Brookings Press Blog

Chad Bown, Author of SELF-ENFORCING TRADE, Quoted in The Economist

China is the world’s largest exporter and as the country’s exports have grown, so has the number of disagreements with its trading partners. An article in The Economist on the rising number of disputes that China has brought to the World Trade Organization says that it is a good thing that Beijing and other emerging markets are turning to the WTO to settle disputes instead of retaliating on their own. But can the WTO’s dispute settlement system cool mounting tensions with China?

Chad Bown, author of Self-Enforcing Trade, argues “that America or the EU may still find disputes with China tricky. Countries often threaten to target their retaliation against politically-sensitive products, hoping that their manufacturers will convince their own governments to change course. But this sort of strategy may be more difficult in a dispute with undemocratic China.”

- Read the full article.

- Learn more about Self-Enforcing Trade.

David Brooks cites WHAT WORKS IN DEVELOPMENT?

In his New York Times column, David Brooks discussed the underlying causes of the tremendous destruction from the earthquake in Haiti. He referred to What Works in Development? edited by Jessica Cohen and William Easterly to back up his point that “we don’t know how to use aid to reduce poverty.” Countries have spent trillions of dollars in foreign aid worldwide, yet this assistance has not generated growth. According to the book:

The picture is grim. There are no policy levers that consistently correlate to increased growth. There is nearly zero correlation between how a developing economy does one decade and how it does the next. There is no consistently proven way to reduce corruption. Even improving governing institutions doesn’t seem to produce the expected results.

- Read the full New York Times column by David Brooks

- Learn more about What Works in Development?

Going Bananas: SELF-ENFORCING TRADE offers primer on recently settled WTO dispute between EU and Latin American countries over bananas

In mid-December, the EU reached accord with Latin American countries on the banana tax. This was the longest-running WTO dispute and is the subject of Chapter 3 in Chad Bown's Self-Enforcing Trade. In “An Introduction to WTO Dispute Settlement,” Bown uses the EC–Bananas III dispute to introduce the WTO’s formal trade dispute resolution process:

The fundamental economic interest that boiled over into a formal trade dispute in the early 1990s involved foreign access to the European import market for bananas—the world’s largest banana market with imports of roughly $2.5 billion per year. While the trade dispute on which I focus erupted in the early 1990s, the issue of EC banana imports has been politically contentious on the domestic front (that is, between EC member states) dating back to the 1950s and the Treaty of Rome. Until the early 1990s, member states had different and divergent external trade policies toward bananas. . . . The different trade policies of EC member states toward the same product managed to coexist until 1993 when, after politically rancorous internal negotiations, the members finally converged on a single, European Community–wide import regime for bananas. The new import policy, known as Regulation 404, was essentially a tariff rate quota. The quota divvied up the EC import market and established one quantitative import limit allocated to ACP producers and another to non-ACP producers (mainly Latin American exporters). Bananas coming in under the quota available to Latin American exporters would be subject to an import tariff that was not applied to imports from the ACP countries.

According to Bloomberg News, Latin American countries are the clear winners of the dispute. As a result of the settlement, banana prices in the EU will drop and exports from Latin America will rise.

- Read more about the settlement of the banana case from Bloomberg and the Financial Times

- Learn more about Self-Enforcing Trade

- Download Chapter 3 of Self-Enforcing Trade to learn the background on this issue

Chad Bown Op-Ed in Asian Wall Street Journal: “Free-Trade Greenshoots”

Recessions often bring high tariffs and trade wars, and recent figures from the World Bank show that industry requests for trade barriers are up 30% over the past year. But according to Chad Bown, there is cause for optimism as well. In an op-ed in the Asian edition of the Wall Street Journal, Bown writes that the "global economy may still stay on a pro-trade path." He points to a recent U.S. government decision to deny new trade barriers on imports of aluminum pistons from Argentina and China's use of the World Trade Organization to formally question barriers instead of resorting to retaliatory measures. Bown discusses the WTO's dispute settlement system in his new book Self-Enforcing Trade: Developing Countries and WTO Dispute Settlement.

- Read the op-ed

- Learn more about Self-Enforcing Trade

A look into Africa: Robert Rothberg discusses governance and leadership

The principles of global governance, and what it means for the rest of us

In an interview with The Africa Group [pdf], Robert Rotberg underscores the importance of engaging developing regions such as Botswana, Ethiopia and Nigeria in the rising value of principles in the world order. Rotberg discusses the transformation of Africa and China, stating, “China will continue to have a profound influence in the development of Africa. Africa, however, needs to develop a multilateral, collective response to China’s involvement.” He adds that though Africa is not immune to the current global meltdown, there are still good opportunities in some sectors for African development. What this means is economic growth for Africa and for better relations between Africa and the rest of the world. But as China submerges itself into the African government, there is a chance that this evolving symbiosis will make Africa the poorest and most troubled continent, while it further powers China’s expansive economic machine.

In the book China into Africa: Trade, Aid, and Influence, Rotberg and a team of renowned scholars tackle China’s interest in African oil, military and security relations, the influx and goals of Chinese aid to sub-Saharan Africa, human rights issues, and China’s overall strategy toward Africa. They outline Africa’s chance for poverty alleviation in the developing regions through a system that promises to do more than anything attempted by Western colonialism or international aid programs.

Rotberg further addresses the issue in his latest book, Corruption, Global Security, and World Order. In collaboration with a distinguished group of contributors, he discusses the global ramifications and implications of deeply embedded corruption in various nations.

Robert I. Rotberg is director of the Program on Intrastate Conflict, Conflict Prevention, and Conflict Resolution at Harvard University's John F. Kennedy School of Government, and president of the World Peace Foundation. Rotberg has authored and edited numerous books, on Africa and global governance including Worst of the Worst: Dealing with Repressive and Rogue Nations (Brookings & World Peace Foundation, 2007) and Ending Autocracy, Enabling Democracy: the Tribulations of Southern Africa 1960-2000 (World Peace Foundation, 2001).

- Learn more about China into Africa

- Learn more about Corruption, Global Security, and World Order

- Read the full interview with Mamao Mihretu of The Africa Group [pdf]

U.S. Foreign Policy Needs a New Playbook

Stale Cold War mentality fosters distrust toward the United States

America has a bad habit of compromising its core values of freedom and democracy by forging alliances with dictators who don’t support these basic tenets. During the Cold War, all a developing country needed to do in order to gain U.S. support was to stay out of the Soviet orbit—the enemy of our enemy was our friend. We thus found ourselves siding with despots such as Ferdinand Marcos, Mobutu of Zaire, the Shah of Iran—the list goes on. Similarly, being a source of vital resources or a protector of “international stability” in today’s world is too often sufficient qualification for U.S. aid.

Author Hilton Root takes a shrewd look at what is happening in American foreign affairs in Alliance Curse: How America Lost the Third World. He challenges long-held assumptions about our actions abroad, arguing that “outmoded” may be a more accurate description of our foreign policy than “current.”

Root’s book, just published by the Brookings Institution Press, comes at a turning point in America’s history. Unfortunately, our recent track record shows that we haven’t learned from the past. In Pakistan, a hotbed of Islamic fundamentalism, the United States has contributed billions of dollars to Pervez Musharraf’s government, largely to secure its support in the war on terror. That aid, however, still has not secured the loyalty of the military regime or the friendship of the population. Root questions the wisdom of providing aid to governments that remain corrupt and tyrannical, in light of the potential blowback.

So, what should America do at this crossroads? Root, a professor of public policy at George Mason University, argues that fostering economic development—not propping up dictators—is the better course for the country’s short-term and long-term goals. In the long term, it is actually a more effective strategy for building stability and winning the hearts and minds of the developing world.

You can hear from the author himself about his alternative strategy to close the gap between security and economic development. Hilton Root will be appearing at Politics & Prose Bookstore in Washington, D.C. this Saturday, July 19th at 1 p.m. Don’t miss out!

- Learn more about Alliance Curse.

- Learn more about the event at Politics & Prose.

Global Trade and Poor Nations

New book assesses the impact of reformed trade policies on the world’s poorest nations

Global Trade and Poor Nations presents the likely effects of global trade reform on seven of the poorest countries in the world. The contributors, led by editors Bernard M. Hoekman and Marcelo Olarreaga, take into consideration the reforms agreed upon under the auspices of the World Trade Organization’s Doha Round and investigate the economic changes that would likely arise. The seven selected nations (Bolivia, Cambodia, Ethiopia, Madagascar, Nicaragua, Vietnam, and Zambia) represent a geographical and cultural cross-section of countries, allowing the analysis presented in the book to reach more than just one localized area of international trade policy. The researched showed that trade liberalization can potentially be a powerful catalyst for economic growth, which is crucial to mitigating poverty and sparking development.

The new book is published in conjunction with the Groupe d’Economie Mondiale at Sciences-Po, Paris and the Yale Center for the Study of Globalization (YCSG). YCSG strives to examine “the impact of our increasingly integrated world” on every level: individual, local, and national. The Center disseminates its cutting-edge analysis in the hopes of ultimately linking “academia and the policy world.” The current director of the YCSG, Ernesto Zedillo, who writes the foreword for Global Trade and Poor Nations, was preceded by current Brookings President Strobe Talbott.

- Learn more about Global Trade and Poor Nations.

- Learn more about the Groupe d’Economie Mondiale at Sciences-Po.

- Learn more about the Yale Center for the Study of Globalization.