WTO Caucus

Today in class we're doing a WTO Caucus session, so I am representing the RNC, and this is my platform on the issues at stake:

Good Afternoon, I am here to represent the RNC in this conference, and these are my positions

Resolution 1: We are not opposed to free trade of automobiles due to manufacturing plants owned by Toyota, BMW and a number of other foreign companies in the United States. Competition from foreign car manufacturers has led to greater consumer choice and a rise in the quality of automobiles in the United States. Furthermore, lifting of barriers on automobiles will also allow for US automobile companies, namely Ford and GM, the ability to compete in the global market, helping American businesses and workers. Regarding free trade of agricultural goods, the RNC does not currently support this proposal, due to concerns over what would be brought into the US, along with the potential to hurt US farmers. Therefore, we can agree on point 1, but not on the second point.

Resolution 2: We do not take issue with the proposal of non-tariff barriers on automobiles and financial services, however NTB’s in regards to agriculture are unacceptable, due to the negative economic impact this would have on American farmers, and the fact it would undermine US farmers. While we would like to move towards free trade in the near future, we cannot come to an agreement at this time over the removal of NTB barriers for farming.

Resolution 3: We do not have an opinion on resolution 3, and the status of GMO products being banned from NTB’s is not a priority for the RNC. This question, in the US, should be left to the FDA and state governments to determine the status of GMO products.

Resolution 4: Regarding subsidies, again we have an issue with lifting restrictions on agriculture products from outside the United States. Furthermore, given the current struggles facing US farmers, we cannot allow them to be exposed to the global market. Furthermore, given the complexity of various agricultural subsidies, their removal is virtually impossible. Also, it would be political suicide for both Republican and Democratic politicians, especially in rural areas, so any farm bill removing subsidies would be immediately voted down. Therefore, the RNC cannot endorse any proposal to remove agricultural subsidies, both as a matter of policy and political reality.

Resolution 5: The RNC supports the proposal of allowing for the free flow of capital investment across borders. This would help to integrate markets further, leading to increased global cooperation and trade. With the prevalence of multinational corporations and financial institutions only increasing, it is logical to work to connect these institutions through the market, and expand trade and commerce even more, benefitting all involved.

Resolution 6: The stability of the United States dollar is one of the most important pillars in the world economy. The dollar is traded on the market today, and its value compared to other currencies is determined by the market. The RNC does not object to the dollar being in free float on the market, however the United States has to reserve the rights to set its own monetary and fiscal policies and the ability to revalue the dollar when necessary.

Resolution 7: Trade has benefitted the US and its economy. The flows of goods, services and ideas both in and out of the United States has led to America’s economic prosperity. We do wish to commit ourselves to the expansion of free trade by 2020, however. Two potential deals outside of the WTO which would help expand trade are the Trans-Pacific Partnership and the US-EU free trade deal. Therefore, the RNC is committed to advocating for free-trade agreements and the increase in worldwide trade both inside and outside of the WTO. 

Russian Economic Issues

Today, the Russian ruble's value plummeted, losing nearly 9% of its value before rallying. At the end of the day, the ruble lost 'only' 4% of its value. While President Vladimir Putin has been enjoying widespread popularity in Russia due to the war in Ukraine, economic troubles in Russia could spell trouble for his regime. The ruble had already taken a hit due to recent economic sanctions following the war imposed by the EU and United States, taking the side of the Ukrainian government in the conflict. However, the ruble's troubles are not due to the war, but instead because of the recent drop in oil prices. Russia is one of the world's largest oil exporters (#2) and the value of a barrel of crude oil has significantly dropped in the last year. Russia's economy is heavily dependent on fossil fuel revenues, so the ruble's value has fallen due to the economic uncertainty surrounding global oil prices. A lot of this has to do with new technology used to extract shale oil and tar sands in the US and Canada, which have led to a large increase in oil supply, and cut the dependence of the US on foreign oil supplies. Also, OPEC (Russia, Canada and the US are not members) has not decreased its production of oil, which contributes even more to the high supply of oil in the global market. In the US, this has also caused gas prices to drop in recent months, but it has adversely affected many resource-rich countries, and is a good example of the resource curse and the over-reliance on fossil fuels in the economies of many nations.

The US and Climate Change Politics

One of the biggest issues in US climate change policy is the fact that climate change is an international issue, and therefore needs to be negotiated on the world stage. However, the United States is very nationalistic in the sense that it does not like to be held to account by international bodies, such as the UN. While Presidential administrations have been looking for international solutions to the issue of climate change through acts such as the Kyoto Protocol under Clinton, there is very little chance that the US will ever ratify either Kyoto or a treaty which is similar, regardless of content. While the absolute insistence of protecting US sovereignty is one issue, another is the feasibility of several climate change agreements, such as the recent Obama-Xi deal where the US and China pledged to cut carbon emissions. For one, the odds of the American government passing legislation (since this isn't a treaty, only legislation is required for now) are minuscule, both due to Obama's weak political position and the Republican Party's unwillingness to act on climate change due to the perceived threat of any legislation to US jobs, and the chance that China could easily renege on the deal. Therefore, it is unlikely that the US will, in the near future, be willing or able to pass any sort of international or domestic legislation that deals with climate change.

Environmentalism in US politics

One of the most controversial issues in environmental politics today is the Keystone XL pipeline, which would replace an existing pipeline, but has become a major political issue due to the environmental concerns associated with its construction. The proposed extension would run from Alberta, Canada to Nebraska, and then down to the Gulf Coast to transport oil overseas. However, the pipeline has been blocked by the Obama administration due to the proposed pipeline running through environmentally sensitive areas in Nebraska, and through a Sioux reservation in South Dakota. The Obama administration can block the pipeline due to the fact it runs across an international border, so it requires presidential approval. At the same time, the pipeline has become in effect a proxy battle between Republicans and Democrats over the issues of climate change and the merits and weaknesses of its economic and environmental impact. Republicans and some centrist Democrats support the proposal due to the promise of jobs it would bring (roughly , while the President and the liberal wing of the Democratic party oppose the pipeline due to their concerns over the environmental impact. The pipeline has been an issue over the last two election cycles, and is currently the central issue in the Senate election in Louisiana. Senator Mary Landrieu (a Democrat) is a supporter of the pipeline due to the oil industries size in Louisiana, and has been trying to bring up a vote in Congress on the issue before her runoff election in December. However, in recent days the Obama administration has indicated it would veto a pipeline, in effect leaving Landrieu out in the wind.

Foreign Aid and Foreign Policy

One of the biggest debates over US foreign aid is how the money is spent, and where the money is actually going. In US politics, the bogeyman of foreign aid is often used to justify cuts in the US budget of wasteful spending, with Rand and Ron Paul being probably the two biggest proponents of this. However, US foreign aid has been used effectively and for good causes recently, just look at George W. Bush's AIDS policies for Africa. In both of the articles we have read, the authors write about whether or not foreign aid works. However, looking at US foreign aid today, the top 5 countries who receive US foreign aid (Israel, Afghanistan, Pakistan, Iraq and Egypt) are not receiving foreign aid exclusively for development. Most of this aid is for the purpose of anti-terrorism efforts and strengthening the militaries of these nations. Israel does not need any development aid, for example, while Pakistan and Afghanistan do need development aid, yet the money sent there is very poorly managed. The point of what I am trying to say is this: while the idea of spending foreign aid to help developing nations grow is in fact US policy, it is not the main tenet of US foreign aid: military aid and support in the War on Terror is. And here I would say that while we are giving money to these countries (Afghanistan and Pakistan) for economic aid as well, they have both squandered this money and are very unreliable partners in the War on Terror, so I would agree with Easterly and the Pauls that our foreign aid is in fact misspent and poorly managed, and needs to in the least be reviewed.

French Political Mess

In my book reading, I read about the state of the Eurozone and how Germany has become increasingly dominant, at the expense of France. France has become second fiddle, mainly due to the complete mess in its political system. The current President, Francois Hollande, is widely recognized as an incompetent, and his approval ratings are in the teens. His economic policy has been disastrous and France's stagnation has brought a feeling of malaise in the country. However, his opponents could be even worse than he is. His main competition on the center-right is Nicolas Sarkozy, his predecessor who lost to Hollande in the 2012 election. Sarkozy was arrested earlier this year over allegations of illegal campaign contributions from former Libyan dictator Muammar Qaddafi in his 2007 election victory. He has denied wrongdoing and is still seen as the center-right's favorite. However, one of his competitors, Francois Fillon, allegedly contacted Hollande's chief of staff to speed up the case against Sarkozy to benefit his candidacy (the third center-right candidate, Alain Juppe, was convicted of corruption in 2004). This new development makes the center-right candidates look as bad as Hollande, and leaves an opening for the far-right candidate, Marine Le Pen. Le Pen has effectively capitalized on the incompetence and corruption of the two main parties, and has a real chance to win the next presidential election in 2017. If a far-right, anti-EU populist such as Le Pen wins the Presidency, it could be even more devastating to the EU than the Greek crisis ever was.

Euro Book Review

David Marsh’s book, The Euro: The Battle for the New Global Currency, was not what I had expected. The book, which I thought would deal more with the current Eurozone crisis, instead was more of a historical piece. Marsh touches on the historical aspects of European currency unions, such as the Gold Standard, the Latin Monetary Union, and various other attempts to have a united European currency, tying in the past attempts of European monetary union with today’s attempt. Marsh’s analysis on the Eurozone focuses much more on the nuance of the Franco-German relationship, and the historical animosity between the two. Also, Marsh tends to focus on the personal and political decisions made which led to the Eurozone, especially by two men who had little knowledge of economics or monetary policy, French President Francois Mitterrand and German Chancellor Helmut Kohl. These two, who led their nations from the early 1980s until the mid-late 1990s, were instrumental in laying the ground for the European Monetary Union. Marsh also focuses on the reasons behind German dominance of the Eurozone, which starts with the rebuilding of the German state after World War II, and Germany’s desire to have a stable, powerful new currency, the Deutsche Mark, in order to avoid the disasters of hyperinflation like in the 1920’s, one of the causes of the Nazi rise to power. Kohl, and most of the German public were immensely proud of the Mark, and saw it as a pillar of the postwar, democratic German state. Kohl, however, was convinced to give up its commitment to the Mark in exchange for French support for German reunification in 1989. German reunification, a central event in Marsh’s book, can be seen as one of the catalysts of monetary union, since it required the Germans to join the European currency. Mitterrand only accepted reunification due to the promise of monetary union, while British PM Margaret Thatcher was vehemently opposed to it, part of an overall anti-European policy. Marsh is not the biggest fan of Thatcher, and refers to her as a right-wing populist, but implies her decisions on rejecting Eurozone membership were prescient. Thatcher’s policy was based in British nationalism, of which her vehement opposition to joining the European Exchange Rate Mechanism (ERM), the forerunner to monetary union, was only a small part. Thatcher eventually relented to joining ERM, but her stubbornness over Europe helped cause her downfall, led by the pro-Europe wing of the Conservative Party. Britain soon left ERM, however, following the inability of the Pound to stay within ERM limits of exchange rates. The resulting devaluation of the Pound sterling also later cost PM John Major and the Conservatives the next election, however the economic fallout was not as bad as it could have been.

In 1992, the Maastricht Treaty was signed, which committed its signatories to adopting the Euro, with the exception of Britain and Denmark. The commitment to adopting the Euro led to a series of actions, mainly through the ERM, to help set parity among the Eurozone nations and avoid economic turmoil. Marsh’s view of the ERM and its subsequent role in the creation of the Euro rather negatively, since many nations who were part of the ERM and the subsequent Eurozone had managed their finances incredibly poorly. Marsh specifically cites the French and Italians as culprits among the main Eurozone members, without mentioning the Greeks at first. However, when it comes to the Greeks, who lied about their finances to gain entry in the Eurozone, it was the first in a set of dominoes to fall. It should not be all that surprising, that the Eurozone nations did not, and could/would not completely align their finances to Eurozone standards. Plus, the incentive of a new, strong currency, backed by the powerful Northern European economies, gave less wealthy Eurozone nations essentially carte blanche to do what they wanted. In particular, peripheral nations in the EU (ex: Spain and Greece) used the Euro as a means to an end so they could raise their standards of living to those of Northern Europe, but at the cost of large scale public debt, which their governments were not concerned about in the early days of the Euro, but that came back to bite them following the 2008 economic recession. Germany, however, managed its finances much better, and following labor reforms in the early 2000s, was not beset with the high unemployment that affected a number of Eurozone nations following the recession. Germany’s effective weathering of the recession, coupled with its export driven economy, allowing it to take an even more central role in the Eurozone, to the point where Angela Merkel is now seen as the EU’s de facto leader. Also, Germany’s rapid rise in the EU, especially following the recession, came at the expense of France, whose economy has had a poor recovery following the recession. France’s position in the Eurozone has become second fiddle to Germany, with Merkel dominating French Presidents Sarkozy and Hollande on European policy. If there is any lesson to be learned from Marsh’s book, it is that Germany’s dominance of the Euro is centered on its national requirement to have a strong currency, and an export-driven economy, allowing it to maintain its leading position in the EU.