Global trade goes on, with America sidelined

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Global trade goes on, with America sidelined
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Global trade goes on, with America sidelined By RYAN HEATH 11/13/2020 09:40 AM EST Presented by WORLD KEEPS TURNING, TO AMERICA’S DISADVANTAGE THE TRADE SHOW GOES ON: If you have any doubt that the world turns independently of the U.S. political process, take a moment to digest the fact […]

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Global trade goes on, with America sidelined

By RYAN HEATH

11/13/2020 09:40 AM EST

Presented by

WORLD KEEPS TURNING, TO AMERICA’S DISADVANTAGE

THE TRADE SHOW GOES ON: If you have any doubt that the world turns independently of the U.S. political process, take a moment to digest the fact that on Sunday, 15 Asian countries will sign the world’s largest trade deal — the Regional Comprehensive Economic Partnership, which is bigger than the EU single market. The deal includes all of the region’s biggest economies (China, Japan, South Korea, Australia) except India, plus the 10 members of the Association of Southeast Asian Nations and New Zealand, and covers 30 percent of global GDP. The text includes an on-ramp for India to join at any time.

Takeaway: Both America’s leading rival, China, and its democratic allies have joined together in a trade deal that leaves the U.S. on the sidelines. Taking a further step back: RCEP is the biggest trade deal, the EU is the deepest trade bloc, and the U.S. doesn’t have membership or a comprehensive deal with either.

DEMOCRACY CONTINUES TO STUMBLE: Ethiopia’s Nobel Peace Prize-winning Prime Minister Abiy Ahmed sent in the army to Tigray, one of the country’s 10 semi autonomous regions, the day after the U.S. election, and has imposed a six-month state of emergency, declared the region’s legislature void, and cut off communications, the New York Times reported. Hundreds are dead.

LOOKING TO 2021 — A TWO-TIERED GLOBAL ECONOMY?

The sooner your government controls the pandemic, the sooner your economy can return to growth. Sounds simple, right? If only. The world’s two most powerful central bankers — the U.S. Federal Reserve’s Jerome Powell, and European Central Bank’s Christine Lagarde warn against hoping for a vaccine quick fix. Strict virus control in one country, whether via a vaccine or social distancing, is also not enough: In a globalized economy no one can fully escape Covid-19 until most of us do. Meanwhile the pandemic is pressuring countries to achieve their digital transformation faster than anyone expected pre-Covid.

Those with the hardest Covid-19 road include the U.S., Latin America, India, Iran and much of Europe: together they account for the 20 worst Covid-19 death rates in the world.

Indeed, the U.S. is getting further from controlling the virus: on course for one million new coronavirus cases this week, and an average daily death toll for November that thus far is over 1,000. The Mayo Clinic’s Midwest hospitals are full (indeed hospitalizations for Covid-19 nationally are at a record 67,096) and most American states don’t have a plan to store and distribute the vaccine throughout rural parts of their state. Federal benefits are expired or expiring, and Congress is deadlocked on stimulus negotiations. With winter coming and around half the population skeptical of an eventual vaccine, a prolonged recession is virtually guaranteed.

Boston Consulting Group (BCG) staff conclude in a new report that the U.S. economy is recovering more quickly than expected. While that may be true overall,the recession isn’t over for many segments of the American population, and Asia’s biggest economies are doing even better.

Philipp Carlsson-Szlezak, one of the authors of the BCG report, told Global Translations that there are two reasons to be cautious about fears of a two-track global economy. While Asia is closer to full recovery, “the bounce is more relevant,” he said because “the worst performers right now have the greatest chance/likelihood of outperformance in 2021. There is more to catch up here and in Europe.”

“The correlation between virus control and economic performance is very weak,” Carlsson-Szlezak insists. Not because virus control doesn’t matter, but because the economic policy response also matters. “Think about how the U.S. health response massively underperformed Europe in Q2 and Q3, yet real growth outcomes were better here because the policy response was superior to Europe’s. That’s neither cost efficient nor desirable from a humanitarian perspective, but true in terms of economic growth.”

The same is true for Africa, which will get there with Chinese assistance. Chinas’ Foreign Minister Wang Yi rattled off the various manners of support in a speech marking the 20th anniversary of the Forum on China-Africa Cooperation: “As many as 21,000 Chinese medical personnel have worked, or are working, in 48 African countries, providing treatment to around 220 million African people…. China has built for Africa over 6,000 kilometers of railways and the same mileage of roads, nearly 20 ports and over 80 large-scale power plants, and more than 130 medical facilities, 45 stadiums and 170 or so schools.”

Biden’s double global vaccine challenge: The first is how to ensure the U.S. joins and funds COVAX, the global vaccine distribution facility. Beyond that, Biden must also address the fact that Pfizer, the maker of the leading American vaccine candidate, does not have a deal with COVAX. If that remains the case, the Pfizer vaccine could prove effective while not reaching large parts of the world quickly, Carmen Paun reports in our Global Pulse newsletter. That could trigger a health crisis, a diplomatic crisis and a domestic economic drag all wrapped into one: Locked-down developing economies import fewer American goods and services, after all.

TRANSITIONING

It’s been a long week, but then again, U.S. presidential transitions are long — “the United States is almost alone among major democracies in taking so long to install a new head of state,” write Ivo Daalder and James Lindsay. If this were Britain or France, Biden would already be ensconced in the British or French equivalent of the Oval Office. Meanwhile, two groups of international observers have now confirmed there’s no evidence of election fraud.

Catch up with all the latest in POLITICO’s daily Transition Playbook.

THE GOVERNMENT-IN-WAITING ISN’T WAITING: It’s normal for a presidential transition team to make staff and policy announcements soon after a U.S. election victory. What’s unusual this time are the road-blocks the outgoing administration is putting up by refusing to concede, and that the Biden’s transition teams challenge is the most complicated ever: Be ready to deal with two whole of government crises (Covid-19 and recession) on Day 1.

The global meaning of Ron Klain: Biden’s new chief of staff is a pandemic response expert, having led the Obama administration’s Ebola response; a supporter of multilateral policy efforts; and has long-standing relationships and affinity with American allies. Like many of Biden’s close allies, British officials have been reengaging with him for around a year now. Klain is also an on-record fan of Angela Merkel.

(Just for fun: Contrast the smooth Klain announcement with bungling over chief of staff news in Downing Street.)

EARLY BIDEN EFFECTS: Biden’s new tone is affecting his interlocutors. Domestically, the center-right U.S. Chamber of Commerce put conspicuous distance between itself and the outgoing administration by praising President-elect Biden’s statement on the importance of mask-wearing. Meanwhile, Boris Johnson suddenly took a more positive tone towards Brexit negotiations with the EU, and Ireland is pressing home the advantage: “Now that Joe Biden is going to be the next president of the United States, that will be a cause for, certainly, a pause for thought in No. 10, to ensure that Irish issues are prioritized as we try to close out this phase of the Brexit negotiation,” Irish Foreign Minister Simon Coveney told RTÉ radio Monday.

Global polling data — Europe ❤️ U.S., Russia and China �: Morning Consult global polling from Nov. 8 to 10 (just after Biden was declared the winner of the presidential election) found that U.S. net favorability improved by an average of 22 percentage points among France, Germany, Italy, Spain and the United Kingdom, but fell seven points in Russia, and six points in China.

IS TRUMP ACTUALLY GOVERNING THESE DAYS? It’s a serious question. The President’s light agenda and conspiracy-laced tweets don’t suggest a sense of urgency. The federal Coronavirus Task Force met Monday, but once again without Trump. Given Trump’s norm-shattering presidency, it’s only reasonable to expect a norm-shattering transition. Here’s what POLITICO has reported will be the Trump administration’s plans for its final 10 weeks.

Trump signed an executive order Thursday barring Americans from investing in a list of 31 Chinese companies that the White House says support the country’s military.

For most of the last four years, the president has been more successful installing conservatives in key posts (often as judges) than in implementing conservative policies. That trend continues: the White House is installing hard line loyalists in posts ranging from Ret. Army Col. Douglas Macgregor as a Pentagon adviser (he supports troop withdrawals from the Middle East, Axios reported) to David Legates, a meteorologist who claims that excess carbon dioxide in the atmosphere is good for plants and that global warming is harmless, who will be head of the U.S. Global Change Research Program.

SECURITY COMMUNITIES ON HIGH ALERT NEXT TWO MONTHS: Top American national security officials fell like dominoes this week. CNN’s Ryan Browne called it a “near total decapitation of civilian leadership” and Adm. James Stavridis, the former supreme allied commander for NATO, labeled it a “burn it down on the way out” approach. The main firewall here is Gen. Mark Milley, the chairman of the Joint Chiefs of Staff who Wednesday described the U.S. military as unique: “We do not take an oath to a king or a queen, a tyrant or a dictator. We do not take an oath to an individual.”

Democrats, alongside 142 ex-national security officials, charge that the government’s delay in recognizing Biden as president-elect poses risks to national security. Former House Intelligence Committee Chairman Mike Rogers, a Republican, warned “our adversaries aren't waiting for the transition to take place.” Sen. Chris Murphy (D- CT) believes “emerging global powers could try to take advantage of the vacuum. At the top of that list is China,” via further repression of Hong Kong and Taiwan. He urged Congress help to fill the void with “bipartisan statements, resolutions, and legislation.” Taisu Zhang, professor at Yale Law School, told my colleague David Wertime that Beijing won’t tempt fate: “Doing anything aggressive at this point would risk a furious reaction from both campaigns and, eventually, harsh retribution.”

LEFT HAND, RIGHT HAND: There’s a large dose of irony in the fact that GOP leaders like National Security Adviser Robert O’Brien and Sen. Marco Rubio (R-FL) are refusing to acknowledge Biden’s election victory while at the same time publicly chastising China for attacking Hong Kong’s democracy. Beijing this week removed pro-democracy legislators Alvin Yeung, Kwok Ka-ki, Dennis Kwok, and Kenneth Leung from the city’s Legislative Council.

Meanwhile, Secretary of State Mike Pompeo heads off for a tour of France, Turkey, Georgia, Israel, United Arab Emirates, Qatar, and Saudi Arabia on Friday. Pompeo has not recognized President-elect Biden’s victory, either, but the leaders in all seven countries have (h/t Kylie Atwood). The secretary also plans to visit a West Bank settlement on occupied territory, a taboo until now.

QUOTABLE

“Take it like a man. It's called democracy. Nothing you can do about it.”
Lars Løkke Rasmussen, former prime minister of Denmark, to Trump

“There will be a smooth transition to a second Trump administration.”
— Secretary of State Mike Pompeo

REALITY CHECK CORNER

75 percent of large businesses to grow their China footprint in the next two years: The new HSBC report surveyed 1,100 companies in 11 markets, and covers both investments and supply chains. “The country’s vast market and its unrivaled manufacturing infrastructure remain compelling reasons not just to maintain business with China, but in many cases to increase it,” said Stuart Tait, Regional Head of Commercial Banking, Asia-Pacific, HSBC.

Global Trumpism lives on: The world’s populists are losing their White House ally, but global Trumpism is far from over

Goodbye Gropenhagen: In Denmark, the real-life Borgen calls time on thigh-grabbers.

Read our full Global Tech Spotlight: This week we look at President-elect Joe Biden’s interest in holding Silicon Valley giants legally responsible for failing to scrub their platforms of harmful material, mirroring a debate already underway in both the EU and U.K. The U.S. government could strip away those protections (known as “Section 230” after the portion of the law governing the issue) through legislation and/or by excluding them from future trade deals. Rep. Jan Schakowsky (D-Ill.), a leading negotiator on trade issues for House Democrats and a critic of Section 230, told Cristiano Lima “the president-elect has not been super friendly to 230, the immunities that are provided, and certainly would not be, I believe, amenable to including those” in U.S. trade pacts. MORE

EU REGULATORS TREK INTO AMAZON: Europe’s competition chief charged the e-commerce giant Tuesday over misusing third-party merchant data to favor Amazon’s own products, and opened a separate investigation into Amazon’s practice of pushing sellers to use the company’s logistics and delivery operations.

GLOBAL AI RANKINGS: Tortoise Media has expanded its Global AI Index to include 62 countries. The U.S. still leads China. Those punching above their weight include Canada, in fourth position; Singapore in seventh and Ireland in tenth. New entries include Armenia (some have called it the Silicon Valley of the former Soviet Union); Colombia (on track to become the leading hub of AI in Latin America) and Slovakia, which is an electric vehicle battery pioneer.

READ THE SPOTLIGHT ≫

POWER PLAYS AND ELECTIONS

US 2020 — GEORGIA ON OUR MINDS: In our final Campaign Confidential episode, Global Translations talks to Greg Bluestein of the Atlanta Journal-Constitution about the Jan. 5 Senate run-off races in Georgia.

MYANMAR — SUU KYI’S PARTY CRUISES TO RE-ELECTION: The country’s second election since the military gave up absolute power in 2011 delivered a second landslide win for Aung San Suu Kyi and her ruling National League for Democracy: they won 397 of 498 seats available (another 166 seats are reserved for the military). Those results are from Yway Mal, an independent vote-counting group. NPR reported that the military’s political party rejected the election results as unfair.

CAUCASUS WAR OVER — RUSSIA AND TURKEY WIN, EU SIDELINED: After six weeks of fighting over the disputed region of Nagorno-Karabakh — and several failed cease-fires — Russia has mediated a deal between Armenia and Azerbaijan that appears likely to hold, writes Nicu Popescu of the European Council of Foreign Relations. “With the conflict now officially re-frozen, the situation has yielded two clear winners: Russia and Turkey, who flexed their muscle in the region while the European Union sat on the sidelines, appearing increasingly irrelevant in its own neighborhood.”

INSTITUTIONALIZED

HOW YOUR PEERS ARE HIRING AND MANAGING: The Conference Board surveyed 330 HR executives about remote work and hiring, productivity and well-being, and plans for returning to the workplace.

HOW TO SET UP A CITY GREEN BANK: Christopher Horn from C40 Cities, a global network of climate conscious mayors, writes to say the group has launched a guide to “Establishing a City Green Bank” for financing climate mitigation projects, such as clean energy and energy efficiency. Washington D.C.’s Green Bank started with a focus on commercial energy efficiency. Toronto’s Atmospheric Fund has been successful enough to spawn six additional funds under the Low Carbon Cities Canada program, while in New York, the NYCEEC mobilized $173 million of capital to upgrade 266 large buildings.

GREENING TRILLIONS IN PUBLIC FINANCE: Around 450 public development banks issued a declaration committing to aligning recovery spending with global sustainability and climate goals, including the World Bank, China Development Bank, European Investment Bank, and the European Bank for Reconstruction and Development. They collectively invest $2.3 trillion annually — 10 percent of all global investments.

Why it matters: According to Oil Change International, G20 public finance institutions invest $77 billion each year in fossil fuels — three times as much as for clean energy.

WHAT HAPPENS WHEN YOU HOLLOW OUT A CIVIL SERVICE? We’re about to find out. President-elect Biden faces a deadly pandemic, a deep recession and racial divides, but after Trump’s four-year war with the career bureaucrats he calls the “deep state”, my POLITICO colleagues report a “stark loss of institutional knowledge, paired with a rapidly aging workforce and a new push to strip protections from the career staff” he needs to turn the ship around. “They’ve got to move quickly to send the signal that the adults are back in the room, and we’re going to start fixing agencies one by one,” said Paul Light, a professor of public service at New York University.

WTO — TOP JOB DELAYS AND DIRTY TRICKS: The World Trade Organization postponed a General Council meeting set for Nov. 9 to choose a new leader, “until further notice” according to a document circulated to the body’s General Council members in Geneva.

Meanwhile POLITICO’s Anna Isaac reports on a letter published in the Financial Times endorsing the front-runner to lead the World Trade Organization — Ngozi Okonjo-Iweala, Nigeria’s candidate — that was very likely a fake. The letter purported to be from Larry Wayne, of Arlington, Va., an alias associated with an earlier dubious Financial Times letter about the top job in the World Bank. There is no suggestion Okonjo-Iweala knew about or approved of the letter, and she denies any involvement. The letter was investigated by ROKH, a Geneva-based intelligence and risk management consultancy, hired by a competitor’s campaign, and has since been independently assessed by another security and risk consultant at POLITICO’s request.

MARK YOUR DIARIES…

Nov. 16 to 19: BLOOMBERG NEW ECONOMY FORUM. Agenda and livestream link. Speakers are a real mix of East and West; the ones Global Translations will follow include Michael Bloomberg, himself, Bill Gates, Kristalina Georgieva, António Guterres, Christine Lagarde, Lee Hsien Loong, Cecilia Malmström, Narendra Modi, Larry Summers, Ursula Von Der Leyen, Yu Liang, Lei Zhang, and Zhu Min.

Nov. 20 to 22: HALIFAX INTERNATIONAL SECURITY FORUM: POLITICO is once again partnering with the forum. You can follow online Nov. 20 to 22.

Dec. 3: GLOBAL PANDEMIC SUMMIT: The United Nations will press for action on the global spread of the coronavirus and its “unprecedented” effects on societies, economies, jobs, global trade and travel.

Dec. 12: GLOBAL CLIMATE SUMMIT: 25 national leaders have expressed interest in speaking at this summit organized by the U.N., U.K. France, Italy and Chile.

BRAIN FOOD

SHORT READ: Inside the New York Times’ Heated Reckoning With Itself, by Reeves Wiedeman (New York Magazine)

LONG READ:I'm Not Yet Ready to Abandon the Possibility of America,” Barack Obama spoke to The Atlantic

BOOK: “Joe Biden: The Life, the Run, and What Matters Now,” by Evan Osnos

PODCAST: Bill Gates and Rashida Jones Ask Big Questions — starting Nov. 16.

GUILTY PLEASURE: The Crown is back, starting Nov. 15, taking us into the Diana years.

THANKS to editor Emily Cadei, Luiza Ch. Savage, Cristina Gonzalez, Heidi Vogt, Cristiano Lima, and Halley Toosi.

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