Hope & History Rhyme

Darren Whiteside/Reuters

Worries about food security appear to have overridden China’s recent role as a defender of free-trade. Above, workers build a greenhouse north of Beijing.

By KEITH BRADSHER

Published: July 31, 2008

HONG KONG — China and India have seldom shared the same views on free trade in recent years, but they ended up on the same side at the collapse of world trade talks in Geneva on Tuesday because China made an abrupt about-face.

Growing worries in China about food security now appear to have overridden the country’s previous commitment to free trade — a commitment that has served it well until now as the country with the world’s second-largest trade surplus after Germany.

Since joining the World Trade Organization in November 2001, China has been a strong and outspoken defender of free-trade principles. It has been especially critical of the United States, for example, for invoking so-called “safeguard” rules to prevent an increase of Chinese textile imports that threatened to put American manufacturers out of business.

But this week, China allied itself with Indian negotiators in insisting on safeguard rules for agriculture. China and India insisted that developing countries be allowed to impose prohibitively high tariffs on food imports from affluent countries to halt increases in imports that might put farmers in poor countries out of business.

The United States and other food exporters refused to accept the Chinese and Indian position on food safeguards, and talks broke down.

In an editorial Wednesday, the official newspaper China Daily denounced the draft text that had been under negotiation. “This proposal would put the livelihoods of vulnerable farmers of the developing world in danger due to cheap farms imports from the rich world,” the editorial said.

By contrast, the Chinese Commerce Ministry had denounced the American use of textile safeguards in 2003 by saying that it was contrary to international principles on “free trade, transparency and nondiscrimination.”

The strong Chinese stance on farm goods comes at a time of rapidly rising worry in Beijing about food security.

Food prices have soared around the globe in recent months, particularly for rice, and many countries with a food surplus have imposed limits on exports to retain supplies for their own populations. China has become increasingly focused on making sure that its farmers can continue to produce most of the food needed for the 1.3 billion people in that country, and leery of having to rely on imports.

President Hu Jintao of China made this point when he met with leaders from the Group of 8 nations in Japan on July 9. According to a Chinese government statement issued afterward, “Hu said China attaches great importance to agriculture and especially the food issue,” and he noted that China “pursues a food-security policy of relying on domestic supply, ensuring basic self-sufficiency and striking a balance through appropriate import and export.”

Chinese officials have put increasingly stringent limits on the paving over of farmland for factories, office towers and residential projects. They have also held domestic grain prices well below international levels through heavy subsidies, to the point that Chinese officials have been aggressively chasing smugglers who try to buy cheap Chinese rice and other grain and ship it to neighboring countries for resale.

Until now, China and India have had divergent vested interests in international trade negotiations because they joined the World Trade Organization under very different circumstances and are covered by remarkably different trade rules.

The world’s major trading powers forced China to lower or eliminate most of its trade barriers in exchange for letting it into the trade group in November 2001. China accepted this deal because its membership forced other countries to eliminate quotas and cut tariffs on Chinese exports _ — and these exports have been soaring ever since.

Since China has relatively few trade barriers to defend, and since its exports are highly competitive in many industries, it has tended until now to favor open markets.

By contrast, India still has some of the world’s highest barriers to imports.

India was one of the 23 founding members in 1947 of the trade group’s predecessor, the General Agreement on Tariffs and Trade. Since then, it has successfully argued that developing countries already in the global trading system should be allowed to keep much higher trade barriers to imports than affluent countries.

by William French

July 23, 2008

GENEVA (AFP) - Leading World Trade Organisation members broke off talks early Thursday morning saying that some progress had been made but not enough to secure a deal to liberalise world trade.

The so-called “G6+1″ group of the United States, European Union, Japan, India, Brazil, Australia and China took part in the talks at the WTO’s headquarters here aimed at concluding the long-running Doha Round.

“There is progress but not enough,” said India’s Trade Minister Kamal Nath.

“We are making progress on sensitive products, (tariff) capping, many issues, but there is still some heavy lifting to be done,” he told reporters.

The “G6+1″ talks were convened by WTO head Pascal Lamy on Wednesday after he warned members that progress had only been modest since talks began Monday.

Emerging and developed countries have slipped into a familiar pattern of demanding new moves from each other, with the success of this week’s high-profile gathering hinging on whether they can find common ground.

The round began in the Qatari capital Doha seven years ago with the aim of helping poor countries take advantage of the freer global flow of goods and services, but has since been delayed by disputes between developed and developing nations over subsidies and tariffs for farm and industrial products.

The European Union’s chief negotiator Peter Mandelson said he was slightly more positive in some respects after the meeting, which ended shortly before 4.00 am (0200 GMT).

“After a great deal of very hard work some issues are nearer a solution, other issues are clearer and better understood but there is some way to go before the gaps are bridged,” Mandelson said.

“I believe that this is a moving picture and we’ve still got a lot of frames to travel through but I believe we shall get to the end,” he added.

Both the US and EU have made opening gambits by offering to reduce trade-distorting assistance to their farmers and they are now waiting for steps by developing nations to open their markets for industrial products.

Washington on Tuesday offered to cut its official aid ceiling for its farmers to 15 billion dollars a year — a move greeted by Nath as welcome, but still inadequate.

“The first thing we must appreciate is that the US is moving,” Nath said. “Up to now there was no movement. The fact movement has started is a good sign.”

Nath gave no indication he would give ground on industrial products but said he would make a “good offer on services” — the final component of the talks.

His failure to demonstrate flexibility on industrial products led a spokesman for the US trade delegation, Gretchen Hamel, to question if he was “reading from old talking points.”

She added: “If the emerging markets don’t contribute it will not be truly be a development round.”

Speaking late Wednesday in Brasilia, Brazilian President Luiz Inacio Lula da Silva said the talks would fail unless the United States and Europe made greater concessions.

“If there is no effective reduction in subsidies in the United States, and if there is no flexibilisation of the agriculture market by the Europeans, there will be no deal,” he told reporters.

In that case, “each one will have to assume his responsibilities, and each one will have to reap what he sows,” he said.

Australian Trade Minister Simon Crean told reporters that talks would continue in the G6+1 format into Thursday.

“We’re not there yet, but some progress has been made and we’ll keep at it so we’re back tomorrow,” he said.

US Trade Representative Susan Schwab was more reticent however, saying only that “some progress” had been made as she rushed out of the building.

By TIM JOHNSTON

The New York Times

Published: July 20, 2008

SYDNEY, Australia — In his final address to hundreds of thousands of young Catholics gathered in Australia on Sunday, Pope Benedict XVI attacked the violence and materialism of the modern age, and called on his audience to build a “new age.”

“A new generation of Christians is being called to help build a world in which God’s gift of life is welcomed, respected and cherished — not rejected, feared as a threat and destroyed,” he told a congregation of about 400,000 gathered at a Sydney race track and neighboring park.

He sought “a new age in which hope liberates us from the shallowness, apathy and self-absorption which deaden our souls and poison our relationships,” he told his rapt audience, which included 26 cardinals and more than 400 bishops.

Sunday’s Mass was the culmination of six days of public and private events of World Youth Day, which the Roman Catholic Church says is the largest gathering of young people on the planet. The pope has used the event as a forum to call for religion to be returned to the center of the moral universe; for Catholicism to return to its evangelistic roots; and for a united front, both among Christians and among the world’s religions, in the face of a world becoming ever more materialistic.

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By Naomi Klein

The Nation 

June 12, 2008

Barack Obama waited just three days after Hillary Clinton pulled out of the race to declare, on CNBC, “Look. I am a pro-growth, free-market guy. I love the market.”

Demonstrating that this is no mere spring fling, he has appointed 37-year-old Jason Furman to head his economic policy team. Furman is one of Wal-Mart’s most prominent defenders, anointing the company a “progressive success story.” On the campaign trail, Obama blasted Clinton for sitting on the Wal-Mart board and pledged, “I won’t shop there.” For Furman, however, it’s Wal-Mart’s critics who are the real threat: the “efforts to get Wal-Mart to raise its wages and benefits” are creating “collateral damage” that is “way too enormous and damaging to working people and the economy more broadly for me to sit by idly and sing ‘Kum-Ba-Ya’ in the interests of progressive harmony.”Obama’s love of markets and his desire for “change” are not inherently incompatible. “The market has gotten out of balance,” he says, and it most certainly has. Many trace this profound imbalance back to the ideas of Milton Friedman, who launched a counterrevolution against the New Deal from his perch at the University of Chicago economics department. And here there are more problems, because Obama–who taught law at the University of Chicago for a decade–is thoroughly embedded in the mind-set known as the Chicago School.

He chose as his chief economic adviser Austan Goolsbee, a University of Chicago economist on the left side of a spectrum that stops at the center-right. Goolsbee, unlike his more Friedmanite colleagues, sees inequality as a problem. His primary solution, however, is more education–a line you can also get from Alan Greenspan. In their hometown, Goolsbee has been eager to link Obama to the Chicago School. “If you look at his platform, at his advisers, at his temperament, the guy’s got a healthy respect for markets,” he told Chicago magazine. “It’s in the ethos of the [University of Chicago], which is something different from saying he is laissez-faire.”

Another of Obama’s Chicago fans is 39-year-old billionaire Kenneth Griffin, CEO of the hedge fund Citadel Investment Group. Griffin, who gave the maximum allowable donation to Obama, is something of a poster boy for an unbalanced economy. He got married at Versailles and had the after-party at Marie Antoinette’s vacation spot (Cirque du Soleil performed)–and he is one of the staunchest opponents of closing the hedge-fund tax loophole. While Obama talks about toughening trade rules with China, Griffin has been bending the few barriers that do exist. Despite sanctions prohibiting the sale of police equipment to China, Citadel has been pouring money into controversial China-based security companies that are putting the local population under unprecedented levels of surveillance.

Now is the time to worry about Obama’s Chicago Boys and their commitment to fending off serious attempts at regulation. It was in the two and a half months between winning the 1992 election and being sworn into office that Bill Clinton did a U-turn on the economy. He had campaigned promising to revise NAFTA, adding labor and environmental provisions and to invest in social programs. But two weeks before his inauguration, he met with then-Goldman Sachs chief Robert Rubin, who convinced him of the urgency of embracing austerity and more liberalization. Rubin told PBS, “President Clinton actually made the decision before he stepped into the Oval Office, during the transition, on what was a dramatic change in economic policy.”

Furman, a leading disciple of Rubin, was chosen to head the Brookings Institution’s Hamilton Project, the think tank Rubin helped found to argue for reforming, rather than abandoning, the free-trade agenda. Add to that Goolsbee’s February meeting with Canadian consulate officials, who left with the distinct impression that they had been instructed not to take Obama’s anti-NAFTA campaigning seriously, and there is every reason for concern about a replay of 1993.

The irony is that there is absolutely no reason for this backsliding. The movement launched by Friedman, introduced by Ronald Reagan and entrenched under Clinton, faces a profound legitimacy crisis around the world. Nowhere is this more evident than at the University of Chicago itself. In mid-May, when university president Robert Zimmer announced the creation of a $200 million Milton Friedman Institute, an economic research center devoted to continuing and augmenting the Friedman legacy, a controversy erupted. More than 100 faculty members signed a letter of protest. “The effects of the neoliberal global order that has been put in place in recent decades, strongly buttressed by the Chicago School of Economics, have by no means been unequivocally positive,” the letter states. “Many would argue that they have been negative for much of the world’s population.”

When Friedman died in 2006, such bold critiques of his legacy were largely absent. The adoring memorials spoke only of grand achievement, with one of the more prominent appreciations appearing in the New York Times–written by Austan Goolsbee. Yet now, just two years later, Friedman’s name is seen as a liability even at his own alma mater. So why has Obama chosen this moment, when all illusions of a consensus have dropped away, to go Chicago retro?

The news is not all bad. Furman claims he will be drawing on the expertise of two Keynesian economists: Jared Bernstein of the Economic Policy Institute and James Galbraith, son of Friedman’s nemesis John Kenneth Galbraith. Our “current economic crisis,” Obama recently said, did not come from nowhere. It is “the logical conclusion of a tired and misguided philosophy that has dominated Washington for far too long.”

True enough. But before Obama can purge Washington of the scourge of Friedmanism, he has some ideological housecleaning of his own to do.

From The Huffington Post 

The Rust Belt is losing its red tint. It has been more than 40 years since Indiana voted for a Democrat in a presidential election, but discontent among the state’s auto and manufacturing workers has them supporting the Democratic Party and Obama this election season as the best hope to save the industry.

Danny, who didn’t want to give his last name for publication, is a retired GM autoworker living in Anderson, Indiana. “Before, nobody really paid attention to Indiana,” he says. But “there’s more activism on the ground right now,” and he predicts the state — a onetime stronghold of the Ku Klux Klan — will go blue in November.

His prediction is supported by recent numbers. In 2004, President Bush crushed Sen. Kerry in Indiana, winning 60 percent of the vote to Kerry’s 39 percent. By contrast, a June 24 SurveyUSA poll showed Sen. Obama actually leading Sen. McCain 48 percent to 47 percent, a toss up, given the 5 point margin of error.

Danny retired in Oct. 2003 after working for GM for 33 years. In that time, he’s seen one of America’s largest plastics manufacturing facilities shuttered and closed, thousands laid off, and the local economy devastated. In 1970, roughly 70,000 people called the then-thriving manufacturing city of Anderson home. Today, that figure stands at 59,000 and falling.

“It’s just gonna keep on going down,” says Danny of his former employer. As reported July 10 in Fortune, GM’s market value is less than the value of Bed Bath & Beyond. A July 15 piece in Fortune on GM’s recently announced restructuring plan carried the headline “[CEO] Rick Wagoner Tries to Catch a Falling Knife — and Fails.”

Perhaps no state has suffered the trauma of the American auto industry’s fall more than has Michigan. Feller Galaviz, an electrician who has spent the past 13 years working for GM in the state, recently relocated to Arlington, Texas, to keep a job with the company. According to Galaviz, many younger tradesmen and women are getting paid higher wages to abandon his trade to work instead on the manufacturing line side by side with seniors.

“They’ve put their trade guys on the line,” he said, “and that’s created animosity — especially with the old-timers.” Like Danny in Indiana, Galaviz sees the trauma of the industry favoring Obama in 2008. “I think pretty much the majority is going for Obama,” he said. “I think there’s a real desire for change. We have the capability to transform the industry.”

Danny agrees, adding that “The [American automakers] had the technology to [make change] for 5-10 years, but they haven’t done it. For God’s sake, they sit there and say, ‘We need change, we need change,’ and they don’t do it.”

The United Auto Workers union endorsed Barack Obama on June 10, and the union website contains rave reviews of a visit he made to Flint, Mich., last month.

It’s possible that no other city in America has suffered more for the GOP’s misguided trade policies, inattention to the nation’s infrastructure, and lack of a national health care plan.
Those problems were on the minds of many UAW members in the crowd when Obama delivered his speech on Monday to rousing applause and numerous standing ovations to about 1,000 people at Kettering University’s Connie and Jim John Recreation Center in Flint.

Both Danny and Feller Galaviz say they thought the unions were more engaged this election cycle than in years past, but they are skeptical of the effectiveness of the unions.

“The [union people] seem to have confidence,” says Galaviz. “But we have no confidence in the union. We feel they’re floating us down the river.” Even if the industry were to right itself, Galaviz predicted, the union system “will be demolished.”

“It’s going to be every man for himself.”

As of publication, a call to the U.A.W. International office in Detroit was not returned.

“Anybody in their right mind — even the U.A.W. or any other union,” says Danny, “knows that in order to succeed, you have to make money…. It all comes down to the elected officials.” Of Indiana politics in 2008, he says, “The people that know where their bread comes from — they’ll fall in line.”

“It’s ridiculous,” says Danny. “No new American refineries since the 1980s.” The disgust is evident in his voice. “It’s not just the auto industry,” he says. “It’s every industry. Corporations, he says, have used American military intervention abroad “as an excuse to move overseas.”

“I don’t see GM changing anything until they have every operation overseas,” says Danny. “This started back in the 1980s with Reagan.” Midwest autoworkers are especially frustrated with NAFTA, he says, calling the trade agreement, health care, and national security the three issues foremost on autoworkers’ minds in 2008.

“We already know we’re not going to get any help from McCain,” Danny says. “And I don’t even know what Phil Gramm thought he was talking about last week.”

Whether or not GM will survive to see what Galaviz and Danny see as the benefits of political change is unknown. On Tuesday, GM Vice Chairman Bob Lutz said that the automaker will “need triples and home runs” if it is to regain market viability in 2009. GM recently put its gaz-guzzling Hummer brand up for sale and is focusing efforts on the development of smaller, fuel-efficient compacts. GM executives are touting the Chevrolet Volt — an extended range electric car slated for release in 2010 — as a potential savior.

“Everybody’s betting on that,” said Galaviz, who seems cautiously optimistic. Danny is more skeptical.

“We are too far into oil,” he says. “We had a lesson in the 1970s. Brazil learned from it,” Danny notes, of the South American country’s progressive alternative fuel program. Brazil achieved energy equilibrium in 2006 — exporting as much oil as it imports; and the country is a leader in ethanol use and flex-fuel infrastructure. According to Danny, though, in the United States, “All we did was sit back for a little bit and do nothing.” Now, he says, “It’s getting close to being a perfect storm.”

At a speech in Des Moines in which he recounted a recent visit to automakers in Detroit, Obama said, “I told them that when I am president, there will be no more excuses — we will help them retool their factories, but they will have to make cars that use less oil.” Obama has further stood in opposition to McCain’s proposed “gas tax holiday” and opposed opening protected coastal waters to offshore drilling.

“We got to have a Democrat in the White House this time around,” says Danny.

By JAMIE GORELICK and

Published: July 16, 2008

The New York Times

NOW that we have presumptive presidential nominees from the two major political parties, we need to turn our attention to the transition that will take place six months from now. One of the observations of the 9/11 commission was that the deeply flawed presidential transition of 2000 and 2001 created a dangerous period of vulnerability.

As always, the crowd coming in was dismissive of the concerns of the crowd going out. There was a mismatch between the concerns of the Clinton national security team and those of the incoming Bush team. While there were briefings between the election and the swearing-in, there was no trust — and thus no effective dialogue — between the members of the two administrations.

In addition, President Bush took too long to set priorities and direction for his national-security team. This was a result partly of the prolonged battle over the 2000 election, but it also reflected a basic problem in how we populate our government agencies — we do so much too slowly. Neither nominations nor confirmations come fast enough.

The 9/11 commission worried that terrorists would take advantage of our weakness during transitions, just as Al Qaeda did when it attacked Madrid just before Spain’s elections in 2004.

The lessons learned from the Clinton-Bush transition should inform what the candidates and the president do right now. The only way for a new administration to make important decisions in a fully informed way is to organize the transition into office very differently. The campaigns of both John McCain and Barack Obama are reported to be compiling lists of potential national-security nominees to speed the confirmation process next year, but that is just the beginning of what needs to be done.

First, the information given to the nominees must change drastically. It is customary to extend to nominees a daily intelligence briefing similar to the one the president receives, but we need to go well beyond that norm. To be ready to make the crucial decisions next Jan. 20 — and to take sensible positions in the debate about our national security in 2008 — both candidates (and a knowledgeable assistant) should be given full access, not just to the daily intelligence brief but to all the sensitive programs that we have in place to protect this nation. Either Mr. Obama or Mr. McCain will have to decide whether and how to continue the intelligence programs and other practices that are now in place. They should have knowledge of how they are working well in advance.

Second, the best transitions are led by those who would take over the federal government’s departments and agencies. Too often, an administration’s appointees are being selected as the transition is happening. That is ineffective and dangerous. The president-elect should be in a position to name his national security cabinet right after the election. To do so, he needs to be able to vet candidates now. We need to give the candidates the full resources — including F.B.I. background checks — they would otherwise get after the election to make their selections before November.

Traditionally, politicians, the news media and voters have been critical of a nominee “presuming” his election by identifying cabinet members before November, so the examination of possible leaders has been done in secret, undermining its effectiveness. When a campaign is worried that consideration of a possible nominee will become public, it refrains from fully vetting the person, to reduce the chances that the name will leak to the press. Our political culture needs to agree collectively that it would be good for the country for the candidates to vet their nominees now.

Third, prospective agency heads should begin meeting with those they would succeed immediately after the November election. The world has changed considerably over the past eight years — and our government has changed with it. We have an entirely new Department of Homeland Security and a director of national intelligence. One of the critical flaws in the Clinton-Bush transition was that the incoming administration discounted the concerns expressed by the outgoing administration, in part because the new administration had a dated view of which problems were most important.

It is extremely difficult for anyone outside the government, even the most avid students of public policy, to fully understand the challenges being faced inside government every day and what is being done to respond to them. The transmission of that information to a new administration is vital.

Current officials should share not just what is happening today but why they made the decisions they made. And during the transition they should share their thoughts on current decisions with those who will soon have to make them.

Fourth, the incoming administration cannot afford a “not invented here” attitude. However much this election is about change, there will be elements of the current team’s policies that are worth building on and continuing. The new president must be able to make informed decisions about what to continue and what to change.

Fifth, Congress must be involved. The Senate should be prepared to change its process for confirming nominations to deal with the heightened vulnerability during a transition. The Senate leadership, on a bipartisan basis, should pledge right now that hearings for national security and other key cabinet and sub-cabinet members will be held in early January and that votes to confirm or reject nominees will be scheduled for Jan. 20, the same day that the president takes office. Confirmation hearings for the other nominees should be concluded within three weeks of receiving nominations.

Our presidential transition process needs to adjust to the threats the United States faces. Improving the process will strengthen our ability to respond to those threats — and it might even result in better decisions in the early weeks and months of the next presidency.

Jamie Gorelick, a deputy attorney general from 1994 to 1997, and Slade Gorton, a Republican senator from Washington from 1982 to 2000, were members of the 9/11 commission.