding the China tires safeguard issue, the following articles are available at M. Ulric Killion’s space’s blog. China wants WTO talks on US tariffs, Sept. 15, 2009. Obama Must Resist the Anti-Trade Mobs, Sept. 15, 2009. China Moves to Retaliate Against U.S. Tire Tariff, Sept. 15, 2009. China files complaint to WTO over US tariffs, Sept. 14, 2009. Obama's Take on the Tires Tariffs: Enforcing Trade Agreements, Sept. 14, 2009. China - “Probe 'not revenge' for hefty tire tariff”, Sept. 14, 2009. China - “Unite against tire tariff hike, exporters urged”, Sept. 14, 2009. US tire tariff may cost 100,000 jobs in China: industry official, Sept. 13, 2009. China investigates US auto, chicken imports, Sept. 13, 2009. China may appeal tire tariff case to WTO, Sept. 13, 2009. Obama slaps duties on tire imports from China, Sept. 13, 2009. US slaps duties on $2.6b China steel pipe, Sept. 13, 2009. The ITC tire (tyre) decision and bridging divergent ways of economic life, Sept. 10, 2009. In Tire Tariff Case, Obama Faces First Chinese Trade Policy Test, Aug. 21, 2009. China sends envoy to Washington on tire case, Aug. 19, 2009. China - “Tariff on tire imports lacks fact, legal ground: official”, Aug. 13, 2009. U.S. distributors deny Chinese tires disrupted market, Aug. 10, 2009. Tariffs on Chinese tires to hurt US consumers: producers, Aug. 6, 2009. China: U.S. gov't should seriously consider tire protectionism, Aug. 5, 2009. US International Trade Commission – China Safeguard Tires Case – What’s Next?, July 26, 2009. ITC rules against China - finds tire import surge (dumping) in US, June 20, 2009. Copyright © Protected - All Rights Reserved M. Ulric Killion. September 10 by M. Ulric Killion. As observed by Xinhua news agency (Rational decision needed in settling China tire case, Sept. 3, 2009), “US President Barack Obama is due to decide in about two weeks whether or not to impose punitive duties on Chinese tire imports. Despite huge domestic pressure, the president is expected to make a rational decision to protect both US interests and overall China-US trade ties. The decision is due by September 17, with some trade protectionists insisting on imposing punitive duties of up to 55 percent on Chinese tyres to ‘save American jobs.’” 
Dealers negotiating beside a tire model at an auto part exhibition in Shanghai, May 21, 2008; Photo/Asianews photo]. The Approval/Rejection Dilemma An issue of paramount importance is that this is the first “special safeguard investigation” on Chinese products under the Obama administration (Xinhua, Sept. 3, 2009). As such, the US decision on this case will be perceived as a strong indicator of the US-government policies toward Sino-US relations, especially future trade relations. While Chinese authorities wisely couch the issue in terms of the greater issues of multilateral trade, free and fair trade, and non-protectionist trade policies, there are those in the United States urging approval of the ITC ruling, thereby presenting a dilemma for President Obama and his administration, notwithstanding bipartisan politics. Those groups urging approval comprise unions such as the United Steel Workers (USW), some US tire producers, some politicians and others. A dilemma for the Obama administration arises from the earlier decision of the International Trade Commission (ITC) that addressed the import of China-made tires. In Washington, on June 2, 2009, the ITC hearing commences. It is a case filed by the USW Union on April 20, 2009, which alleges that an increase in Chinese tire imports have cost 7,000 US jobs. In response, the USW wants the Obama Administration to more than halve the number of imports from 46 million units last year to 21 million. The USW also wants the Obama administration to employ section 421 of the Trade Act of 1974, which requires the ultimate approval or rejection of the president even after a ruling of the US International Trade Commission (M. Ulric Killion, ITC rules against China - finds tire import surge (dumping) in US, June 20, 2009, citing Alec Zhu, Sino-US trade ties face a tough tire test, China Daily, June 9, 2009). As for the USW’s Section 421 petition, which is a petition filed pursuant to the Trade Act, the ITC issued its now controversial ruling: “by a 4-2 vote that a surge of low-priced consumer tires from China is harming the domestic industry.” It is an import surge that the USW alleged has caused “major job losses and plant closures in the United States” (Killion, June 20, 2009). On or before September 17, 2009, as earlier mentioned, President Obama, or perhaps more accurately, the Obama Administration is expected to make a decision, pursuant to section 421 of the Trade Act, which either approves or rejects the ruling of the ITC. A problem for the Obama administration is a growing wedge of opinions, both within and without the jurisdiction and borders of the United States, supporting both approval and rejection of the ruling by the ITC. A difficulty only enhanced by the fact of a multitude of reasons by those seeking either approval or rejection. Nonetheless, it is strongly intimated, when gauged by the news media reports, that the issue of approval or rejection of the ITC’s ruling is polarizing along the lines of protectionism, that is, US protectionist policies. For instance, on the issue of approval or rejection of the ITC’s ruling, China appears, though many will disagree, to be promoting multilateralism, free trade, and removal of protectionist trade practices and barriers. According to Xinhua news agency (Sept. 3, 2009), “The case has become an opportunity for some politicians at the center of US partisan politics to make a show. However, the US government is strongly expected to take into account the long-term development of Sino-American trade relations in making its decision.” More notably, Xinhua writes: “If the punitive duties being called for by some politicians and trade protectionists are imposed, more than 10,000 Americans in the tire distribution and retail sectors may lose their jobs, along with about 100,000 Chinese manufacturing workers. In addition, US tire firms with investment in China will suffer. On these figures, punishing China's tire exporters will definitely lead to a lose-lose situation and requires strong opposition from both sides. Notably, accusations against Chinese tyres failed to win support from some American tire firms and unions. Some giant US tire manufacturers, including Cooper, have warned that mishandling the tire case may lead to further troubles.” In these respects, the official view from China appears to promote greater multilateralism in trade, genuine free and fair trade, and removal of protectionist barriers to trade. Ding Qingfen and Li Xing (Major trade test ahead for Obama with China tire ban) opined that following an acceptance of the ITC ruling, China Daily, Sept. 8, 2009) opined that following an acceptance of the ITC ruling by the Obama administration, “The high-level tariffs, which would effectively impose a ban, will keep Chinese tire imports off US roads, strip 100,000 local laborers of their jobs and potentially spark a series of special taxes by other nations and regions.” Ding and Li also opined that in response to an acceptance of the ruling that “China will likely take retaliatory measures against the US industries.” On the other hand, there is the view from the United States. As gauged by news media coverage, it is strongly suggested that the majority view is one of approval of the ITC’s decision. Thus, if the issue is, actually, reducible to simply protectionist versus non-protectionist trade policy, one suspects the majority of Americans, including union members and politicians, would opt for approval of the ITC’s decision. A case in point is a recent article appearing in the Washington Post, which emphasized the loss of American jobs and wage differentials between Chinese and American labor. (Peter Whoriskey, As Cheaper Chinese Tires Roll In, Obama Faces an Early Trade Test, Washington Post, Sept. 8, 2009). As Whoriskey writes: “ALBANY, Ga. -- At the vast Cooper Tire plant here, workers heard for years about their rivals in Chinese factories. In meetings, managers urged employees to run production lines faster and more efficiently to help the company keep up. Overseas laborers were toiling for as little as 20 cents an hour, they were told, and working harder. Even more ominously, while browsing the aisles of Kmart and Wal-Mart, Cooper employees could see that, sure enough, the Chinese tires were cheapest. ‘They would have these meetings and say we’re up against the Chinese,’ said Larry Burkes, 29, who worked at the plant, which rises on the city’s outskirts just beyond a mobile-home park. ‘We’d hear it all the time: ‘They work for less.’ There was pressure.’ Now the plant that employed 2,100 people in this small south Georgia city is being shut down, and the troubles afflicting the U.S. tire industry are at the core of what many consider to be one of President Obama's first major decisions on trade policy.” There is, of course, also the issue of US tire production. The Washington Post produced the following graphics demonstrating this shift in US tire production (Graphic: A Shift in Tire Production, Washington Post, Sept. 8, 2009). According to the Washington Post, “From 2004 to last year, the number of Chinese tires imported to the U.S. more than tripled.” 
In other words, although the USW helped Obama to win the presidency, according to Whoriskey, there are other political forces at work; more particularly, he stressed the plight of non-union labor. It is also reasonable to suggest that Whoriskey’s article is typical of the US news media coverage, and the emphasis on the loss of US jobs, China-US wage differentials, factory closings, etc. However, although these concerns are genuine and deserve consideration by the Obama Administration, once the issues are so couched and prioritized, other key issues such as multilateralism, free and fair trade, Sino-US relations, etc, seemingly become loss in the shuffle or politics of the moment. This also serves as a reminder of earlier comments made by Obama’s US trade representative, Ron Kirk. As Jim Abrams earlier reported: Kirk, though supporting international trade in a broad sense, “has also made comments suggesting that protectionism might not be so bad after all” (Killion, June 20, 2009, citing Jim Abrams, Former Dallas Mayor Ron Kirk confirmed as US trade representative, Chicago Tribune/AP, March 18, 2009). Divergent Ways of Economic Life Assuming such polarization, there is another issue that the news media coverage seems to neglect. It is not so much an issue of simply whether approval or rejection is contingent on adopting or rejecting protectionist trade policies, or even an issue of they (China) versus us (the United States). This is because another underlying issue is more plainly stated as an issue of their way versus our way. The idea of their way versus our way intends to reflect conflicting ways of life; more particularly, divergent ways of economic life between the two countries. As recently observed by the former US trade representative and now World Bank Group President Robert B. Zoellick, “China has steered a steady course through the stormy seas of the economic crisis.” According to Zoellick, this is because, “Through its massive stimulus and strong lending program, China has contributed to the early signs of a global recovery by keeping its growth rate up. With growth in China now projected at close to 8 percent for 2009 as a whole, and signs of stabilization in many other economies in Asia and around the world, the chances of a truly global recovery have increased measurably” (M. Ulric Killion, World Bank - China Playing Important Role in Steadying World Economy, Zoellick Says / 佐利克说中国在稳定世界经济中起着重要作用, Sept. 9, 2009). When relating the chances of a truly global recovery to positive contributions made by China, Zoellick reminds us of the critical importance of positive Sino-US trade relations. It is a growing economic interdependence deserving critical consideration by the Obama administration, when addressing the issue of approval or rejection of the ITC’s decision addressing the import of China-made tires. China, especially the Chinese way of economic life, is possibly proving to be a model for success as it weathers the post-subprime global crisis (or financial crisis) better than most, just as it did during the earlier East Asian financial crisis (1997-98). In this respect, China’s way of economic life serves as a model to emulate, rather than challenge by US protectionist trade policies and barriers. Indeed, there are lessons to learn from China. The current success or rebound from the financial crisis is partially due to the Chinese way of economic life. In the context of China, their way of economic life, actually, minimized the fallout from the US subprime mortgage crisis, notwithstanding China’s economic policies. For instance, this is because the Chinese way of economic life generally promoted higher saving rates (about 40% of net income), greater numbers of home owners (about 60%), and other measures of frugality in general; all of which are in stark contrast to the numbers in the United States. For these reasons, the Chinese way of economic life might deserve emulation. Moreover, in the United States, in the wake of the financial crisis America consumers are now demonstrating an increasing degree of frugality, in the American way of economic life. In addition, the financial crisis does not have its origins in China, nor did China’s export-based economy cause the financial crisis. According to Deng and Li (China Daily, Sept. 8, 2009), “China's GDP grew by 6.1 and 7.9 percent during the first and second quarter. While the US unemployment rate remains high and has been climbing since last April, the US expects to gain from China's high economic growth.” Deng and Li, more importantly, explained that the “Chinese economy has rebounded significantly without having to rely so much on exports.” The financial crisis (or US subprime mortgage crisis) has its origins partially in the American way of economic life. However, it is the Chinese way of economic life that partially contributes to an early rebound from the financial crisis, while also allowing China, as Zoellick explained, to increase the chances of a truly global recovery. It is also for these reasons that the Obama administration must proceed with caution on approving or rejecting the ITC’s ruling on the import of Chinese tires. An approval of the ITC ruling challenges the success of China’s way of economic life, misplaces the blame for the US subprime mortgage crisis, challenges the chances of a truly global recovery, denies the reality of the American way of economic life (i.e., a model of a consumer driven economy), and also, inevitably, challenges the goals and aspirations embodied in the world multilateral trade system (i.e., multilateralism, free and fair trade, reduction in trade barriers, etc). Conversely, a rejection of the ITC’s ruling enhances the chances of a truly global recovery, by promoting multilateralism in trade, free and fair trade, and a reduction in trade barriers (i.e., protectionist trade policies and barriers). The answer to the woes of an American way of economic life lies neither in protectionist trade policies and barriers, nor in misplacing the blame for a US subprime mortgage crisis on the Chinese way of economic life. As earlier mentioned, the Obama administration must proceed cautiously when approving or rejecting the ITC ruling. This is because of the larger or global implications that associate with an approval of the ITC decision, including the goals and aspirations embodied in the world multilateral trade system. As Mohamed Sid Ahmed succinctly observed, “The United States cannot move out of history and be at the same time its most authentic contemporary expression.” (Mohamed Sid Ahmed, The Kagan Thesis (3) - Beyond Fukuyama and Huntington?, Al-Ahram Weekly On-Line No. 602, Sept. 11, 2002). ______________________________________________________________________________________ See also M. Ulric Killion, In Tire Tariff Case, Obama Faces First Chinese Trade Policy Test, Aug. 21, 2009. See also M. Ulric Killion, China sends envoy to Washington on tire case, Aug. 19, 2009. See also M. Ulric Killion, China - “Tariff on tire imports lacks fact, legal ground: official”, Aug. 13, 2009. See also M. Ulric Killion, U.S. distributors deny Chinese tires disrupted market, Aug. 10, 2009. See also M. Ulric Killion, Tariffs on Chinese tires to hurt US consumers: producers, Aug. 6, 2009. See also M. Ulric Killion, China: U.S. gov't should seriously consider tire protectionism, Aug. 5, 2009. See also M. Ulric Killion, US International Trade Commission – China Safeguard Tires Case – What’s Next?, July 26, 2009. See also M. Ulric Killion, ITC rules against China - finds tire import surge (dumping) in US, June 20, 2009. Copyright © Protected - All Rights Reserved M. Ulric Killion. September 06 by M. Ulric Killion. On Friday, Aug. 4, 2009, in reference to ongoing dispute between the United States and the European Union (EU), the World Trade Organization (WTO) rendered a decision, or more accurately, a preliminary report setting limits on government support for civil aircraft makers. The dispute, more particularly, addresses the dispute between Boeing (in the United States) and Airbus (in the European Union). However, there are economists and industry analysts that now perceive the earlier relevancy of this dispute as having waned over the past years. According to Nicola Clark (New York Times, Five-Year Dispute on Aircraft Claims Loses Its Urgency, Sept. 3, 2009), “But it is coming, economists and industry analysts say, too late to make much difference. . . While the findings may be a watershed in a case that, by many measures, is the largest and most expensive to be heard by the global trade body, analysts say the dispute’s relevance has faded as new airplanes are increasingly being designed and built in several countries. And even if the W.T.O. forcefully declares Europe’s support for Airbus illegal, the process of resolving both claims would take many more years before any actions could be taken. Some analysts also say it would be hypocritical to provoke a trade war over subsidies for airplanes after hundreds of billions of taxpayer dollars and euros were given to failing banks and automakers on both sides of the Atlantic in the last year. With Airbus and Boeing globalizing production even more — and other countries like China and Japan expanding their domestic industries — several analysts say the Americans and Europeans would be better off seeking a negotiated settlement. ‘Lots of governments are interested in having a piece of the civil aircraft construction business, so much of the aircraft produced today is not manufactured in the country with the nameplate,’ said Gary Clyde Hufbauer, a trade specialist at the Peterson Institute for International Economics. ‘This introduces a whole new level of complexity’” (Clark, 2009).  (An Airbus A380 from Singapore Airlines; Photo/Mike Clarke/Agence France-Presse — Getty Images).
Moreover, Clark (New York Times, 2009) also observed that companies such as Boeing and Airbus by virtue of increasing industry competition now routinely outsource a larger share of their manufacturing to international partners, while also increasingly relying on suppliers from other countries. On Sept. 5, 2009, the WTO did issue its ruling that the EU provided illegal subsidies to Airbus for its aircraft. From the perspective of the United States and Boeing, and according to House Democrat (Representative/State of Washington) Norm Dicks, the ruling confirms the 2004 U.S. complaint that “all Airbus aircraft have received illegal subsidies and that these have caused material harm to Boeing.” As Agencies (WTO rules for US in case over Airbus subsidies, Sept. 5, 2009) reported, “The WTO handed its interim ruling to the US and European Union, but didn't reveal the results partly because of the sensitive company information contained in it. Both Washington and Brussels confirmed they received the ruling.” Moreover, given that the WTO ruling is an interim decision, the EU can appeal the ruling. An appeal by the EU means that Boeing and Airbus will have to wait until next year for a decision, which prompts many analysts to suggest that the ongoing disputes will more likely eventually resolved by direct negotiations between the two companies, rather than a final decision by the WTO. In the interim, following the issuance of the WTO ruling or preliminary report finding “that Airbus received illegal subsidies for the $13 billion A380 superjumbo jet and several other airplanes, hurting Boeing in the battle for sales,” both Boeing and Airbus, actually, declared a victory. As earlier stated, for U.S. Representative Dicks, it is a “broad ruling in Boeing’s favor.” Nicola Clark and Christopher Drew (W.T.O. Says Aid to Airbus for A380 Was Illegal, New York Times, Sept. 4, 2009) reported, “[Norm Dicks] said that the W.T.O. found that a substantial amount of the low-cost loan money, known as launch aid, that European governments provided to develop the A380 jet was illegal and should be repaid by Airbus. Mr. Dicks said a panel of experts from the trade organization found that other series of Airbus planes — the A300, A310, A320, A330 and A340 — also benefited from similar improper subsidies.” Then there is the EU’s perspective of a victory; as “The Europeans stressed, however, that the W.T.O. had rejected many of the specific arguments that were in the complaint” (Clark and Drew, 2009). Consequently, the WTO’s preliminary ruling is more or less a victory for Chicago-based Boeing. This is because the Airbus company (whose parent company European Aeronautic Defense and Space Company N.V. is partnered with Northrop Grumman Corp.), which also perceives the preliminary ruling as a victory, can appeal the ruling, and will probably do so. A consideration for both companies is an appeal process that will extend the finality of this dispute for yet another year. In this respect, economists and industry analysts may rightly perceive this dispute as eventually subject to finalization only by direct negotiation between the two companies. The history of the dispute between Boeing and Airbus dates back to 2004. The issue of government support for civil aircraft makers, such as Boeing and Airbus, still enjoys modern relevance. This is because the issue uniquely focuses on the discussion of unilateralist trade policies by developed countries and economies. In 2004, the WTO trade regime witnesses an increase in protectionist trade activity by both developed and developing countries and economies. For instance, during this earlier period, developing countries such as China, South Korea, Brazil, Mexico and others were increasingly employing unilateralist approaches to trade. In addition, during the same period, there were developed countries such as Australia, Canada, the EU, and even the United States also employing protectionist trade policy (internal citations omitted) (Ulric Killion, Modern Chinese Journey to the West, Chapter 9, (2006)). In particular, in terms of the United States, Section 301 of the Trade Act of 1974 has always presented a major problem in fostering multilateralism. This is mostly due to the mandatory retaliation action provision of the Trade Act that, actually, lends to, if not promotes, unilateralism in trade. There is also the then and continuing relevancy of governments subsiding aircraft producers such as Boeing and Airbus. This is because the case of the EU subsidizing the manufacture of Airbus aircraft would present the largest subsidy case in WTO history. The United States earlier argues that EU members have subsidized Airbus through financing at sub-market rates, assumption/forgiveness of debts, equity infusion, and/or other grants. All of which, from the perspective of the United States, violated the WTO Agreement on Subsidies and Countervailing Measures (SCM). As a result, as early as 2005, the United States’ request for a WTO panel was partly triggered by the EU’s commitment of $1.7 billon in launch aid for Airbus (Killion, 2006). In the end, the dispute between Boeing and Airbus also appears hardly likely to resolve the greater issues of multilateralism versus unilateralism in trade, free and fair trade versus protectionism, and the issues of government subsides in trade and violations of the WTO Agreement on Subsidies and Countervailing Measures (SCM). This is a long contested trade dispute that problematically now presents both opponents, or the two companies, as perceiving a reading of the preliminary ruling as a victory. As such, the WTO’s ruling is far from resolving the greater issues surrounding the origins of this 2004 dispute. Copyright © Protected - All Rights Reserved M. Ulric Killion. September 01 by M. Ulric Killion. In early June of 2009, General Motors Corp. (GM) announced the confirmation and details of its proposed transaction, or perhaps more accurately, the memorandum of understanding (MOU) for the sale of the off-road Hummer brand, along with a senior management and operational team (Shenzhen Evening News, 悍马被卖了，买家是中国民营企业, 2009年06月03日, Hummer sold to a Chinese company). GM announced that the buyer will be a privately owned Mainland China company, which is Sichuan Tengzhong Heavy Industrial Machinery Co., Ltd (Tengzhong, 腾中重工) (Shenzhen Wan Biao, June 3, 2009).  (Shenzhen Evening News [Shenzhen Wan Biao], June 3, 2009, Photo/Danwei.org).
Under the terms of the proposed agreement or MOU, Tengzhong will assume existing dealer agreements that relate to Hummer’s dealership network. Tengzhong will also execute a long term contract assembly and key component and material supply agreement with GM. In addition, GM, though the final details of the agreement are still pending, also earlier announced that it anticipates that the agreement will help to secure more than 3,000 US job. As for Sichuan based Tengzhong, according to its CEO, Yang Yi, “The HUMMER brand is synonymous with adventure, freedom and exhilaration, and we plan to continue that heritage by investing in the business, allowing HUMMER to innovate and grow in exciting new ways under the leadership and continuity of its current management team.” Yang Yi further announced, “We will be investing in the HUMMER brand and its research and development capabilities, which will allow HUMMER to better meet demand for new products such as more fuel-efficient vehicles in the U.S.” Hummer, pursuant to earlier terms, though still pending finalization, will continue to maintain its headquarters and operations in the United States, while also continuing under the management of its present leadership team. The Hummer management team intends to expand Hummer’s dealer network worldwide, including a new market in China.  (Photo/GM Hummer.com).
The parties to the pending agreement intended to close the deal by the third quarter of 2009. However, Tengzhong is still waiting for approval of the terms of the agreement from China’s government. As of August 2009, China government officials, who refused to be named, when commenting on recent media reports of approval by China’s Ministry of Commerce (MOC) announced that the government has not yet given approval for the transaction or MOU (Xinhua, Chinese company’s purchase of Hummer not yet approved: Officials, Aug. 24, 2009). As Xinhua (2009) reported, “Sichuan Tengzhong did not say in its application to the National Development and Reform Commission that it would produce Hummer in China, or acquire Hummer's assets or stake in parent company General Motors (GM). An MOC official also denied media reports the ministry had given a green light to the deal, saying Tengzhong had only said it would purchase the Hummer brand in its application. The ministry has asked Tengzhong to make clear whether it intended to buy the Hummer's patent or its technology.” Although these privately owned companies (GM and Tengzhong) mutually perceive benefits (i.e., profit, profit maximization, growth potential, employment opportunities, etc.) attributable to finalization of the terms of the agreement or MOU, the concerns of China’s government (i.e., production in China, Tengzhong acquiring assets of parent-GM, Tengzhong acquiring Hummer patent/technology) may, ultimately, constitute deal breakers. As for the concerns of the US government, there are, of course, the paramount concerns of the survival of GM following its July 10, 2009 emergence from a Chapter 11 bankruptcy reorganization, and also GM’s plan to make an initial public stock offering (IPO), which will occur in 2010 (John D. Stoll and David McLaughlin, General Motors Aims for IPO Next Year, Wall Street Journal, July 2, 2009), notwithstanding the potential loss of more jobs in America. Moreover, one reasonably suspects that there are parties on both sides of the great transpacific, and within and without the governments of the United States and China, who either approve or disapprove of the finalization of the proposed transaction between GM and Tengzhong. For these reasons, the pending transaction is interesting, while also, eventually, presenting what will be an interesting episode in free and fair trade confronting protectionist trade policies and barriers on both side of the transpacific (i.e., the legislative-enacted Buy American variety, and the Buy China requirement as an inclusion in its domestic stimulus package, see cf. M. Ulric Killion, The Chinese trade regime: will the prey become hunter or vice versa?, Aug. 8, 2009). Copyright © Protected - All Rights Reserved M. Ulric Killion. August 23 Author(s): M. Ulric Killion
Shanghai International Studies University
mulrickillion@netscape.net
Journal: Economics, Management, and Financial Markets
Volume: 4 (2) • 2009
Year: 2009
Full text: http://www.addletonacademicpublishers.com
Publisher: Addleton Academic Publishers Abstract. This paper first presents a brief history or survey of some of the earlier problems that associate with China’s banking and financial institutions. The paper then addresses specific problems, in the context of the rules, procedures, and practices of the banking and finance sector, which widely range from non-performing loans, to China’s money market and interbank lending business. These problems also directly associate with the liberalization of the banking and finance sector of the economy, and the requirements of both the WTO rules and China’s WTO Protocol on accession. The paper also briefly explores the US sub-prime mortgage crisis and its contagion effect throughout the world, including the Asian region. In the context of China and the subprime crisis, the paper summarizes some of the problems that associate with China banking and financial institutions, by focusing on the policy implications of the history of banking and finance in China, and what this means in terms of both WTO compliance and greater liberalization of banking and financial institutions, especially pursuant to the WTO GATS, as service industries. All of this, eventually, allows for the presentation of certain conclusions concerning China banking and finance in the new era of a global subprime crisis. (pp. 79–90) JEL Classification: F13, G01, G10 "POST-SUBPRIME CRISIS: CHINA BANKING AND GATS LIBERALIZATION " is abstracted in: -
Academic Papers Database -
Contemporary Research Index -
Current Index to Scholarly Journals -
Digital Journals Database -
Directory of Academic Resources -
Elite Scientific Journals Archive -
Recent Science Index -
Scholarly Journals Index -
Scientific Publications Index -
Scientific Resources Database © Copyright 2008-2009 Contemporary Science Association All Rights Reserved. Contemporary Science Association. August 20 by M. Ulric Killion. In the news media circuit, the month of August witnessed a great deal of attention directed to China and its economic statistics. For instance, according to the China Economics Blog, Where Chinaeconomicsblog leads the FT is sure to follow (Posted by ChinaEconomist on Aug. 5, 2009): -
“Of course the fact that the FT is covering the ‘GDP numbers riddle’ has nothing to do with Chinaeconomicsblog's coverage but it is good to see the FT picking it up nonetheless.
China’s growth figures fail to add up [FT] -
All but seven of the regions reported GDP growth rates above the bureau’s first-half figure of 7.1 per cent. At the start of the year, Beijing set 8 per cent as China’s growth target for the year.
Hmmmm.
However, this is the first time I have seen poetry as the first line of defence. -
The criticism has prompted the NBS to launch a campaign last week, entitled ‘Statistical Feelings: We have walked together – Celebrating the 60th anniversary of the founding of New China,’ to boost confidence among statisticians. -
The campaign has already produced works such as: ‘I’m proud to be a brick in the statistical building of the republic.’ In another poem, a contributor writes: ‘I can rearrange the stars in the sky because I have statistics.’”  (People's Republic of China State Statistical Bureau / 中华人民共和国国家统计局).
There is the earlier Aug. 4, 2009 blog at China Economics blog, "Chinese riddles" - Chinese numbers questioned yet again, which also addresses the recent controversy concerning China statistics. The Aug. 4, 2009 blog reads: -
“This time Radio Free Asia takes a skeptical view of China's recent GDP numbers. This skepticism is more than justified. Does the old adage from school "you are only cheating yourself" apply to the most populated country on earth? -
Let us imagine that the numbers are wrong. What harm can it do? It might artificially inflate confidence that may in turn cause a virtuous circle of growth and prosperity? Can it be that easy or is it simply storing up a whole lot of trouble for later? -
I have posted this article in full as it makes for important reading. This is an issue I have posted about on this blog on numerous occasions. The "oil use" issue is important as these numbers are harder to fake. Can oil use fall and output rise by so much? previous correlations suggest not. Can 100,000 statisticians be wrong? This number of statisticians might even help the UK get its numbers right.” As for the Financial Times’ coverage of the issue, “The Financial Times reports that economic statistics about regional economic growth aren’t tallying with Beijing’s numbers: The article goes on to describe a campaign launched by the National Bureau of Statistics in response: -
The criticism has prompted the NBS to launch a campaign last week, entitled ‘Statistical Feelings: We have walked together – Celebrating the 60th anniversary of the founding of New China,’ to boost confidence among statisticians. -
The campaign has already produced works such as: ‘I’m proud to be a brick in the statistical building of the republic.’ In another poem, a contributor writes: ‘I can rearrange the stars in the sky because I have statistics’” (China Digital Times, China’s Growth Figures Fail to Add Up (Updated), Aug. 6, 2009). The earlier mentioned Aug. 4 blog (China Economics Blog) rightly describes the issue of the accuracy and reliability of statistical reports from China as an old subject that occasionally resurfaces. However, the premise of the Aug. 4 blog (i.e., “What harm can it do?”) is challengeable. This is because the "GDP numbers riddle" presents an important issue for several and obvious reasons. For instance, “Problematic are past reports of economic growth rates because they routinely contain embellished or reportedly higher rates of economic growth than real rates, by reflecting higher reported growth rates of 9 percent or more. According to Li Deshui, commissioner of the National Bureau of Statistics (NBS, guojia tongjiju), China’s economy grew at an annual average growth rate of 9.6 percent from 1979 to 2004, at 10 percent in 2003, at 10.1 percent in 2004, and then at 9.9 percent in 2005. Li reported that for 2005 the GDP was 18.23 trillion yuan ($2.26 trillion), reflecting value-added components of several industries. Li also reported that primary industry reached 2.27 trillion yuan (5.2 percent increase), secondary industry was 8.62 trillion yuan (11.4 percent increase) and tertiary industry was 7.34 trillion yuan (9.6 percent increase). Although challengeable on several grounds - theoretical and practical - Li also announced economic performance in 2005, ‘boosted the income per head of China’s 1.3 billion citizens to $1,700, making the country richer than Morocco.’ Further, Li adds, ‘The data also means China, with output of 18.2 trillion yuan ($2.3 trillion), has overtaken France to become the world’s fifth-largest economy and might also have leapfrogged fourth-placed Britain, depending on growth rates and currency changes in 2005.’ In 2006, China’s GDP reportedly reaches $2.6847 trillion and per capita GDP surpasses $2000 for the first time, and many predict that by 2020 per capital GDP will reach $3000” (internal citations omitted) (Ulric Killion, Modern Chinese Rules of Order (2007), Chapter 8). “However, an IMF study observed that, in the long term, it is consumption rather than investment or even GDP serving as a better measure of economic welfare. A recent 2006 Organisation for Economic Co-operation and Development (OECD) study also found that within a national account framework, there are better measures of economic resources than GDP per capital, such as national product and net income. In terms of China, the earlier mentioned IMF study also observed the difficulty of operating in an environment of institutional deficiencies, which includes a weak legal framework, poor governance and economic data of dubious quality. A January 2006 article (Shenzhen Daily) reads, ‘Economists agreed that China had the wind in its sails.’ However, as early as 2003, Li Deshui acknowledged for the first time that China’s economic estimates were flawed, and its research methods ‘did not always reflect the real situation,’ which necessitated that after about twenty years the NBS had to switch from the Soviet accounting system, and not standard international practices of readjusting quarterly and annual GDP growth estimates, to Western accounting standards. In terms of the reliability of China’s statistics published by the NBS, one hopes that the “wind in its sails” is not from the “wind of falsification and embellishment” (jiabao fukuafeng)” (internal citations omitted) (Killion, 2007). Copyright © Protected - All Rights Reserved M. Ulric Killion. August 13 by M. Ulric Killion Pakistani leaders have filed treason charges against Pakistan’s former leader Pervez Musharraf. The treason charges relate to his detention of about sixty (60) members of the judiciary or judges of the Supreme Court. The illegal detention of these judges occurred during Musharraf’s 2007-imposition of emergency rule. The pending charges have the potential of brewing an international crisis, as the government of Britain lobbies Pakistani leaders to spare Musharraf from the charges of treason. 
(Photo: Julian Simmonds). As the news sources are generally reporting, [Xinhua, Musharraf booked for detaining judges: police, Aug. 12, 2009], - ISLAMABAD: Police in the Pakistani capital Tuesday registered a case against former President Pervez Musharraf for illegally detaining top judges during 2007 emergency rule a day after a court called for registration of the case, police said. Up to 60 judges including chief justice Iftikhar Muhammad Chaudhry, were sacked and put under house arrest when they refused to show loyalty to Musharraf. Musharraf was charged under various sections which carry at least three-year jail term, said Liaquat Niazi, Deputy Superintendent of Police at Secretariat Police Station, where the case was registered. Niazi said that all aspects will be reviewed during the investigation as to which police officers and officials in Islamabad followed instructions from the former president. A lawyer Aslam Iqbal Ghuman had filed a petition in the district court Islamabad, requesting the judge to order the police to register case against the former military president. Ghuman told reporters that he will also name more people to be booked in the case when he will record his statement with the police. The petitioner said that the former President had put under house arrest the Chief Justice Iftikhar Muhammad Chuadhry and around 60 judges of highest judiciary and their families when he imposed emergency rule on November 3, 2007. He argued that President Asif Ali Zardari restored the judges on their November 2, 2007 positions and said that Musharraf's action was not only illegal but also an insult to the judiciary. The judges had lost jobs after they refused to take oath under the Provisional Constitutional Order (PCO) after Musharraf suspended the country's Constitution. Musharraf, currently in London, resigned in August 2008 to avoid impeachment by the parliament. On July 31, Supreme Court ruled that former president Pervez Musharraf's decision to impose emergency rule and dismiss dozens of senior judges was unconstitutional. A 14-member Supreme Court bench headed by Chief Justice Iftikhar Muhammad Chaudhry had summoned Musharraf to appear in person or through a lawyer to explain his position, but the ex-president ignored the notice. Opposition leader and former Prime Minister Nawaz Sharif demands of the government to put Musharraf on trial for suspending constitution (Xinhua, 2009). In the interim, and as earlier mentioned, the government of Britain is lobbying Pakistani leaders, more particularly the Pakistan Muslim League, to spare the former leader Pervez Musharraf from treason charges. According to senior opposition figures, the charges of treason are punishable by the death penalty (Dean Nelson in New Delhi and Javed Siddiq in Islamabad, Telegraph.co.uk, Aug. 12, 2009). As for the efforts being made by Britain, “Sir Mark Lyall Grant, political director of the Foreign Office and a former High Commissioner in Islamabad, was reported to have visited the former premier Nawaz Sharif and urged him not to press for Mr. Musharraf to be extradited to Pakistan to face trial over his imposition of emergency rule in November 2007” (Nelson and Siddiq, 2009). However, “British sources denied Sir Mark had intervened on behalf of Mr. Musharraf, who now lives in London, but stressed the need to avoid any ‘distraction’ from creating regional stability. Despite Britain's intervention, Mr. Sharif [the leader of the Pakistan Muslim League] appears determined to bring Mr. Musharraf back from the UK, where he is staying under Pakistani government protection, to face a trial for treason under Article 6 of its constitution. If convicted he would face the death penalty. Pakistan's Chief Justice, Muhammad Iftikhar Chaudhry, has already ruled that Mr. Musharraf broke the constitution when he imposed emergency rule and sacked seven supreme court judges in November 2007. A case has been registered against him for holding these judges under house arrest, for which he could face three years in jail. But Mr. Sharif believes he must also face treason charges to discourage military chiefs from seizing power in the future. ‘We should go on with it. Something must be done if we are to prevent another military takeover,’ said an aide” (Nelson and Siddiq, 2009). For the moment, Britain stands alone, while also having to deal with the consequence of Musharraf, after his 2008 resignation, currently residing in Britain. However, Britain’s plea for Pakistan to spare Musharraf, which is supposedly in the greater interest of regional stability, may eventually garner support from other countries. This is because the substance of Britain’s plea that Pakistan spares Musharraf in the interest of regional stability is, actually, couched in the language of Pakistan not becoming distracted from its progress in pursuing al-Qaeda and Taliban fighters. Growing international support for Britain’s call to spare Musharraf from treason charges, as so couched, may well serve to challenge the reticence of Pakistani leaders, or perhaps more accurately, the reticence of former premier Nawaz Sharif and the Pakistan Muslim League. Copyright © Protected - All Rights Reserved M. Ulric Killion. August 08 by M. Ulric Killion. Borrowing from a page at the website of the International Association of Machinists and Aerospace Workers (IAM), which addresses common complaints about trade with China, “Unfair trade practices by the People’s Republic of China continue to plague American workers. The trade deficit hit a record $232 billion last year and manufacturing jobs continue to diminish as companies such as Wal-Mart look to China for cheap labor.” 
The IAM further characterizes the problem with China trade as, “The United States continues to be flooded with a wave of imports from China. Clothes, toys, refrigerators, air conditioners – the list goes on and on. U.S. corporations such as Wal-Mart are jumping at the opportunity to import products from a country where workers are forced to work ungodly hours for a mere fraction of what American workers earn. Meanwhile, the Chinese government continues to drastically undervalue their currency, making American products more expensive in China and Chinese products cheaper here. The result is the continued loss of manufacturing jobs and a record trade deficit that hit $232 billion last year.” In the United States and other (both developed and developing) countries and economies, the aforesaid statements of the IAM are typical of the complaints made about trade with China. For this reason, it should hardly come as a surprise that China enjoys the status of being the trade regime that is the most frequent subject of new World Trade Organization (WTO) investigations (WTO, 2009). As the China Ministry of Commerce observed, “China can expect to be a major target of rising trade protectionism - particularly from the United States and India - as the world struggles to recover from the global financial crisis, the Ministry of Commerce (MOFCOM) said Thursday. The crisis has pushed trade protectionist cases to a historical high” (Ding, 2009). Sino-US Trade The year of 2009, however, may well represent a pivotal year for China as a Member of the WTO. As of this writing, China has filed its first complaint against the European Union (EU) with the WTO, in relation to its complaint against the EU’s anti-dumping duties on China-made screws and bolts, and there is also its filing of a challenge to a US ban on the imports of Chinese poultry. China’s participatory efforts in addressing its trade disputes within the realm of the WTO and its Dispute Settlement Body (DSB) is a good or bad consequence, mostly dependent on who or what trade regime is the alleged wrongdoer, or even, in the future, who or what trade regime may find themselves at the other end of the AD/CVD variety of trade measures. A good consequence owing to China’s increasing use of the WTO trade regime, especially its DSB, is that it lends to the processes of juridification, which arguably associate with the increasing utilization of international trade laws or the WTO rules—substantive and procedural—governing the world multilateral trade system. From the perspective of those countries or trade regimes witnessing China increasingly employing the WTO regime in resolving trade disputes, other countries or trade regimes may perceive this as a bad consequence. In this respect, the United States should proceed with greater caution on issues of Sino-US trade, lest it may find itself in this category of those countries or trade regimes. For instance, when the United States filed a complaint with the WTO over Chinese restrictions on the export of key industrial raw materials, such as coke, bauxite, fluorspar, magnesium, silicon metal, yellow phosphorus and zinc, China responds by filing its complaint challenging a US ban on the imports of Chinese poultry. In another example, the United States introduced its new variety of protectionist-trade policy, which is the legislative-enacted Buy American variety. In July 2009, China, perhaps as a response or as even following the example set by the United States, introduced its Buy China variety of protectionism (i.e., the Buy China requirement), as an inclusion in its domestic stimulus package. In June 2009, there is also the controversial decision of the International Trade Commission (ITC). The ITC ruled “by a 4-2 vote that a surge of low-priced consumer tires from China is harming the domestic industry,” an import surge they alleged has caused “major job losses and plant closures in the United States” (Killion, June 20, 2009). The ITC considered the issue of remedy, and send its report to the US President and the US Trade Representative by July 9. The United Steelworkers (USW) Union, who filed its complaint with the ITC on April 20, 2009, is now urging the Obama administration to employ section 421 of the Trade Law, which requires the ultimate approval or rejection of the president even after a ruling of the US International Trade Commission. In this respect, the USW wants the Obama Administration to approve the ruling of the ITC, thereby, from their perspective, they want the Obama administration to more than halve the number of imports from 46 million units last year to 21 million. The USW perceives these China-tires imports as having cost about 7,000 US jobs. All of this presents a dilemma for the Obama administration, however. "This is the administration's first real test on trade policy . . . [and] they're either going to implement new trade barriers or not," as Chad Brown explained, "this is the first decision that has been in the administration's lap that they have direct responsibility over" (Shin, 2009). “In his short tenure, Obama has sent conflicting signals on trade. He has warned against policies that ‘send a protectionist message’ and criticized trade barriers, saying they ‘hurt us all in the end.’ But the administration has also failed to stop policies that major trading partners have decried as protectionist. It has largely ignored complaints by Canada, its largest trading partner, over the Buy American policy. And it has failed to resolve a dispute with Mexico over Mexican truck access to U.S. highways” (Shin, 2009). Moreover, the Obama administration has been sending other conflicting signals on Sino-US trade. For instance, there is Secretary of State Hillary Clinton encouraging China to continue to buy US debt, while US Treasury secretary Timothy Geithner earlier accused China of currency manipulation, and the appointment of Ron Kirk as the new US trade representative, who announced that he did not come to the job with deal fever. Kirk, though supporting international trade in a broad sense, "has also made comments suggesting that protectionism might not be so bad after all" (Abrams, 2009). The problems of US protectionist policy may become more of a reality with the passage of time for proponents of Buy American provisions; a path to protectionism that may ultimately serve as a legacy of the Obama presidency. It is a crisis in Sino-US trade relations that seems to present a paradox for both the Obama administration and the US congress. As the Wall Street Journal (2009) observed, when addressing the first case initiated under the Obama administration, which involves Chinese restrictions on the export of key industrial raw materials, [US Trade Representative Kirk] "said it does seem somewhat 'counterintuitive' that the Obama administration's first WTO complaint involves allegations that China isn't exporting enough" (WSJ, 2009). China and WTO Investigations In addition, what other countries or trade regimes, especially Western countries or economies, should consider is the record of trade measures taken against China. This also serves as reminder of the recent WTO data or statistics on anti-dumping investigations. The data, more importantly, generally concludes the China enjoys the status of being the trade regime that is the most frequent subject of new investigations. Relevant portions of the WTO data follow. In May 2009, “The WTO Secretariat reported that during the period 1 July — 31 December 2008, the number of initiations of new anti-dumping investigations showed a 17 per cent increase compared with the corresponding period of 2007. The number of new measures applied also increased between these periods. In particular, during July — December 2008, 15 WTO Members reported initiating a total of 120 new investigations, compared with 103 initiations reported by 14 Members for the corresponding period of 2007.” As the WTO Secretariat also reported, “On a yearly basis, there were 208 initiations of new anti-dumping investigations in 2008, as compared to 163 in 2007 and 202 in 2006 . . .” 
According to the WTO Secretariat, “The Members reporting the highest number of new initiations during July-December 2008 were India, reporting 42, followed by Brazil, reporting 16, China (11), Turkey (10), Argentina and the European Communities (9 each), Indonesia (6), Ukraine (4), Pakistan and the United States (3), Australia and Colombia (2 each), and Canada, Korea and Mexico (1 each). These figures represented increases for Argentina, Australia, Brazil, India and Turkey, and declines for Korea and the United States, while the numbers of initiations by Canada, the European Communities and Mexico remained unchanged, compared with the numbers reported for July — December 2007. China, Colombia, Indonesia, Pakistan and Ukraine, which did not report new initiations for July — December 2007, reported new initiations for the second semester of 2008.” The WTO Secretariat, more importantly, reported that, “China was the most frequent subject of the new investigations, with 34 new initiations directed at its exports. This was a 17 per cent decrease from 40 new investigations opened in respect of exports from China during July — December 2007. The European Communities (including individual member states) was next with 14 new investigations directed at its exports, followed by Chinese Taipei, Thailand, and the United States (6 each), Indonesia, Korea and Malaysia (5 each), India and Saudi Arabia (4 each) and Iran and Turkey (3 each). These were followed by Australia; Belarus; Hong Kong, China; Japan; Russia; South Africa and Ukraine (2 each), and Argentina, Armenia, Brazil, Chile, Ecuador, Israel, Kazakhstan, Kuwait, Peru, Philippines and Sri Lanka (one each).” China’s increasing participation in the WTO regime, especially increasingly employing its trade dispute resolution mechanism, is a good or bad consequence, mostly depending on who or what country stands on the other side of the aisle. However, despite China’s antagonists or those acting on behalf of China antagonists, in terms of the aspirations embodied in the WTO regime, it is actually a good consequence that will promote free and fair trade, in the long run. For the same reason, China’s increasing usage of the WTO regime in resolving trade disputes does not present an issue of whether the prey becomes hunter or vice versa. Sources: Ding Qingfen, China a major target of trade protectionism: official, China Daily, July 31, 2009. M. Ulric Killion, US, Europe charge China with WTO violations, mulrickillion.blogspot.com, June 27, 2009. M. Ulric Killion, ITC rules on China tire imports - finds import surge (dumping) in US, mulrickillion.spaces.live.com, June 20, 2009. Annys Shin, In Tire Tariff Case, Obama Faces First Chinese Trade Policy Test, Washington Post, August 7, 2009. Jim Abrams, Former Dallas Mayor Ron Kirk confirmed as US trade representative, AP, March 18, 2009, (Chicago Tribune). U.S., Europe File Trade Complaint against China, WSJ, June 24, 2009. China Defends Curb on Exports, WSJ, June 24, 2009. WTO: 2009 Press Release, SPRESS/556, 7 May 2009, Anti-Dumping, WTO Secretariat reports increase in new anti-dumping investigations. Copyright © Protected - All Rights Reserved M. Ulric Killion. August 04 by M. Ulric Killion In an update to an earlier blog (M. Ulric Killion, North Korea sentenced US journalists to 12 years of hard labor, June 9, 2009), which discussed the case of two American television journalists, Laura Ling and Euna Lee, who were sentenced by a North Korean court to 12 years of hard labor for illegally entering North Korean territory, former president Bill Clinton is now in North Korea attempting to negotiate the release of the two journalists.  Former President Bill Clinton shook hands with a North Korean official in Pyongyang, Photo/Zhang Binyang/Xinhua, via AP).
On August 3, 2009, the New York Times reported that, “Mr. Clinton landed in Pyongyang,” though “The White House declined to comment.” (Mark Landler and Peter Baker, Bill Clinton in North Korea to Seek Release of two U.S. Reporters, NY Times, Aug. 3, 2009). This also marks the first public mission by Clinton on behalf of the Obama administration.  Euna Lee (left) and Laura Ling (right).
Washington is approaching the issue of the two journalists with caution. In formulating how to approach Pyongyang on the issue of the two journalists, Washington has been weighing the options of a special envoy, and United Nations-supported “strict sanctions against the North Korean government, including a halt to all weapons sales and a crackdown on its financial ties” (NY Times, Aug. 3, 2009). All of this may also explain the failure of Washington to comment on Clinton’s trip to Pyongyang. In the end, though not conclusive on available diplomatic options, Washington appears to be attempting to separate its official diplomatic campaign from the case of the two journalists, though presenting the issue as a humanitarian issue. Nonetheless, the negotiation of an earlier release of the two American journalists, which is short of the twelve (12)-year sentence of hard labor, as earlier mentioned (Killion, June 9, 2009), is contingent on some form of diplomacy, such as a special envoy or couching the crisis as one of a humanitarian issue. In this respect, Washington appears to be on the right track, by approaching the crisis as one of a humanitarian issue. By doing so, Washington also engaged a diplomatic approach that enhances its ability to garner additional support from the international community, especially from countries such as China and Russia. The voting record of China and Russia as permanent members of the United Nations Security Council evidence a reluctant to impose strict sanctions against Pyongyang, especially military action (Killion, Modern Chinese Rules of Order (2007), 164-69). As earlier mentioned (Killion, June 9, 2009), “Kim Yong-hyun, a professor at Seoul's Dongguk University, said the 12-year sentence, though the maximum under Korean law, "does not mean much because the issue will be resolved diplomatically in the end.” Moreover, as foretold by Kim Young-hyun, due to Washington and the diplomacy of Bill Clinton, the two U.S. journalists were released. As reported by the Washington post, “North Korea announced Tuesday that it had pardoned two detained American journalists, hours after former president Bill Clinton met in Pyongyang with reclusive dictator Kim Jong Il as part of an unannounced and highly unusual diplomatic mission to win their freedom” (Glenn Kessler and Stella Kim, N. Korea Says Two U.S. Journalists Have Been Pardoned, Washington Post, August 4, 2009). Kim issued an order "granting a special pardon to the two American journalists who had been sentenced to hard labour in accordance with Article 103 of the Socialist Constitution and releasing them," the official Korean Central News Agency (KCNA) said (Kessler and Kim, 2009). Copyright © Protected - All Rights Reserved M. Ulric Killion. August 03 by M. Ulric Killion. There is an interesting blog at the International Economic Law and Policy Blog that addresses, and is titled, “GATT Article VI:5 and Dual Remedies for AD/CVD,” which is posted by Simon Lester on July 27, 2009. Mr. Lester is discussing the US viewpoint that, “dual remedies against dumping and subsidies are only prohibited where the subsidies in question are export subsidies.” According to Mr. Lester, “For other kinds of subsidies, dual remedies are permitted. This seemed like a strange result to me, so I went where I always go for questions about the meaning of the GATT text: John Jackson's World Trade and the Law of GATT. At page 412, he says: Article VI:5 ‘prevents the imposition of both antidumping and countervailing duties to compensate for the same situation -- one or the other can be utilized but not both at the same time. It's interesting that his description does not distinguish between export subsidies and other kinds of subsidies. And it may very well be that the drafters did not have this distinction in mind, and did not mean to carve out separate rules for export subsidies.’ Nevertheless, as a textual matter, I find the U.S. argument difficult to rebut.” The history of this particular trade dispute dates back to 2008, when China filed a WTO complaint against duties placed by the United States on the imports of certain Chinese steel pipes, tyres and laminated woven sacks. On September 27, 2009, China publicly announced, ”Considering that bilateral consultations between China and the US failed to solve concerns of China, China requested consultations with the US under the WTO dispute settlement mechanism regarding those measures” (考虑到中美双边协商无法解决中方关注的问题，中国要求在WTO争端解决机制下与美方就[关税]措施进行协商). Washington imposed the import tariffs because China allegedly was selling those products in the US market at less than their normal value, or simply, dumping. As a general rule and broad definition, dumping in trade constitutes the practice of selling goods abroad below the price charged for the same goods in the domestic market or at a price below the cost of production, usually with the aim of driving competitors out of the market. On September 27, 2009, China further announced, ”After the anti-dumping and countervailing investigations by the US against the above mentioned products were initiated, China was highly concerned and has repeatedly articulated its position at various occasions, opposing the unfair practices of the US in those investigations” (美国对上述产品发起反倾销和反补贴调查后，中国即表示高度关注并且在不同场合反复阐明自己的立场，反对美国在这些调查中的不公平做法). According to China, the anti-dumping and countervailing investigations, including the import duties against China products, were unfair trade practices. Moreover, and potentially consequential for future Sino-US trade, the pending trade dispute and/or request for consultation represents the second time that China’s government has officially initiated a dispute at the WTO level. In the historical context of WT/DS379, Mr. Lester’s comments examined the First Written Submission of the United States, filed May 27, 2009, in UNITED STATES – DEFINITIVE ANTI-DUMPING AND COUNTERVAILING DUTIES ON CERTAIN PRODUCTS FROM CHINA (WT/DS379). His comments focused, in light of the US response in WT/DS378, on the issues of GATT Article VI:5 and the availability of dual remedies for anti-dumping and countervailing duties. Then there is the issue of Sino-US trade. Although the final outcome of this trade dispute remains pending, the final resolution of this case at the WTO level may affect both future Sino-US trade relations, and subsequent legal interpretations of GATT Article VI: 5 and anti-dumping and countervailing duties, especially the issue, or US argument (WT/DS379), of whether “dual remedies against dumping and subsidies are only prohibited where the subsidies in question are "export subsidies" (Lester). In other words, for many reasons, the pending dispute in WT/DS379 presents an interesting trade dispute deserving our attention. Copyright © Protected - All Rights Reserved M. Ulric Killion August 02 by M. Ulric Killion. On July 17, 2009, China filed its first complaint against the European Union (EU) with the World Trade Organisation. China’s complaint against the EU targets anti-dumping duties on China-made screws and bolts, which is a trade dispute that has been pending since January of this year. A summary introduction, by way of relevant news releases, to the trade dispute follows. 
BRUSSELS, July 17 (Reuters) - China has decided to challenge at the World Trade Organisation European Union anti-dumping duties on Chinese-made screws and bolts imposed by Brussels in January, sources with knowledge of the case said on Friday. "Mofcom (China's ministry of commerce) is going to seek WTO dispute settlement consultations in the EU fastener case over the legal process used by Brussels," one source told Reuters. Source: Darren Ennis, reporting. The Background UPDATE 1-EU puts antidumping duties on Chinese screws, bolts BRUSSELS, Jan 31 (Reuters) - The European Union imposed on Saturday import duties of up to 85 percent on screws and bolts from China, a move likely to trigger retaliatory action by Beijing at the World Trade Organisation. The tariffs affect up to 200 Chinese companies selling components widely used for cars, white goods and machinery in the EU and are worth some 575 million euros ($739 million) a year. Chinese manufacturers, anticipating the duties, have asked Beijing to take the EU to the WTO, the global trade watchdog, over the matter. They say Brussels is protecting European companies amid the worst global economic slowdown in 80 years. But the European Commission, which oversees trade policy in the 27-nation bloc, rejected the allegation. "We reject strongly the implication from various sources quoted in the press that any anti-dumping measures in this case would be protectionist and not based on fact," the Commission said in a statement to Reuters. "The Commission rejects any notion that anti-dumping measures are used to protect European companies from fair competition." "Anti-dumping is about fighting unfair trade, and the Commission will continue to address unfair trade where we find it, based on the facts." . . . Source: Darren Ennis, reporting, Reuters UK. >>Read full article here. Copyright © Protected - All Rights Reserved M. Ulric Killion. August 01 by M. Ulric Killion. In the context of China and barium carbonate exports, and seemingly ongoing problems relating to the AD/CVD variety of trade disputes, Brazil's Ministry of Development, Industry and Trade has recently initiated a (sunset) review (that is classified under NCM 2836.60.00) of the AD duty order on Mainland China exports of barium carbonate. According to the announcement, the review will seek to determine whether revocation of “this order would be likely to lead to continuation or recurrence of material injury to a domestic industry within a reasonably foreseeable time. Imports of subject merchandise are currently subject to an AD duty of US$105.17 per tonne” (Brazil Begins Sunset Review of AD Duty Order on Barium Carbonate, Hong Kong Trade, International Edition, July 17, 2009). 
The photo is from Yuci Jintai Barium Salt Chemical Co., Ltd., (榆次金泰钡盐化工有限公司), in Jinzhong City, Shanxi Province. Yuci Jintai Barium Salt Chemical Co., Ltd., is one of the largest, if not the largest, professional manufacturer and exporter of Barium Hydroxide and its series of products in China (我公司是中国无机盐协会常务理事，是全国规模最大的氢氧化钡及钡盐系列产品生产易企业，氢氧化钡年产量占全国总产量的三分之一. 从93年开始生产氢氧化钡产品至今，公司重科技、抓管理，生产的“榆贝”牌八水氢氧化钡、粉体一水氢氧化钡、晶体一水氢氧化钡、偏硼酸钡、碳酸钡、硫脲等产品，远销美国、日本、欧洲、南非、东南亚、台湾等国家和地区, Yuci Jintai Barium Salt Chemical Co., Ltd.). In Mainland China, companies such as Yuci Jintai and other producers of barium carbonate are facing a recurring problem with the export of this product. Brazil’s announced (sunset) review also serves as a reminder of a similar dispute involving China and the United States. Notwithstanding politics or a political decision, if the facts in the Brazilian case are similar to the U.S. case, especially in the context of a continuing (or recurring) material injury, it is reasonable to anticipate that following a review the existing AD duty order will remain in place. The earlier U.S. case does appear to be a factually similar trade dispute. This is because it is a dispute instituted on Sept. 2, 2009 that addresses a five-year (sunset) review, which also involves barium carbonate exports from Mainland China. In January 2009, the U.S. International Trade Commission (ITC) earlier determined that revoking the existing antidumping duty order on barium carbonate from China would be likely to lead to continuation or recurrence of material injury within a reasonably foreseeable time. The ITC report Barium Carbonate from China (Inv. No. 731-TA-1020 (Review)), USITC Publication 4060, January 2009) sets forth both the views of the ITC and information developed during the review (News Release 09-006, Inv. No. 731-TA-1020 (Review), ITC makes Determination in Five-Year (Sunset) Review Concerning Barium Carbonate from China, January 21, 2009). All of the Commissioners, which total six, voted in the affirmative. As a consequence of the ITC's affirmative determination, the existing order on imports of barium carbonate from Mainland China would remain in place. Copyright © Protected - All Rights Reserved M. Ulric Killion. July 27 by M. Ulric Killion. In an earlier blog (Killion, Korea, EU conclude FTA talks), the announcement of the conclusion of the Korea-EU FTA was perhaps premature. As earlier announced, “Korea and the European Union Monday declared the conclusion of more than two years of negotiations for a free trade agreement. The landmark deal to scrap tariffs for an annual US$106 billion (S$155.2 billion) trade within five to seven years is expected to take effect as early as the first half of next year, following a formal signing and ratification. The announcement was made by President Lee Myung-bak and Swedish Prime Minister Fredrik Reinfeldt during their summit in Stockholm. Sweden holds a rotating presidency of the 27-member European Union. The leaders hailed what would be the biggest free trade accord for both sides. . .” The Korea-EU FTA postponed According to Business Week (2009), “An agreement between the EU and South Korea worth billions of dollars has been put on hold after politicians balked at trade conditions.” “The EU and South Korea have been negotiating the free trade agreement for approximately two years. The deal is expected to eliminate duties worth €1.6 billion for European exporters of goods and create addition opportunities worth €1.9 billion, according to the European Commission” (Business Week, 2009). As for now, the proposed free trade agreement between the EU and South Korea, which most analysts expected to boost mutual trade ties currently worth over €70 billion, due to continuing debates on key issues will be put on hold until September. Key issues causing a postponement are “rules of origin that establish the level of permissible foreign content in products and so-called duty drawbacks that allow for reimbursement of tariffs under certain conditions.” Earlier in March 2009, Europe's carmakers announced that they will “fight until the bitter end” to derail a 100 billion euro ($125.4 billion) free trade agreement between the EU and South Korea unless the bloc's trade chief addresses their concerns (Reuter UK, March 4, 2009). The auto industry is one of the most vocal opponents against finalizing the Korea-EU FTA. Renata Goldirova (Business Week, 2009) writes: “Carmakers have been staunchly opposed to the EU signing up to what they describe as “unacceptable demands” by Seoul. “This is a damaging development for all European manufacturing industries, including the automotive industry, which is a very strategic sector for the EU,” Ivan Hodac from the Brussels-based European Automobile Manufacturers Association (ACEA) said. Under the current proposal, South Korean manufacturers would be able to purchase 45 percent of car components from low-cost countries such as China and claim the duties back when the vehicles are shipped to European markets. “This would significantly distort competition,” Mr Hodac argued. “Chinese radios in Korean cars will through this mechanism enter the EU at zero percent duties, while the EU companies will continue to pay 14 percent when importing the very same radios.”  (Stockphoto.com/(Phrysphotos)).
The Duty Drawback As for defining a duty drawback, it is generally “a key regulatory measure that involves full or partial refund of paid import duties, when the imported merchandise is destroyed, exported, or consumed as a raw material to produce an exported material. Most countries offer duty drawback incentives with the primary goal of assisting domestic manufacturers to compete in foreign markets” (Hong-Choon Oh, 2005). In terms of the WTO rules, as a general rule a duty drawback scheme is non-actionable so long as the payment is not in excess of the levies actually paid on inputs. In other words, “Duty drawback schemes, which typically involve a combination of duty rebates and exemptions, are a feature of many countries'trade regimes. They are used in highly protected developing economies as a means of providing exporters with imported inputs at world prices, thus increasing their competitiveness, while maintaining the protection on the rest of the economy” (Ianchovichina, 2002). As concerns the duty drawback in the proposed Korea-EU FTA, the fear of the EU, though the drawbacks are not in violation of the WTO rules, is that the tariff refunds will not only create a precedent for future free trade agreement negotiations, but also invoke similar demands by other countries in the future. Hodac earlier warned that, “This deal could set a precedent for further free trade agreements with India, Japan and China which would hugely damage Europe's economy” (Reuters UK, March 4, 2009). In response, Brussels has proposed a transition period of three to five years to allow the EU's auto sector to adjust, while EU carmakers and/or ACEA want this transition period extended to at least nine years. Due to the global financial crisis, the EU’s auto industry, which employs about 2.3 million people and another 10 million in related sectors, fears that production could fall by at least 15 percent this year. As of July 14, actually, “Car output in Europe is likely to fall by a quarter this year as government handouts to car buyers fail to halt a major slump, EU car makers said Tuesday” (AP, 2009). Their Korean counterpart, South Korea’s auto industry has also been hit by the global economic downturn with leading carmaker Hyundai earlier planning to cut production at domestic plants by 25 to 30 percent in the first quarter, while Kia, another carmaker, is also expecting to cut output. As for the EU, the proposed lower barriers to trade and investment with South Korea is of critical importance, because it represents the first of such a pact in Asia. Nonetheless, according to Hodac, the proposed FTA that ends the 10 percent EU import duty on Korean-made cars is “totally unbalanced.” From Hodac’s perspective, “What is being offered to us has no balance whatsoever. Under the deal the European market is completely open and they [Korea] will get the benefit. Even with the measures that will be taken on our side, we don’t believe the Korean market will be open to us.” As for the EU auto market, in 2009, the EU actually imported about 600,000 Korean-made cars. However, the ACES projects, as a consequence of the terms of the proposed Korea-EU FTA, a rise from about 150,000 to 200,000 per year. It is especially for this reason that EU carmakers are the loudest opponents against the proposed Korea-EU FTA. EU carmakers perceive the proposed trade agreement as detrimental to the EU auto industry, while at the same time allowing their Korean counterparts to take advantage of “duty drawback.” Under the mechanism of the so-called “duty drawback”, Korean carmakers enjoy the benefit of being able to import cheap components from China, while having all import duties paid on these parts reimbursed if, and once, they are exported in cars destined for an EU market. This also presents the issue, at least from the perspective of Mr. Hodac and the ACES, of the problem of the rules of origin that establish the level of permissible foreign content in products. EU carmakers, more specifically, are grumbling about a duty drawback enjoying an economic value that is worth between 300 and 500 euros per vehicle to a Korean manufacturer (Reuters, UK, March 4, 2009). Moreover, in the context of South Korea, and the effect of duty drawback on export promotion, there is strong empirical evidence demonstrating a positive effect of export subsidy in terms of duty drawback on export supply. Thus, in the context of Korea, as one study demonstrates, “the efficiently managed duty drawback system may contribute to export promotion significantly” (Mah, 2007). A consequence that may offer small hope for Brussels’ suggestion that, “It is a very political question for South Korea and although we would like to see duty drawbacks phasing out, you have to make a political choice at some point” (Business Week, 2009). Sources: M. Ulric Killion, Korea, EU conclude FTA talks, July 17, 2009. Renata Goldirova, Brussels divided over Korean trade deal, Business Week, July 23, 2009. Hong-Choon Oh, Sourcing-Production-Distribution Planning of Global Multi-Product Chemical Manufacturing Processes with Duty Drawback, Nov. 2005. Elena Ianchovichina, Trade policy analysis in the presence of duty drawbacks, World Bank Policy Research Working Paper 3312, May 2004. EU car makers expect 25 pct output drop in 2009, AP, July 14, 2009. Jai S. Mah, The effect of duty drawback on export promotion: The case of Korea, Journal of Asian Economics, Volume 18, Issue 6, December 2007, 967-973. Copyright © Protected - All Rights Reserved M. Ulric Killion. ______________________________________________________________________________________________ See also S Korea, EU to initial free trade deal next month, Sept. 17, 2009. July 16 by M. Ulric Killion. On June 17, 2009, the Court of First Instance of the European Union rendered a decision, in the case of Zhejiang Xinan Chemical Industrial Group Co. Ltd v Council of the European Union, Case T‑498/04, setting aside a Council Regulation, being Article 2(7)(b) and (c) of Regulation (EC) No 384/96, denying Market Economy Treatment (MET) to Zhejiang Xinan. In this respect, the judgment established a landmark decision. This is because the court’s decision is the first instance of a Community Court annulling a Council Regulation due to a manifest error of assessment on the part of the Community Institutions; namely, both the Commission and the Council of the EU, as concerns the controversial subject-matter of MET. The relevant legal text, being Article 2(1) to (7) reads: 1. Article 2(1) to (7) of Council Regulation (EC) No 384/96 of 22 December 1995 on protection against dumped imports from countries not members of the European Community (OJ 1996 L 56, p. 1), as amended (‘the basic regulation’), lay down, for the purpose of determining the existence of dumping, rules concerning calculation of the amount known as the ‘normal value’. Thus, Article 2(1) provides for the main method, according to which ‘[t]he normal value shall normally be based on the prices paid or payable, in the ordinary course of trade, by independent customers in the exporting country’. 2. Article 2(7) of the basic regulation lays down a special rule for imports from non-market economy countries. . . The requisites for the granting of Met essentially necessitated a mainland Chinese company demonstrating five (5) criteria. MET is typically denied to companies unable to demonstrate that business decisions (i.e., prices, costs, etc.) are reached free of what is characterized as “significant State inference.” In this respect, Community Institutions demonstrate a reluctant to grant MET to those companies evidencing significant (and even in some cases only significant minority) State shareholdings. In regard to the issue of “significance State interference”, the Court of First Instance wrote: 67. The Council contends that ‘significant State interference’ within the meaning of the first indent of Article 2(7)(c) of the basic regulation does not require the institutions to assess whether the State has interfered in individual business decisions if the State itself takes such decisions or prevents them from being taken. It is sufficient to establish that the State exercises significant control over the exporter in the PRC. 68. In that regard, the Council states that the PRC is still a non-market economy country in which only a few companies operate according to market economy conditions. It therefore submits that it is sufficient, in order to establish that the State participates in business decisions, to establish that the State participates with a significant weight in the overall decision-making of the company. That may take various forms, including participation in shareholder and board meetings. 69. In the Council’s view, if the State controls a company, it also interferes with its decisions, even if it does not ‘meddle’ or ‘tamper’ with individual decisions or ‘contaminate’ them, as Audace requires. In that case, the decisions of the company are State decisions taken by virtue of the general control it exercises and that will necessarily apply to the categories of decisions covered by the first indent of Article 2(7)(c) of the basic regulation. Thus, in the Council’s submission, if the holding of shares by the State gives rise to State control, it also leads to State interference which is, by definition, significant. 70. The Council contends that, under the first indent of Article 2(7)(c) of the basic regulation, State interference and arm’s length prices are two different issues and the verification that prices and costs reflect market values is not the sole aim of the MES determination. As is apparent from the use of the conjunction ‘and’ in the wording of the first indent of Article 2(7)(c) of the basic regulation, an exporter must demonstrate two separate facts: first, that its decisions are made in response to market signals and, second, that its decisions are taken without significant State interference. The Council argues, consequently, that evidence of the prices of particular transactions is irrelevant to the question of State influence and declines to address the arguments that the applicant has devoted to that question in its application. In other words, in the case of Zhejiang Xinan Chemical Industrial Group Co. Ltd v Council, during anti-dumping proceedings involving glyphosate, pursuant to Regulation 1683/2004, the Council rejected the MET claim of Zhejiang Xinan, a Mainland Chinese agrochemical producer. The Council specifically rejected the MET claim of Zhejiang Xinan because it found that the company was under State control (i.e., “significant State interference”). The rationale of the Council is Zhejiang Xinan’s wide dispersion of majority non-State owned shares, in conjunction with State actually owning the largest block of shares. Adding to the consensus of Zhejiang Xinan being under State control is a board of directors appointed by the State’s shareholders with the majority of those directors being either State officials or officials of State-owned Enterprises (SOEs). Thus, the Council found that Zhejiang Xinan was subject to “significant State interference”, and denied its eligibility for MET. Notwithstanding a finding of “significant State interference”, the Council also announced that it could deny MET by virtue alone of the State being “able to take such decisions or prevent them from being taken.” A problematic of the Council’s decision is that it effectually denied MET eligibility to all State-controlled companies. In the context of Mainland China, the decision of the Council, in practice, excludes MET eligibility to “state-owned enterprises (Guoyou qiye) (SOEs), such as, joint state-state enterprises (Guoyou lian ying qiye), enterprises directly under Central Government (Zhongyang zhi shu qiye), and urban collective-owned enterprises (Chengzhen jiti qiye)” (Killion, 2006). The Court of First Instance did not agree with the Council and wrote: 90. Thus, more particularly, in the context of a non-market economy country, the fact that a company established in that country is State-controlled may raise doubts as regards the question of whether the State exceeds the role of a normal shareholder which respects the rules of the market and whether the company’s management is sufficiently independent of the State to be able to make decisions concerning prices, costs and inputs autonomously and in response to market signals reflecting supply and demand. In addition, it is clear from the first indent of Article 2(7)(c) of the basic regulation, in the words of which decisions of firms are ‘made’, that the Community legislature specifically required that the concerned undertaking’s decision-making process be free from any significant State interference. Thus, it is for the company to show that its decisions on prices, costs and inputs are made independently, based on considerations typical of a market economy, namely, in particular, the maximising of profit, and that they are not influenced by considerations peculiar to the State. The taking of independent decisions on commercial grounds is, generally, a characteristic of the private sector and, consequently, it is legitimate for the Community institutions, in the exercise of the wide discretion they enjoy in that domain, to take account, in their examination of the evidence produced by the exporter concerned, of the fact that the undertaking concerned is State-controlled. 91. However, State control, as established in this case, is not, as such, incompatible with the taking of commercial decisions by the undertaking concerned in keeping with market economy conditions and, in particular, does not mean that its decisions on prices, costs and inputs are based on considerations unrelated to an undertaking operating under such conditions. Then there is the June 27, 2009 landmark decision of the Court of First Instance of the European Union, which wholly rejected the Council’s findings and rationale. This is because, according to the Court of First Instance, the litmus test of “significant State interference” must premise on action by the State that is such as to render a company’s decision, ultimately, incompatible with market economy conditions. The Court took issue with the effect of the Council’s decision, which would have effectually presented a blanket denial of all State-own companies to MET. In other words, the single factor of State control is insufficient to demonstrate “significant State inference.” The Community Institutions when considering cases (i.e., on a case by case basis) must consider actual business practices, such as on a case by case basis decisions such as price, costs, etc. The Court went as far as to rule that there would be “significant State interference, when and only when the State exceeded the role of a normal shareholder in a market economy. The Court is drawing a line between those business decisions promoting government objectives, as opposed to those decisions pursuing profit maximization. Given these criteria and standards, a company cannot be denied MET solely because it is State-controlled. The Court also denied the Council the means to circumvent its decision by employing the vehicle of export restrictions. According to the Court of First Instance: (14) Moreover, it was established that the Government of the PRC had entrusted the China Chamber of Commerce Metals, Minerals & Chemicals Importers and Exporters (CCCMC) with the right of contract stamping and verifying export prices for customs clearance. This system included the setting of a minimum price for glyphosate exports and it allowed the CCCMC to veto exports that did not respect these prices. (15) Consequently, after consulting the Advisory Committee, it was decided not to grant [MES] to [the applicant] on the basis that the company did not meet all the criteria set in Article 2(7)(c) of the basic regulation.’ A problem in this case is the Council not taking into consideration evidence that the company presented, which shows, as a practice, that no exports of glyphosate have actually been vetoed, nor even vetoed when prices were below the minimum price. For this reason, the Court also specifically found that the Community Institutions wrongfully disregarding this evidence relating to exports restrictions; thus, the Community Institutions made a manifest error of assessment. Zhejiang Xinan, more specifically, presented evidence demonstrating that the mechanism in question was not actually imposed by the State, but rather constituted prices set by glyphosate producers, who were members of the CCCMC; a consequence, at least according to the Court, did not entail any actual restrictions on the applicant’s exports.
[According to the Hong Kong Trader, (European Court judgment invites radical overhaul of “market economy” treatment process, July 10, 2009)]: “The Court of First Instance's judgment is novel insofar as it has made some inroads into the hitherto unassailable margin of discretion afforded to the Community Institutions by the Community courts as concerns the determination of MET. The practical implications of the judgment for exporting producers in mainland China (and interested parties in Hong Kong) will be significant. The Commission will have to undertake a revision of its existing fact-finding practices and thus a considerably greater assessment of how a company's decisions on prices, costs and inputs are taken. Paradoxically, this could mean a far more burdensome (though fairer) fact-finding procedure to be conducted at the on-the-spot verifications of MET claims at exporting producers' premises in mainland China. In view of the judgment's radical stance on the Community Institutions' fact-finding process in comparison with the Community courts' hitherto more conservative decisions on MET-related appeals (for example, Shanghai Excell M&E Enterprise Co. Ltd v Council reported in Business Alert-EU Issue 08/2009), Hong Kong's business community may question whether this decision at first instance will be allowed to stand or whether the Community Institutions are currently mulling over the possibilities of an appeal. In any event, as noted above, the judgment is all but certain to provoke a more burdensome MET process for exporting producers in order that future MET determinations by the Community Institutions can withstand the heightened Court scrutiny.” Sources: Official Journal of the European Union, C 057, Volume 48, 5 March 2005; 2005/C 57/60, Case T-498/04: Action brought on 23 December 2004 by Zhejiang Xinan Chemical Industrial Group Co., Ltd against the Council of the European Union, 35. Judgment of the Court of First Instance (Fourth Chamber) of 17 June 2009. Zhejiang Xinan Chemical Industrial Group Co. Ltd v Council of the European Union. Dumping - Imports of glyphosate originating in China - Status of undertaking operating under market economy conditions - Article 2(7)(b) and (c) of Regulation (EC) No 384/96. Case T-498/04. Ulric Killion, Modern Chinese Journey to the West: Economic Globalization and Dualism (2006). European Court judgment invites radical overhaul of “market economy” treatment process, Hong Kong Trader, July 10, 2009; [欧洲法庭裁决触发市场经济待遇评估程序改革, 2009年7月10日]. Copyright © Protected - All Rights Reserved M. Ulric Killion. July 15 by M. Ulric Killion. The Background: On June 23, 2009, and as mentioned in an earlier blog (Killion, Sino-US trade, China export restrictions, protectionism and “Buy-China” requirements, July 11, 2009), the United States and the European Union filed complaints with the WTO over Chinese restrictions on the export of key industrial raw materials, such as coke, bauxite, fluorspar, magnesium, silicon metal, yellow phosphorus and zinc. The heart of the controversy are allegations by both the US and EU that China failed to reduce its export tariffs and raise quotas on these industrial raw materials, and that China's export restrictions created an unfair advantage for Chinese industries. China’s immediate response, as announced by China’s Ministry of Commerce (MOC), is that the policy of limiting exports of these raw materials intends to protect the environment and natural resources; therefore, China’s policy is in accordance with the WTO rules (Bloomberg, 2009). China, more importantly, also responded by announcing on June 25, 2009 the filing of its own challenge to a US ban on the imports of Chinese poultry (WSJ, 2009). The US Ban on Poultry: On June 18, 2009, the US House Appropriations Committee approved legislation, for the fiscal year ending September 30, 2010, establishing appropriations for the operation of the U.S. Department of Agriculture. The legislation, more importantly, included a provision precluding the use of any of the funds appropriated under legislation for FY 2010 for establishing or implementing a rule allowing mainland China poultry products to be imported into the United States. The legislation for FY 2010 parallels provisions earlier included in the appropriation bills for both FY 2008 and FY 2009. [On July 3, 2009, The Hong Kong Trader, House Committee Proposes to Extend Import Ban on Chinese Poultry, reported]: “While mainland China is not eligible to export to the U.S. poultry products that are slaughtered in domestic establishments, the Food Safety and Inspection Service issued a final rule in April 2006 allowing processed poultry products from China to be imported into the U.S. if they are processed in certified establishments from poultry slaughtered in certified slaughter establishments in other countries eligible to export poultry to the U.S. Among other things, the regulation requires that those poultry products be subject to re-inspection at the pertinent port of entry for transportation damage, labelling, proper certification, general condition, accurate count, defects and microbiological contamination. However, no mainland Chinese facilities have yet been certified to export processed poultry products to the U.S. and Congress has continued to block any such facilities from being certified. According to various reports, China recently requested the establishment of a WTO dispute settlement panel to examine allegations that these restrictions violate multilateral rules. China requested consultations with the U.S. on this issue in April but the two sides have not reached a mutually acceptable agreement. China's request for the formation of a panel will be considered at the 20 July meeting of the Dispute Settlement Body. While the U.S. has the ability to block this request, that action would probably only delay the establishment of the panel by a few days or weeks. Reportedly, House Appropriations Agriculture Subcommittee Ranking Republican Jack Kingston (Georgia) is trying to amend the appropriations bill language on mainland Chinese poultry to avoid a protracted and possibly losing battle with China at the WTO. Such an amendment would require the FSIS to commit to conduct audits and on-site reviews and enhance its inspection capabilities at U.S. ports of entry before allowing that agency to move forward with the implementation of the rule allowing poultry shipments from the mainland” (Hong Kong Trader, July 3, 2009). Copyright © Protected - All Rights Reserved M. Ulric Killion.
|
Tools 
