Inflammation and stories on trade

Taiwan Travel ActThe U.S. House of Representatives Foreign Affairs Committee recently passed the Taiwan Travel Act, allowing official travel between the U.S. and Taiwan. The State Department had previously placed restrictions on travel that prevented government officials from traveling to or from Taiwan. The enactment of the Taiwan Travel Act denounces these restrictions, encouraging diplomatic relations between Taiwan and the U.S.

Taiwan was previously a highly impoverished and war-torn country. Its development towards economic stability happened rapidly after the Taiwanese government began promoting the exportation of goods and global trade in the late 1960s. Since then, the quality of life in Taiwan has increased substantially. Forbes even awarded Taiwan the number one destination for people who are interested in moving to live in another country, naming it “the best place for quality of life as well as for personal finances” above any other country. However, the number of Taiwanese citizens relying on social welfare is continually increasing, and in 2012 the number of people living below the poverty line shot up nearly 30 percent.

Taiwan Travel Act: An Economic Enhancement

The Taiwan Travel Act enactment will help improve Taiwan’s failing economy by improving its economic relationship with the U.S. Taiwan’s economy relies heavily on exports, and the U.S. is Taiwan’s most important market for trade. However, Taiwan’s exportation of goods to the U.S has been steadily declining. Faced with a rapidly changing global market, Taiwan’s inability to compete with other countries stems from its inability to negotiate better trade agreements and forge more mutually beneficial partnerships.

The Taiwan Travel Act states that it is now the policy of the U.S. to encourage the Taipei Economic and Cultural Representative Office, and any other instrumentality established by Taiwan, to conduct business in the United States. This includes activities that involve participation by Members of Congress, officials of Federal, State or local governments of the U.S, or any high-level official of Taiwan. This change will drastically improve the economic potential of Taiwan, allowing its leaders to negotiate on behalf of their best economic interests and stop trade decline.

– Jenae Atwell

Photo: Flickr

Hunger in DjiboutiDjibouti is a small country located on the northeast coast of Africa, adjacent to the Red Sea. The former French colony has been facing a severe food and water crisis for several decades. With a population of nearly 850,000, the country ranks 172nd out of 188 countries on the Human Development Index. Needless to say, Djibouti is high on the list of countries needing foreign aid in terms of clean water, food and the tools to become self-sufficient. Despite these priorities, hunger in Djibouti remains a serious issue.

Hunger in Djibouti can be chalked up to a few different causes. Djibouti relies heavily on trade, and because of this, it has a concentrated urban center in which trade can take place and shipments may be sent by rail, air and road. However, one-third of the population resides in small villages surrounding this center, making the transport of materials and supplies extremely difficult. Djibouti also suffers from poor conditions for farming such as drought, which means a large percentage of food sources must be imported, perpetuating the hunger deficit. Because Djibouti is reliant on nutritional imports, they are often at the mercy of market prices that their weak economy cannot always support. Even slight variations in food prices can have hugely detrimental consequences for families.

Fortunately, international programs are working toward a lasting solution to hunger in Djibouti. The World Food Programme has been working since the late 1970s to prioritize government support in stabilizing the hunger issue. Projects the World Food Programme has made headway on include providing nutrition to women and children, for refugees, and in schools. Action Against Hunger is also making progress with hunger in Djibouti. In 2016, the agency brought nutritional support to over 1,000 people, aided in water access for over 4,000 and supported economic self-sufficiency for nearly 650.

These agencies may not be eliminating hunger in Djibouti entirely, but they are working toward providing the people of Djibouti with lasting development plans that have the potential to become self-sustaining solutions.

Casey Hess

Photo: Flickr

Why Is Andorra Poor? A Resolved Issue or Still at Risk?

Although Andorra is a part of Europe, this small chunk of land skirts above the poverty line. Andorrans narrowly avoid poverty through trade alone, meaning one decision or mistake could lead people to ask: why is Andorra poor?

Andorra‘s independence has successfully lasted about 150 years, yet only five percent of their land is arable. Andorrans rely on Spain for 63.6% of consumer goods, food, fuel and electricity, while France provides them with 15.8% and Germany 3.1% of their resources. Andorra imports a total of 82.5% of these resources that are necessary for survival.

Without trade, Andorra would fall drastically below the poverty line because the land cannot support the population. Furthermore, Andorra does not contain an airport, thus they can only rely on neighboring countries for imported goods. If Andorra built an airport and made trade connections with multiple countries, it would not be as vulnerable.

Luckily, Andorra has made other improvements to help it remain above the poverty line, such as a recent decline in their unemployment rate from 4.1% in 2015 to 3.7% in 2016. The infant mortality rate has also fallen from seven per 1,000 in 1990 to three per 1,000 in 2012.

Andorra’s basic education remains free for residents and they provide three different school systems to address the various language barriers. They have an Andorran, French and Spanish school system. The diversity in education allows greater access for children to become educated, leading to economic success.

It is not as if Andorrans have not considered the disadvantages of their trade-reliant society. In 2006, “the Andorran government began sweeping economic reforms,” hoping for economic growth. The government also passed foreign investment laws in both 2008 and 2012.

Andorrans live prosperously, while also hoping they will never be asked: why is Andorra poor?

Brianna White

Photo: Flickr

 ChinaThree days after President Trump’s inauguration, he executed one of his major campaign promises: withdrawing the U.S. from the Trans-Pacific Partnership (TPP). Whether or not the TPP will outlast the U.S. withdrawal, China and fifteen other regional partners have forged ahead with a free-trade agreement of their own, the Regional Comprehensive Economic Partnership (RCEP).

One of the differences between the Trans-Pacific Partnership and the Regional Comprehensive Economic Partnership is that the former was slated to account for almost 40 percent of the world’s GDP and 10 percent of its population, while the latter comprises nearly 40 percent of GDP and almost half of the global population.

Many analysts have framed the differences between the TPP and the RCEP in terms of the balance of power between the U.S. and China, but for many of the countries involved, free trade is first and foremost an economic issue. Like most free-trade agreements, TPP and the RCEP center on tariff reductions. By liberalizing the international exchange of goods, many economists believe increased competition will stimulate growth in each country’s comparative advantage.

While the TPP aimed to remove tariffs completely on over 90 percent of traded goods, the Regional Comprehensive Economic Partnership attempts to merely reduce tariffs on only 80 percent of goods. The TPP also went further in attempting to curtail government-subsidized industrialization and implement environmental and labor regulations.

Despite the projected benefits for all countries involved, free trade agreements have been criticized for their potential harm to workers. Not only President Trump, but presidential candidate Bernie Sanders advocated for leaving the TPP. Senator Sanders held valid concerns about the continued widening of the international labor pool for American companies.

Indeed, despite the TPP’s projected contribution of 0.6 percent to U.S. GDP, this growth would have occurred in only the country’s comparatively advantageous sectors such as agriculture and advanced technologies, at the expense of every other sector. In the process, workers in less efficient sectors would experience displacement and, without a safety net, suffer in the near-term. On the flipside, the TPP would have contributed more than 10 percent GDP growth to countries like Vietnam and Malaysia, each willing to capitalize on their low labor costs.

In India, though, one of the potential signatories of RCEP, concerns about the displacement of its agriculture industry have slowed negotiations. The Indian parliament is hesitant to liberalize trade and capital flows for fear of allowing large agribusinesses to displace millions of small farmers. Though the end result of structural change may very well be improved efficiency and cheaper food, the transition will inevitably feature dispossession.

Despite minor setbacks, one of the final differences between the TPP and the RCEP is that the latter has a greater chance of coming to fruition. If it does, and only time will tell, economic integration will certainly bring growth, and disruption, to its signatories.

Nathaniel Sher

Photo: Flickr

BRICS Summit
The BRICS nations—Brazil, Russia, India, China and South Africa—account for a massive 30 percent of world’s GDP and a high proportion of international growth. These nations are key players on the world stage. The annual BRICS summit has helped galvanize a wide array of infrastructure projects, trade and poverty alleviation initiatives to ensure equitable and sustainable growth. BRICS is bolstering the capacities and capabilities of rising markets by tapping into their potentials.

The New Development Bank (NDB) and Contingent Reserve Arrangement is contributing much to improving social security nets, bettering infrastructure networks and regulating governance. Each country is dedicating a fixed proportion to the BRICS Development Bank. The NDB has allocated over $1.4 billion to support four projects each in China, Russia and India. Over the course of 2017, more than $30 billion will be channeled toward supporting projects in other key realms.

Similarly, the BRICS Business Council helps strengthen cooperation among BRICS countries in e-commerce, technical development and agenda-setting.

The BRICS bloc works to integrate a number of global, national and regional development projects and agendas together, like the U.N. Sustainable Development Goals and the African Union 2063 Agenda.

BRICS countries are capitalizing on their positions to encourage trade liberalization within the bloc, especially in regards to increasing efficiency and overcoming red tape and bureaucratic weaknesses often associated with free trade.

The BRICS bloc strengthens positions of countries in Eurasia. In 2017 alone, it was reported that levels of trade between BRICS nations increased exponentially. Shipments to and from countries are reaching record heights. The growth of the manufacturing sector and e-commerce has increased exponentially.

The bloc is also working collaboratively towards safeguarding the future by securing employment in the manufacturing sector and cushioning technology.

The recent 2017 BRICS Summit held in Xiamen, China covered issues ranging from employment, commerce and finance, innovation and technology to reforms of the United Nations Security Council and improving counter-terrorism measures.

As the BRICS bloc often invites many non-BRICs members to observe annual proceedings, it could possibly lead to the inclusion of more developing countries in future. For the recent BRICS summit, China invited countries such Tajikistan, Mexico, Thailand, Kenya and Egypt. The bloc wants to expand its potential and scope in future.

However, even within BRICS nations, there are differences in aspects such as wealth distribution, growth rate and population control. China and India boast exponential growth rates, while countries such as Russia have been experiencing slower growth rates at present.

As a host to this year’s BRICS Summit, China pledged $76.4 million for a BRICS economic and technology cooperation agenda. President Xi Jinping also pledged $4 million to the NDB. China’s Belt and Road Initiative was an important part of the discourse, seeing as it has gained much traction globally since its inception.

South African President, Jacob Zuma, focused on the implementation of the U.N.’s Sustainable Development Goals 2030 to eradicate poverty at the 2017 BRICS Summit.

Zuma spoke about the work of the African Union (AU) in this realm. The AU recently announced the opening of the African Regional Centre. Moreover, Zuma is also confident about the progress of the 23rd Conference of the Parties to the U.N. Framework Convention of Climate Change.

At the BRICS Summit, Prime Minister Narendra Modi was particularly concerned with tackling poverty and corruption, bolstering clean energy sectors, and ensuring gender parity. India recently joined the Shanghai Cooperation to ensure more social stability and economic security.

Prime Minister Modi unveiled 10 “noble commitments” concerning key aspects like counter-terrorism, cybersecurity and disaster management. The BRICS commitment could also bring India closer toward normalizing relations with China, especially after the Doklam border conflict.

Russia and India agreed to collaboratively work toward easing the War in Afghanistan. The leaders also focused on fortifying energy efficiency, tourism and improving youth exchanges, bilateral trade, and boosting investment in an integrated manner.

Furthermore, Brazilian President Michel Termer aimed to secure more foreign investment during the course of the BRICS summit this year to possibly counter Brazil’s current period of languid growth. Termer expressed his wish to channel investment toward infrastructure projects and diversifying markets.

Overall, future BRICS Summits will pave the way for pioneering global development initiatives and will be an important framework for governance and policymaking in the future, as it is essential that developing superpowers be immune to economic headwinds. It will also be the foundation for future agendas in the evolving world dynamic.

Shivani Ekkanath

Photo: Flickr

North Korean RelationsOn July 21 in Aspen, Colorado, Mike Pompeo, Director of the CIA, told a press conference audience that the United States will be blocking all American travel to North Korea to prevent Americans from supporting the North Korean economy or being detained.

Over the past two decades, North Korean relations with western and other Asian nations have progressively worsened and have produced negative effects on the North Korean people. Already known as a nation ravaged by food shortages, where children and other vulnerable groups of people have been malnourished for many years, increased North Korean aggression has begun to produce worsening effects on the quality of life available to North Korean citizens.

This comes in the form of economic and trade sanctions preventing the North Koreans from receiving foreign aid and furthering the economic development needed to sustain the country’s 25 million citizens.

North Korea has long been known to have serious issues providing nutrition for all its citizens. The condition of North Korean farming in 2017, however, hit a particularly difficult point with severe droughts and record-low crop production.

According to The New York Times, North Korea’s stable crop production, which includes crops such as rice, corn, soybeans and potatoes, has been drastically damaged as the country is going through the worst drought it has seen in the past sixteen years. This is making it significantly more difficult for the country to feed its population and “threaten[s] food security for a large [portion of the] population,” according to the Food and Agriculture Organization of the United Nations.

Under these dire circumstances, increased trade and foreign aid are critical to remedy the problems with producing crops. North Korea, however, is unable to receive foreign aid or increase trade with the U.S. or its allies due to numerous sanctions in place to dissuade nuclear threats and military aggression.

In part because of economic sanctions, North Korea holds one of the highest poverty rates in the world. Going hand-in-hand with the high poverty rate is the level of undernourishment seen among the population.

Since 1990, the rate of malnutrition in North Korea has risen from 21 percent to a staggering 32 percent. From a humanitarian perspective, this rate is astronomically high and must be reduced.

This places the U.S. in an uncomfortable position from a poverty-reduction standpoint. If the U.S. provides aid to North Korea, all funds will likely be diverted from reaching the people. However, if inaction is chosen, millions of people will lack the resources necessary to survive. While it may be a long and difficult process, the first step in solving North Korea’s issues with poverty may be in reopening negotiations.

In exchange for lessened hostility and improved North Korean relations with the west, the United States and its allies could agree to help provide foreign aid to a country in desperate need of it.

Poverty reduction in North Korea is tremendously difficult to gauge due to the government’s desire for secrecy. If a distinct effort is made to try and coordinate with the North Korean government to decrease hostility and improve North Korean relations with the west, poverty reduction measures can certainly be implemented for a country whose people desperately need help.

Garrett Keyes

Photo: Flickr

Fair Trade
Fair Trade is a global movement committed to paying fair prices in trade, impacting producers in developing countries. The concept came as a response to global poverty levels and focuses on the marketing of products and development trade. It also raises awareness of trade injustice in trade structures and advocates changes to favor equitable trade. Overall, the movement organizes producers and production and provides services to the producers.

From the 1970s to the 1980s, Fair Trade products were only sold to consumers in specified shops. In 1997, Fairtrade Labelling International was created, which expanded the movement into other countries including North America.

Fairtrade Labelling International set international standards for products in certifying production trade. When a product meets these standards, the company identifies the product with a label. Purchasing products with the Fair Trade label can improve a community. The funds from Fair Trade impact communities with social, economic and environmental development projects.

Fair Trade impacts the building of sustainable businesses by demanding fair wages and treatment. Workers can socialize with buyers while gaining a living wage. Both the employed and farmers may work efficiently with this system. More companies are investing in this movement, while it also ensures safe working conditions and prevents forced child labor.

Investing companies include Ben & Jerry’s ice cream and Rishi Tea in China. Ben & Jerry’s was the first ice cream company to join the movement. With its popularity, it set an example for many other businesses to follow. Rishi Tea is based in China and makes organic teas out of some of the oldest gardens in the world. The company supports education, provides scholarship programs and builds hospitals and roads in secluded areas.

Fair Trade uses the money that may have been put toward high-priced goods to build schools instead. Since fair trade helps stabilize incomes, many families can keep their children in school. It provides supplies, scholarship programs and healthy meals. Fair Trade enables education for even the most outlying communities.

Fair Trade impacts workers, farmers and families. Farmers can receive market-based tools to prevent them from falling into poverty and may learn environmentally sustainable practices. Workers and families gain access to doctors, treatments and nutrition. These benefits enable people to help themselves as well as others in their communities.

Fair Trade is a model for alleviating global poverty. Many companies and markets are investing, impacting developing communities. From building sustainable businesses to providing education, the movement is life-changing for those living in poor communities around the world.

Brandi Gomez

Photo: Flickr

Between Saudi Arabia and Iraq lies the country of Kuwait. Kuwait has the sixth highest GDP per capita in the world and has a thriving industrial economy. With the country being in such a great position to help, what is it doing to tackle global poverty in emerging markets?

On July 1, Kuwait reaffirmed its support for the United Nations Industrial Development Organization (UNIDO), which encourages globalization, cooperation among nations and environmental sustainability. Acting director-general of Kuwait’s Public Authority for Industry (PAI) Abdulkarim Taqui addressed the 45th session of the UNIDO’s Industrial Development Board (IDB).

According to the Arab Times, Taqui’s address included asking UNIDO to do more in stopping the negative outcomes resulting from liberating the international trade and “dumping.” Dumping in international trade is when a country’s businesses lower the sales price of its exports to gain an unfair market share in the consuming country. Taqui proposes to create systems that can make sure pricing stays fair in both the exported country and country of origin to combat dumping in international trade.

Dumping seems to be a severe problem according to Taqui, as he goes on to say “The UNIDO must set a host of projects and programs that are likely to develop practical and realistic solutions to remedy such practices that have been causing colossal damage to the industrial sector in many countries.”

This instance isn’t the first time that Kuwait and the UNIDO have teamed up together. The Public Authority for Industry and the UNIDO have started a project that will increase the export competitiveness of small Kuwaiti companies (SMEs) from the chemicals, rubber and plastic sectors. This project will hopefully counter dumping in international trade.

Taqui stresses that Kuwait will continue to cooperate with the United Nations and encourages other nations to not pull out of the UNIDO. He says that organizations like the UNIDO are necessary in maintaining a balanced world economy, and social stability.

When it comes to solving complex issues related to lifting people out of squalor, Kuwait seems to be on top of its game, without even taking center stage in the fight against global poverty.

Vicente Vera

Photo: Flickr

Unilateral Trade Agreement
What is a unilateral trade agreement? It is a treaty that benefits only one state, imposed on one nation by another, that has the potential to aid developing nations’ economies.

Through the Trade Act of 1974, the United States established the Generalized System of Preferences (GSP), which instituted unilateral trade policies that benefit the world’s poorest nations. The GSP gives developing nations the opportunity to grow their economies through trade and ultimately lift themselves out of poverty.

The GSP eliminates duties on over 5,000 import products from more than 120 designated beneficiary states and territories. Out of the 122 beneficiary developing countries (BDCs), 43 are categorized as least-developed beneficiary developing countries (LDBDCs). LDBDCs reserve 1,500 of the import products in the program that receive duty-free status. These LDBDCs include Yemen, Ethiopia, Haiti, Afghanistan and Cambodia.

The GSP helps developing nations by lowering the cost of their products in the U.S., which in turn stimulates demand and helps the BDC’s economy grow. Furthermore, the GSP not only helps the U.S. accomplish its foreign policy goals but also benefits American consumers. The GSP helps keep prices low for Americans and is integral to the success of small business owners who rely on savings from duty-free products to stay competitive.

The value of imports that entered the U.S. duty-free under the GSP in 2015 totaled $17.4 billion.

While the GSP demonstrates how unilateral trade agreements can be fruitful, unilateral trade policies have downsides as well. Tariffs, for example, can be circumstantially advantageous or disadvantageous.

Initially, tariffs raise the cost of imports and make local products more competitive, boosting the economy and creating jobs. However, when tariff prices are universally high, local exports drop and soon after global trade drops — this hurts everyone. This sequence of events occurred during the Great Depression in the 1930s and, in consequence, global trade dropped 65 percent.

So: what is a unilateral trade agreement? It’s simply a treaty that only requires the action or initiative of one state. Unilateral trade policies can be tariffs, or they can be trade preference programs, such as the United States’ GSP, and can be used as a strategy to promote economic growth in developing countries.

Catherine Fredette

Photo: Flickr

10 Facts About Trade in Iraq
Present-day Iraq is located between the Persian Gulf and Iran in the Middle East. Its population of over 38 million is extremely involved in global trade, as a large portion of its GDP relies on imports and exports. Below are 10 facts about trade in Iraq.

  1. That “large portion” previously mentioned is about 50%–half of Iraq’s GDP comes from trade, making it the 48th largest export country in the world.
  2. Iraq is the 61st greatest importer in the world.
  3. Last year, Iraq had a positive trade balance of over 16 billion, meaning that the country exports far more than it imports.
  4. Iraq is the world’s second-largest oil reserve owner.
  5. Iraq’s main exports are crude petroleum at $47.7 billion, refined petroleum at $295 million, gold at $212 million, lubricating products at $90.4 million and tropical fruits at $62.3 million.
  6. The majority of Iraq’s imports are cars at $872 million, packaged medical materials at $671 million, rice at $671 million and raw iron bars at $542 million.
  7. Iraq exports the most materials to China, India, the United States, South Korea and Italy.
  8. The largest shipments of Iraq imports come from Turkey, China, the United States, South Korea and India.
  9. Declining stability since the origin of the Islamic State of Iraq and Syria (ISIS), as well as decreased oil prices internationally, has lowered Iraq’s economic efficiency in the past few years.
  10. In 2016, the United States’ trade deficit with Iraq was $4.7 billion. This means that, in relation to Iraq, the United States imports far more than it exports, and this number is increasing.

These 10 facts about trade in Iraq show that trade is an incredibly large aspect of the country’s economy that continues to grow and holds an international presence. While its outlook in the oil market seems bright, the economic fallout from the creation of ISIS is a cause of uncertainty for the nation’s economic future.

Emily Trosclair

Photo: Flickr