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US-China Trade Tensions
The U.S. has recently started enforcing tariffs on China to address the trade imbalance between the two countries. The Trump Administration’s goal is to pressure China into altering its trade policies to favor the U.S. In response, China has enforced its own tariffs leading to the US-China trade tensions.

From May to June this year, the Chinese Renminbi fell 4.3 percent against the U.S. dollar. Many fear an impending trade war if neither side backs down. Unfortunately, the trade tension also has the potential to significantly impact not only the economies of the U.S. and China but developing nations as well.

Impact of US-China Trade Tensions on Developing Nations

The impact of US-China trade tensions on developing nations would be especially significant in Asia. Economic success is a pathway to alleviating poverty and advancing progress globally. The trade tension would serve as a roadblock. Should it continue, China and the U.S. are not likely to immediately feel major shock waves from the tariffs given the enormous size of their economies.

Smaller nations, however, are getting caught in the middle. According to JP Morgan economist, Sin Beng Ong, Asian countries like Japan, Malaysia, Singapore, Thailand, South Korea and Taiwan would be hit the hardest from a possible trade war. Each nation is export dependent and is intertwined in the complex supply chains in the tech and automobile industries. Chinese goods are often made using components produced in other nations. For example, Taiwan’s supply of components to China makes up two percent of its GDP. Tariffs on China then also impact Taiwan by proxy.

South Korea is similar. Compared to last year, exports were up by 13.2 percent in May and following the trade tension it dipped to 0.1 percent in June. OCBC Bank measured the impact of the US-China trade tensions on other nations as well. It projected a drop of 0.2 percent for South Korea and a drop of 0.3 percent for Japan if the U.S. continues with new tariffs on the $250 billion worth of Chinese goods.

Closer allies like India, Canada, EU and Turkey have noted concerns on impending harm in the long run as well. This would not only erode their economic progress but negatively impact our diplomatic relations as well. As a result, these countries have retaliated, despite being allies, fearing lack of jobs and an overall harm to their respective economies.

The US-China trade tensions have the potential to unite the world against the U.S. in order to protect years of economic development and avoid increasing poverty.

Trade Tensions and Poverty

As of 2013, the World Bank has reported the poverty headcount ratio in South East Asia to have significantly improved. The number of individuals living with just $1.90 a day was listed as 15.1 percent: a significant improvement from previous years. The US-China trade tensions, however, will impact this progress negatively.

The impact of the US-China trade tensions on development in the U.S. is mainly centered on food. China has targeted pork through multiple 25 percent tariffs and other products such as soybean. This hurts farmers economically because they now have to sell their products for much less.

Trade War and Nonprofits

In Asia, several nonprofits have a continued mission of resolving the issue of poverty. Organizations such as the Peace Corps and Care have existed for several years. In the event of a trade war, their work will have increased importance in impacted nations.

International groups, such as the World Trade Organization, have worked to quell the escalations through advocacy. WTO Director General Roberto Azevedo noted that the “escalation poses a serious threat to growth and recovery” in nations around the world.

A recent WTO report also mentioned, however, that the global trading system would be able to resolve such issues. Specifically, it asked the G20 economies to alleviate the issue and advocate for trade recovery.

As the US-China trade tensions escalate, it is imperative to the health of developing nations as well as the U.S. and Chinese economies that the issue is resolved. With organizations such as the WTO and nonprofits in South Asia working to minimize tensions, the goal of alleviating the issue is still attainable.

– Mrinal Singh
Photo: Flickr

World trade reduces povertyWorld trade proves to be a prosperous way for countries to keep good relations while benefiting from one another. World trade reduces poverty in many unique forms, allowing businesses to buy and sell their goods in an easier, safer environment while improving economic balance and structure.

Economic Benefits

According to the World Trade Organization (WTO), an economy will grow quicker and at a more consistent pace when free trade is more easily accessible. A company which earns a greater profit is more likely to hire a larger amount of people while giving their employees a stable position within the company, without fear of being laid off or fired due lack of funds or money.

WTO reports that there has been a 34 percent wage increase for companies in sub-Saharan Africa that participate in exporting goods. In a closed economy, the numbers severely decrease in amount, proving that the impact of trade can have a great consequence on each individual country. Generally speaking, world trade reduces poverty by boosting each economy and providing more opportunity for growth in any country.

Education and the World Trade Institute

With a better economy that has higher profits, this creates more money to be given to educational institutions. Not only do elementary, middle and high schools benefit, but for countries with an open market, this gives college-aged students and business owners a chance to learn the skills in trade, importing and exporting.

The World Trade Institute (WTI) provides many different programs for graduate students interested in learning the art of trading. WTI offers Doctorate and Masters programs in economics, political science or international law and economics. The World Trade Institute also offers courses and topics in trade, investment and sustainability, leaving its students with the knowledge of a successful career in trade while providing internship opportunities to gain experience and learn how world trade reduces poverty.

Reduction of Corrupt Governments

Many times, high poverty rates within a country can be a sign of government corruption or the country’s leaders taking advantage of its citizens. The World Trade Organization has enabled many different plans to help fight bribery, extortion, fraud and nepotism. Through the Government Procurement Agreement, government purchases can now be tracked and watched to ensure all money received or gifted is in good faith and only used for those who are abiding by the law.

The American Society of International Law reports that citizens universally pay around 25 percent more than average for communal goods and services under corrupt governments. When the government is providing better funding for things such as housing, education or creating jobs rather than participating in questionable business deals, this opens up opportunities for the people to create a better life.

Industrialization and Infrastructure

When business owners and entrepreneurs have access to public transportation and roads, it provides an outlet that allows them to travel to and from different regions, expanding their markets and advertisements. However, when a business owner who produces a good they would like to trade does not have a simple entry into other provinces, it proves difficult for them to be able to make any money or get their product noticed.

The World Bank reports that, sometimes, increasing trade for poverty-stricken areas can have quite an easy answer; sometimes, all that is needed is a new road. The World Economic Forum states that for a continent such as Africa, it is best for nations to trade with their neighboring countries. This allows the business to trade on a smaller scale before moving on to trade with first-world countries such as China or the U.S.

Technology Brings New Trading Outlets

Technological advances have made it easier than ever before for consumers to find what they wish to buy and for business owners and product builders to “post” their brand online. This way, the consumer can have their product delivered right to their door, while the company benefits from the profit.

E-commerce sites have recently become a staple in African communities, and businesses such as Jumia have seen a rise in revenue by raising $150 million in 2014 alone. Websites like Jumia have everything a customer could possibly want or need, from electronics to fashion to grocery items. Websites like Jumia showcase how technology can bring in money and jobs, while easily marketing brands around the world.

Technology, economic benefits and industrialization are only a few ways world trade reduces poverty. The Office of the United States Trade Representative ensures that our markets are left free and open, while keeping trade agreements with countries where poverty can be most prominent, such as Africa, the Middle East and South and the Western Hemisphere of the Americas. Keeping good relations with these countries ensures economic and job growth while bringing in an abundance of goods.

– Rebecca Lee

Photo: Flickr

How to Help People in LatviaOne of the smaller Baltic states, Latvia gained its independence from the Soviet Union in 1991, and ever since has been shifting to catch up to the rest of the economies in the EU. Although Latvia is one of the fastest growing economies in the EU, nearly one in three Latvians is at risk of severe poverty and nearly one in five suffer severe material deprivation. Additionally, the GDP per capita of Latvia is only $13,700 – in contrast, the United States’ GDP per capita for 2016 was over $52,000. Considering the close strategic ties between the U.S. and Latvia, this all begs the question of how to help people in Latvia who suffer from poverty.

With the aim of helping Latvia develop as a nation and stamp down its poverty rate, here are some ways to get involved and help the people of Latvia:

  1. In 2014, the U.S. provided Latvia with $67 million worth of assistance through an assortment of military programs run in the country. Writing to members of Congress in favor of continued support for Latvia can allow them to focus their attention and finances on their own economy.
  2. Similarly, the U.S. and Latvia are members of many of the same economic groups – such as the World Trade Organization, the World Bank and NATO. Urging your representatives in Congress to support these groups provides Latvia with access to the resources and assistance provided by them.
  3. Latvia is currently in the process of becoming a member of the Organization for Economic Cooperation and Development (OECD) – an international group that seeks to assist nations in improving their economies and the livelihoods of their citizens. Getting involved with the OECD and supporting their initiatives is a tangible way of helping make an impact in the lives of Latvians.
  4. Investing in and purchasing the goods and services of Latvian-based companies puts money directly into the Latvian economy, which is largely based on industries such as transport and telecommunications. For example, choose to fly Air Baltic next time you take a trip to Europe.
  5. Volunteer your time or donate to the American Latvian Association, which has been providing aid to Latvia since 1989.

Ultimately, the choice of how to help people in Latvia most effectively lies in the hands of the Latvian government, but urging U.S. representatives to consider ways to assist Latvia as well as volunteering your own time and money can assist the poor in Latvia in making life a little bit better for themselves.

Erik Halberg
Photo: Flickr

WTO
The World Trade Organization recently held talks to discuss the possibility of duty-free trade on information technology goods. The proposed legislation sought to extend a 17-year-old trade agreement to end all tariffs on IT products.

However, on December 12, all talks ceased and collapsed due to a deadlock between China and South Korea over liquid crystal displays, commonly referred to as LCDs. The zero-tariff agreement applied to over 200 hundred products. South Korea wanted LCD products to be included in the deal; however, China refused this measure. It seems unlikely that China will concede to the stipulations regarding the LCD screens.

The Information Technology Agreement, or ITA, intends to strengthen trade between countries in the growing sector of technology. Opening channels for trade would have benefited both countries immediately as they would no longer be penalized for trading goods.

WTO Director General Roberto Azevedo said after the talks collapsed, “The participants have significantly reduced the gaps on expanding the coverage of the ITA agreement in recent days, but unfortunately it has not been possible to finalize the negotiations this week.”

In 2015, the talks are projected to continue with the hope that they will receive a unanimous vote in agreement. The WTO is committed to multilateral trade that integrates 161 countries around the world. The ITA deal would integrate mostly developing economies with significant production of new technology.

The deal makes imported products significantly cheaper than manufacturing and selling the products in one’s own country. India’s Prime Minister, Narendra Modi did not enter into the signed deal with the United States and China to protect India’s manufacturing interests.

However, a case could be made that a deal for India would increase exports, in turn benefiting India’s economy.

India is currently number 19 on the list of leading exporters and the 12th largest exporter. The balance of trade is India’s main concern and the concern of counties who do not already have robust industries.

– Maxine Gordon

Sources: NDTV, Rediff
Photo: Business Times

india-trade-facilitation-hurts-poor
Due to lack of progress on food security to help India’s poor, India has refused to accept the World Trade Organization’s, or WTO, trade facilitation agreement. This deal was achieved in Bali in December 2013 and India’s refusal prevents the adoption of the Bali agreement.

India’s refusal has been criticized by trade officials around the world. Diplomats have noted that it may hamper the WTO’s Doha Round of trade negotiations.

Indian Prime Minister Narendra Modi and his Bharatiya Janata Party won a decisive victory in the spring election where they promised to develop the economy and tell the world that India is welcoming to business.

However, the new government is sticking by its previous position that the WTO is limiting their agricultural support programs.

Food security is important concern for India’s poor because 450 million people in India survive on less than $1.25 per day. The government has been arguing that the value of subsidies for food stockpiles has to be changed to more than 10 percent of a country’s total food production.

Indian Finance Minister Arun Jaitley said that the issue of food security is critical for the country’s small farmers. India’s position on the trade facilitation agreement is probably due to political pressure from India’s poor.

India’s government argues that wheat and rice are more expensive than market prices. Their agricultural programs protect farmers’ livelihoods and provide reasonably priced nutrition to India’s poor and vulnerable. However, WTO rules only allow governments to stockpile food if they acquire those stocks at market prices.

The Bali agreement will only take effect if it is approved by all 160 member governments. Unless the World Trade Organization relaxes restrictions on a countries’ ability to subsidize farmers, the agreement will not come into effect.

“India has a decision to make about where it fits in the global trading system,” John Kerry, U.S. Secretary of State, said. “India’s willingness to support a rules-based trading order and fulfill its obligations will help to welcome greater investment from the United States and from elsewhere around the world.”

Colleen Moore

Sources: Gulf Today, Washington Post, Wall Street Journal
Photo: Washington Post

food_security
A new disagreement has cropped up that is threatening progress made by the World Trade Organization (WTO) last year.

This past week, India rejected the United States’s proposal to debate further the issue of food security—a rejection related to India’s earlier threat to block the WTO’s Trade Facilitation Agreement. Indian officials interpreted the proposal as a design to place their concerns in the periphery as the Trade Facilitation Agreement’s deadline of  July 31 quickly approaches.

By Aug. 1, WTO members must reach a consensus in order to approve a short protocol for the implementation of the trade agreement to continue. Some experts have argued that the agreement could pump as much as $1 trillion into the global economy by facilitating a streamlined trading process across national borders. Others, like Jayati Ghosh, a professor of economics at Jawaharlal Nehru University, have argued that prediction is based on “spurious empirical exercises.”

During a December 2013 meeting in Bali, WTO members agreed to a three-part work program. The trade facilitation agreement was one element. Another was the opening up of markets in developed countries to the Least Developed Countries. The final part — and the point of contention — proposed that developing countries could continue implementing their food security programs for the next four years. The WTO plans to have found a permanent solution to the food security issue by 2017.

India’s representatives took issue with the four-year postponement of action. “You’ve given yourself until 2017, but that doesn’t mean you have to wait to start,” said Nirmala Sitharaman, India’s Commerce Minister, in an interview with the Financial Times. She continued, “We want some very quick, substantive movement on this.”

However, other sources have reported that Indian Commerce Department officials have been demanding a “permanent solution” by the end of the month. These contradictory demands have left the rest of the WTO confused about India’s position. What is clear is that India has felt marginalized and ignored in WTO’s negotiations thus far.

And the country has cause for concern when it comes to agriculture. The agricultural sector employs more than one-half of the country’s workforce, a force that the democratic government must appease to stay in power. When rice prices skyrocketed in 2007-08, India responded with the National Food Security Act of 2013. As a result of this act, India stores grains so that price spikes can be managed by introducing stockpiled supplies into the market. Farmers receive a minimum price for their products, thereby remaining appeased, and the Indian government pays for the difference.

These are controversial methods both within India and abroad. In India, citizens criticize the subsidizing of farmers because the money could be benefiting the development and education of children, or improving the health care system.

Abroad, countries like Thailand and Uruguay have expressed concerns that India distorts the global market and hinders these countries’ own rice markets. Developed countries like the United States have deemed India’s practices contrary to the spirit of a liberalized global market. Many in India have responded by pointing to the subsidy programs of developed countries as evidence of these countries’ hypocrisy.

Joshua Meltzer, a fellow in Global Economy and Development at the Brookings Institution, has argued India misconstrued food security to equal food sovereignty—complete “self-sufficiency in food production.” He suggests this isolationism from international trade will engender greater food insecurity.

Indian officials disagree, and until the WTO finds a solution, the country will continue with its food security policy. Moreover, despite the popular rhetoric praising them, global markets have not always benefited developing countries as they are supposed to in theory. India, like many other developing countries, does not trust these markets. Inevitably, these countries turn inward.

In the long run though, most experts would agree that India cannot improve on its poor Global Hunger Index ranking (65 out of 79) through isolationism from international markets. The country has chosen a critical moment for the WTO in which to voice its concerns, but by doing so, India has threatened the well-being of the same tool — international trade—that might be capable of solving the country’s food insecurity problem.

– Ryan Yanke

Sources: The Guardian 1, The Guardian 2, Times of India, United States Senate Foreign Relations Committee, Financial Times, Brookings,,
Photo: Agriculture Information

levi_strauss_foundation
When one thinks of Levi’s, the images of blue denim and jean vests comes to mind. As an iconic American brand that has revolutionized the world of fashion, it’s safe to say a Levi Strauss & Co. item is a staple in many closets. However, when taking a break from stitching and sewing, Levi’s works towards something for which it may not be as famous–philanthropy.

The Levi Strauss Foundation was founded in 1952 and works to advance the human rights and well being of people living in the developing world by tackling important social issues such as HIV/AIDS, workers’ rights, and asset building. The independent and private organization bases its mission on the Levi Strauss & Co. company values, which are originality, integrity, empathy and courage.

The Levi Strauss Foundation works to change the course of the global HIV/AIDS pandemic as one of its main goals. In fact, in 1982 the organization was the first U.S. corporate foundation to bring awareness to the epidemic of HIV/AIDS. Since then, it has raised about $45 million for service organizations that deal with the disease in over 40 countries worldwide. By addressing HIV/AIDS as a human rights issue, the Levi Strauss Foundation has been able to provide assistance to people affected by the disease, as well as funding risk-reduction education for populations that are at high risk to contract it.

Additionally, the organization works to improve workers’ rights in the apparel and textile businesses by funding programs that educate workers and factory managers on labour rights and responsibilities, as well as improving the health of workers. The Levi Strauss Foundation also holds asset-building workshops for workers so that they can learn how to save for long-term goals and eventually break the poverty cycle. The organization also provides factory-level dispute settlement procedures and legal aid to workers, should they need it.

The foundation also partners with several organizations to reach its goals such as AIDS Care China, an organization that tackles the stigma and discrimination that AIDS patients in China face, as well as La Cocina, a San Francisco-based nonprofit that works to help women of disadvantaged businesses start their own food businesses. The organization also takes a global public stance on its issues by getting the international community involved. It has formed relationships with institutions such as the International Labour Organization (ILO), World Trade Organization (WTO), and the World, as well as several NGOs, in order to get its platform across on the global stage.

The Levi Strauss Foundation’s newest initiative is the Pioneers in Justice project which provides grants to future social justice leaders who are committed to improving several social justice issues in their communities such as civil and human rights initiatives, advocacy, and policy change.

By taking a stance on issues in which it believes, Levi’s has proven that it should not only be known as just a clothing brand, but a clothing brand that looks beyond the denim and upholds its responsibility to workers, human rights, and the world.

– Elisha-Kim Desmangles
Feature Writer

Sources: Levi Strauss, IHRFG, NPIN
Photo: PXLeyes:vysakhk

aid-for-trade-wto-women-workers_opt
Aid for Trade is a holistic approach to incorporating developing economies into global trade networks by assisting them in increasing exports and market access. Aid for Trade was initiated at the WTO Ministerial Conference in 2005, and the program has since increased its scope to include building production capacity (financial services, businesses, and industry), trade-related infrastructure (communications, energy, transportation), and trade policy and regulations.

When the Aid for Trade initiative began, it was unclear whether it would receive funding or be successful. Now that it has been implemented for over a decade, it is time to reexamine the links between trade, development, and poverty reduction that Aid for Trade aims to strengthen.

The principle behind Aid for Trade is that increased trade should benefit inhabitants of developing countries, whether or not they are directly involved in the program. One Aid for Trade program teaches Ugandan farmers how to grow and process dried fruit to be sold into the European cereal market. The farmers involved should benefit from increased income, market access, and productivity, and Uganda should benefit from increased exports.

Most evaluations of the effectiveness of Aid for Trade programs take place within 18 months of a given program’s initiation. This is not enough time to measure whether the program has truly been successful at reducing poverty in a sustainable way. Additionally, evaluations often do not take into account a program’s impact on those not involved; how did the fruit-growing education program impact farmers who did not receive additional training and support?

A new study on European trade assistance aid, commissioned by NGOs Traidcraft and the Catholic Agency for Overseas Development, suggests that there may be “hidden losers” to Aid for Trade initiatives. For example, South African fruit growers increased exports to Europe after trade sanctions were lifted. They earned higher wages and improved their standard of living. However, the demand for cheaper fruit also caused some growers to lower wages and to replace full-time employees with temporary, often migrant workers, who did not enjoy the benefits.

The study also found that the majority of trade assistance goes to middle-income countries rather than to the least developed countries (LCDs) that Aid for Trade is directed towards. Little evidence exists to prove Aid for Trade’s effectiveness in reducing extreme poverty; this is likely a result of short-term program evaluations that take place before real impact can be measured, as well as lack of donor interest in, and therefore funding for, impact evaluations.

Overall, there are many obstacles to determining whether or not Aid for Trade has been successful thus far. More thorough, accurate, and long-term evaluations of poverty rates are necessary in order to determine the tangible successes or failures of Aid for Trade.

– Kat Henrichs

Sources: OECD, International Center for Trade and Sustainable Development, The Guardian
Photo: European Commission

Aid For Trade
In 2005, the World Trade Organization (WTO) launched its Aid for Trade initiative, which works to reduce poverty in developing countries through trade. In most developing countries, supply-side and trade-related infrastructure problems hinder the ability to participate in international trade. The Aid for Trade initiative works to educate governments on the potential for trade to work towards development.

The World Trade Organization has managed to raise $200 billion worth of funding for the initiative that will go towards resource mobilization, the mainstreaming of trade into development plans and programs, regional trade integration, private-sector development, and the monitoring and evaluation of Aid for Trade. Emphasis is placed on gathering support and resources to counter constraints that deter trade in developing countries. Aid for Trade works on the assumption that “a rising tide floats all boats,” meaning that as national wealth increases, the poor will profit as well.

Some NGOs, however, question the viability of this method in reducing poverty. A study was commissioned by Traidcraft and the Catholic Agency for Overseas Development to look into the real impacts of these projects on the poor. Saana Consulting reported that most of the funding had gone to middle-income rather than low-income countries. They had also found that the program had little impact on the poor, calling the assumption that it will have an effect “a leap of faith.”

Donors have admitted that impacts are indeed difficult to track. Adaeze Igboemeka, head of Aid for Trade at the UK Department for International Development, concedes that there is indeed a lack of information, as the programs impacts on poverty are seemingly indirect.“The assumption,” Igboemeka said, “is – and there is a lot of evidence to support it – that if a country is able to trade more, it will grow, and that will create jobs and increase incomes and lead to poverty reduction.”

The consensus seems to be that, generally, trade is good. However, for now, there is not enough information and time to accurately project its impact on poverty reduction.

– Rafael Panlilio

Sources: The GuardianWTO