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The past two weeks we looked into the threats of an international trade war as result unilateral hiking of tariffs, while we also looked into protectionism as compared to free trade. We concluded that although the hiking of tariffs by the USA seems to have been made with a WIN-LOSE mentality, most likely all affected by such measure may lose, including sectors and workers in the country that was supposed to gain by the move. Whether we like it or not, we live in a globalized world, in which economies have become interdependent as compared to dependent on each other. There are arguments both for and against globalization, which is often blamed for workers losing their jobs as their input is replaced by cheaper manufacturing elsewhere. Most consumers will not think about this while buying their clothes for example but let us have a closer look at both sides of the globalization coin.
Firstly, globalization makes more goods and services available to more people, often at lower prices. If you have disposable income and you’re buying a product that comes from abroad, you’re benefiting from globalization to some extent. Business owners also benefit by having access to a bigger market for their goods and services.
The argument that globalization has lifted people in developing countries out of poverty is somewhat controversial because opinions differ as to the quantity – and quality – of the jobs created by globalization. But the general thinking is that globalization has increased job opportunities in capital-scarce, labour-rich countries, i.e. emerging economies.
Globalization is also said to have increased cross-cultural understanding and sharing. A globalized society boosts the rate at which people are exposed to the culture, attitudes and values of people in other countries. That exposure can inspire artists, strengthen ties between nations and dampen xenophobia. Globalization might also lead to more cultural homogeneity if people’s tastes converge. If everyone wears jeans, learns English and watches Hollywood movies we may lose precious cultural practices and languages. Some critics of globalization worry that it’s creating a monoculture.
Art and culture aren’t the only things that spread more easily in a globalized society. The same goes for information and technology. As examples, see the rise of mobile banking or the practice of microlending. Civil society organizations can look to other countries for inspiration and good ideas can spread more easily.
On the flip side of the coin we see that when established economies compete with less-developed economies, their big advantage is their access to capital, whereas less-developed economies’ big advantage is their cheap labour.
Globalization increases the returns to capital in rich countries like the U.S. and decreases the returns to labour in those same countries. In other words, low-skill jobs in a developed economy can disappear because of globalization. The result may be a decrease in the inequality between countries but an increase in the inequality within countries.
Globalization can also be an opportunity to spread values and practices like environmentalism and labour rights throughout the world. In practice, that spread is slow and imperfect. For example, rather than exporting the labour protections it abides by in Europe, a company might follow lower standards in, say, Bangladesh.
Some argue that globalization has caused a “race to the bottom” in which companies actively seek the countries with the weakest labour and environmental protections and the lowest wages. And while globalization has increased the flow of goods, services and capital, there are still plenty of tax havens, meaning that much of the value added by globalization is not captured and redistributed by governments.
It is also said that globalization has empowered multinational corporations at the expense of governments and citizens. This reduces state sovereignty and citizens’ ability to hold their leaders accountable for conditions in their countries. It’s another reason that labour and environmental protections are harder to enforce than many critics of globalization would like. Multinational corporations may also lobby for favourable provisions in trade agreements.
In conclusion, supporters and opponents of globalization generally agree that the phenomenon has created winners and losers. Supporters argue that the benefits outweigh the drawbacks, while critics want to either improve the conditions of global trade or, in some cases, roll back globalization. What is your take?
Reference: The Pros and Cons of Globalization by Amelia Josephson

Ton Haverkort

The Neglected Solution to the TB Crisis

Society

April 2, 2018

Though TB can strike anyone, it disproportionately afflicts marginalized and vulnerable populations in places like refugee camps, slums, and prisons. That fact goes a long way toward explaining why 10.4 million people contracted the disease in 2016.

In an age of rapid technological innovation, it is shameful that almost two million people will die from tuberculosis this year because they are too poor to afford treatment. Indeed, the reason why TB continues to take lives is simple: indifference.
This indifference stems from the deadly delusion that TB is a disease of the past – a delusion that has persisted, even as 10.4 million people contracted TB in 2016. TB patients are generally powerless to demand the world’s attention. Though the disease can strike anyone, it disproportionately afflicts marginalized and vulnerable populations in places like refugee camps, slums, and prisons.
Another delusion is that we have ample treatments to fight TB, even as it continues to mutate. But multidrug-resistant TB is a serious threat. It is sometimes called “Ebola with wings”: while the two pathogens have similar death rates, MDR-TB is airborne and spreads more easily. The current treatment for MDR-TB includes a regimen of toxic drugs – some requiring painful, daily injections – that can last for up to two years.
The treatment options for TB have scarcely evolved in decades. Whereas the research and development pipelines for HIV/AIDS and hepatitis C continue to deliver results, the R&D pipeline for TB lags far behind.
But that’s not the whole story. In the last four years, TB care should have been revolutionized. After 50 years without a single new TB drug being developed, two – bedaquiline and delamanid – were approved in quick succession. This should have been an historic moment in the fight against TB, especially for drug-resistant patients.
One would have expected a broad coalition of health authorities, health-care providers, standard-setting bodies, insurers, and manufacturers to rush to the aid of the patients most in need of these new drugs. But no such response emerged.
Instead, the new medicines have mostly gathered dust on warehouse shelves. Since they were approved for use, a paltry 5% of patients in need have benefited from them. The latest figures for delamanid, in particular, are appalling: after four years, a mere 1,247 patients worldwide have been treated with the drug.
We would know, because many of these patients were treated in our programs, and in countries where Médecins Sans Frontières and Partners in Health have been pushing for the registration and uptake of new medicines. In partnership with Interactive Research and Development and with support from Unitaid – which channels funding from a painless airline tax toward addressing neglected health problems afflicting the poor – we launched the endTB initiative to accelerate use of the new drugs in 17 countries facing TB epidemics.
It is a sorry situation when nongovernmental organizations, rather than governments, academic institutions, and drug companies, must push for the use of available new drugs. We took action because cash-strapped national TB programs tend to be conservative about adopting new treatments, and because pharmaceutical manufacturers have little incentive to bring their drugs to market in poorer countries.
The evidence we have gathered so far indicates that when the new drugs are used, hard-to-treat TB patients are likelier to recover, and often do so more quickly. Given the scale of the global TB crisis, endTB’s work is a drop in the ocean. Yet it offers a glimpse into the failing response at large: an appalling lack of political will, imagination, and urgency that leaves millions to die on our generation’s watch.
This September, the United Nations will host its first high-level meeting on the TB crisis. UN member states should use the occasion to pledge a radical increase in funding for TB programs around the world, and to overhaul an R&D model that has proved unfit for purpose. Otherwise, the event will be remembered as yet another meaningless gathering – one that left tens of millions to suffer in the clutches of the world’s deadliest infection.
Specifically, what we need are simpler, quicker, and cheaper ways to test and treat TB, especially in remote and impoverished settings. We need better tools to prevent infections in the first place, and to kill latent infections before they kill us. And, of course, we need a robust pipeline of drugs to ward off TB and its resistant forms.
In the meantime, the governments of TB-stricken countries must use the tools they already have – for example, by doing more to ensure that new treatments like bedaquiline and delamanid are made available to those who need them.
A UN meeting is a golden opportunity to make progress. Although it will not solve the TB crisis overnight, it is a chance finally to elevate TB to the World Health Organization-designated status of a “public health emergency of international concern,” as was done in wake of the Ebola and Zika outbreaks.
The urgency of the TB crisis is well known to medical experts, and certainly to patients and their families. Standard treatments are failing as we speak, and millions of people are silently being infected and falling ill. In the twenty-first century, that should be a source of deep shame for us all.

Joanne Liu is the international president of Médecins Sans Frontières.
Paul Farmer is the co-founder of Partners in Health, Professor of Global Health and Social Medicine at Harvard Medical School, and Chief of the Division of Global Health Equity at Brigham and Women’s Hospital.

US tariffs and reciprocity

Business & Economy

April 2, 2018

Both the World Bank and the IMF data reveals that the two-way United States-European Union trade has been roughly balanced over time. The very high levels of foreign investment accounted for by each in the other’s markets means that the Transatlantic economy is arguably the most integrated on Earth. US policy makers understand that trade and investment between Europe and the United States make the Transatlantic market the most integrated economic area in the world. This is not “FAKE NEWS”, but a quote from the web site of the Office of the United States Trade Representative.
According to Jean-Francois Boittin, the former French Diplomat and Treasury official, except for the only one whose opinion really matters in America’s contemporary parallel “truth” universe is that of the current occupant of the White House. The President, Donald Trump, in his speeches and tweets, loves to hammer away at the fact that other countries “rape” the United States. President Trump is particularly irate about the “scandalous” tariff that the European Union imposes on imported cars which levied at 10%, when the United Sates has a tariff of only 2.5%; hence a call for reciprocity.
It sounds entirely reasonable, if it weren’t for those pesky details. The real world is, alas, more complex. Jean-Francois Boittin noted that President Trump and his sidekick Wilbur Ross, the current United States Secretary of Commerce, live in a world where everything is binary. Their preferred alternatives are: Either I win – or you lose. Everything else is “cheating.”
Krzysztof Bledowski, senior Polish economist argued that both President Trump and Commerce Secretary Ross conveniently forget that there are actually two US tariffs on automobiles: 2.5% on light vehicles, and 25% on pickup trucks. The second one, in case you care about the truth, was not any untoward demand by the Europeans. Instead, it was imposed by Lyndon B. Johnson, the 36th President of the United States, all the way back in 1964.
According to Krzysztof Bledowski, the pretext for this tariff was the so-called chicken war with Europe. The real motive was to answer the plea from the United Autoworkers Union (UAW) to keep Volkswagen mini-buses out of the United States market. The 25% tariff, at this high level an aberration even in the United States, the world champion of the so-called tariff peaks has not been touched since.
Krzysztof Bledowski further noted that the problem for President Trump arises as soon as one realizes that trade negotiations are actually more complex than a game of strip poker. In trade negotiations, the tit-for-tat is called reciprocity. It is measured not in a binary fashion, but across many sectors, in accordance with Ricardian principles. Think Bordeaux wine versus British textiles in the 18th century.
And so it was that, Jean-Francois Boittin recalls that during the last major tariff negotiation between the United States and the European Union, the Uruguay Round in the GATT (1986-1993), American and European negotiators spent sleepless nights making sure that their bilateral concessions were strictly equivalent. Never once did the United States side request a reduction of the European Union tariff on automobiles.
Was that a matter of their incompetence? Or a sign of a traitor to the American cause? No. In the US, the main competitor to the car market at the time was Japan. The Big Three – GM, Ford and Chrysler – lived happily sheltered behind the wall of the 25% duty on pick-ups. They also loved the euphemistically called “voluntary exports restraints.”Those are GATT-illegal export restrictions which were adamantly pursued by the United States government and which Japan agreed to in the trade equivalent of a shot-gun wedding.
Meanwhile, the Europeans chose to maintain their tariffs at 10%. This move received the enthusiastic support of the European subsidiaries of the US “Big Three” automobile manufacturers. Their European subsidiaries, mostly established in Germany, catered to the local market under the protection of the GATT or WTO legal, European Union tariff, which raised by 10% the cost of imported Japanese cars.
The magic question here is the following. Would an alignment of the European duty rate on the American one, down to 2.5% from the current 10%, generate a tidal wave of made-in-America cars to Europe? According to Jean-Francois Boittin it is unlikely. Even President Donald Trump should know why. He has owned more Ferraris, Lamborghinis or Mercedes-Benzes than Cadillacs. Not that such truth would matter to him. For President Trump, it’s always “do as I say,” not as I do myself.
James Dorsey, Singaporean award winning journalist and senior fellow at the S. Rajaratnam School of International Studies stated that selling cars to Europe is a bit like selling coal to Newcastle, in the olden days, when there was still coal in Newcastle. Look at car rankings inside the United States: Japanese and European cars top United States models in terms of customer satisfaction.
James Dorsey argued that it should not come as a surprise to anyone who ever took an Economy 101 class. If you are a Big Three manufacturer in Detroit, why would you try to compete on the light vehicle market with exports to Europe when you can have big fat margins on domestic sales of pick-ups inside the United States, protected behind a 25% tariff wall? Add that any move by the Trump administration to weaken the fuel economy standards or raise emissions will be an added handicap in the European market, where consumers care about fuel costs and the fight against climate change.
Enough said about cars. If you want to look at surpluses on a strictly sectoral basis, what if the US trading partners were looking at deficits in the aerospace industries or services or Hollywood movies? Or to the digital economy and the insolent domination of the Silicon Valley-based tax artists, called internet robber barons? As the saying goes, better not to throw stones when you live in a glass house.