Much has been talked about the crisis state of the trademultilateralism. Recently concluded Ministerial Conference

at Bueno Aires, Argentina is yet another example of unsuccessfulWTO ministerial. It is seen happening before in Seattle (1999) andCancun (2003). But this time there was no palpable appetite on thepart of any WTO member to make it a success. The result was that theBueno Aires Ministerial could not produce a ministerial declarationor decision.

Many developing countries including India refused to acceptdiscussions and negotiations during the conference as mere ‘policydialogue’. There was not much push on the part of other major playerssuch as the EU, China and Brazil to get them to a conducive negotiatingtable. The question is how to get trade multilateralism out of its crisis so thatthere is a greater political push for globalisation with equity.

Need for Institutional ReformsThe multilateral trading system, WTO rests on three major functions –

negotiations, regular work programme and dispute settlement. Since negotiationsare stalled, the regular work programme has become more like business as usualand the dispute settlement system is under severe stress. The US is saying thatthere is too much of emphasis on WTO disputes and as a result its negotiatingfunction under the regular work programme is not getting much-needed attention.

Time for Collective LeadershipThe institutional reforms at the WTO will take its own time to actually take

place because it is a member-driven organisation and they will have to first agreein what areas and what type of reforms are needed. Both the dispute settlementsystem and the functioning of its regular work programme need significant reformsso that there is balanced participation of all members in the system and a moreequitable distribution of its outcomes.

That can happen if there is a collective leadership within and outside theWTO. The comity of nations will have to work collectively for better governance ofglobal public goods; trade being one of them. All countries should be in a positionto exercise their right to trade. This should be done at the WTO and also at otherrelevant fora such as the G-20. This will require much more proactiveness andflexibility on the part of the US, EU, China, India and other emerging economies.They should realise the importance of finding negotiated solutions to problemsthrough dialogues and that even with ‘give and take’, there can be ‘win-win for all’.

If the WTO becomes dysfunctional, the world is heading for disastrousconsequences in the other two areas of global public goods (security andenvironment) as well.

• Pradeep S Mehta, Secretary General and Bipul Chatterjee, Executive Director, CUTSInternational; excerpts from an article appeared in The Wire, on December 25, 2017

China Wins First Tesla Factory .......... 3

Tough time for ‘Belt and Road’ ......... 4

Closing the Gender Gap .................... 6

WB Overhauling Lendingto China ............................................ 8

India to Achieve 2030Climate Targets ............................... 11

Environmentalists CriticiseCoal Deals ....................................... 13

Highlights

Articles

Foreign Trade PolicyMid-term ReviewReaffirms Centre’s Beliefin ‘Make in India’ ...................... 2

Globalisation in RetreatAshutosh Varshney .................... 9

Poorest Nations Are Also Mostat Risk from Climate ChangeMartin Wolf ............................10

Nothing Trump DoesCan Save CoalBarry Ritholtz .......................... 15

CONOMIQUITYEOctober-December 2017

Failure of Latest WTO Summit Reveals an AlarmingGlobal Indifference to Multilateralism

The Financial Express

2No. 4, 2017CONOMIQUITYE

Article

• This news item appeared in Financial Express on December 18, 2017

Foreign Trade PolicyMid-term Review Reaffirms Centre’s Belief in ‘Make in India’

Mid-term Review of FTP 2015-20This was a crucial development as

the much-needed changes came in thewake of dwindling exports, globaleconomic slowdown and a highlyuncertain business environment acrossthe world. The mid-term review of theForeign Trade Policy (FTP) 2015-20 wasan opportunity before the governmentto make corrective changes in the Indianforeign trade policy to adjust with thechanging global trade scenario andrealign the policy provisions toharmoniously sync with GST madeapplicable with effect from July 01,2017.

These changes were imperative toprovide a boost to the Indian economyand position India as an evolvedmanufacturing so as to resolve some ofthe unaddressed issues left behind bythe newly introduced GST provisions.

While the government has beenconsistently taking steps to facilitateprovision of refunds, integrating themechanism into the FTP has been awelcome move.

The issue of non-availability ofimport benefits against old advanceauthorisation licences has also beenaddressed in the mid-term changes, asnow, under advance authorisation,export promotion of capital goods and100 per cent EOU scheme, exportershave been extended the benefit ofsourcing inputs/capital goods fromabroad as well as domestic suppliers forexports without upfront payment of GST.

In addition, the government haspromised the launch of e-wallet facilityfrom April 01, 2018. These measures are

expected to resolve the liquiditychallenges faced by exporters to a largeextent. As part of the global exportrepositioning strategy, the governmentlaid out mechanisms for continuedsupport for multilateral treaties andagreements.

This would help businesses in Indiaintegrate with major regions of theworld and expand markets in newregions, enhance participation ofIndian industry in global value chains,increase farmers’ income throughfocused policy for agricultural exportsand promote exports by MSMEs andlabour-intensive sectors to generatemore employment.

Revised PolicyThe revised policy also seeks to

extend incentives of up to Rs 2,743 croreto the garments and textile industry.There has been an increase of about twoper cent on incentives under MEIS andSEIS schemes across the board withincreased validity of the duty creditscrips from 18 months to two years,benefiting a wide range of sectors suchas leather, agriculture, carpets, handtools, marine and rubber products,ceramics, sports goods, medical,scientific products as well as electronicand telecom equipment. This translatesinto reduced costs and increasedsavings for the exporters which wouldyield competitive and quality productsfrom India into international markets.

Besides, scrips have been madefreely transferable as GST rates on suchtransfer or sale of scrips have beenreduced to zero from the earlier rate of

12 per cent. This would incentiviseservice exporters without significantimports who would have unutilisedscrips which they can sell and generateadditional revenue.

The government have given the hintthat it is interested in looking atincentivising new products andexploring new markets for targetedincentives, such as Africa, Latin Americaand the Caribbean regions. The newpolicy envisages hand-holding, supportand assistance to exporters with theirexport-related problems.

Belief in ‘Make-in-India’One can now expect a more

proactive assistance from the DGFT toexporters looking to meet regulatoryobligations and access new exportmarkets. Procedures related toclearances involved in cross-bordertrade will also be simplified. Self-certification scheme for duty-freeimports and establishment of a newtrade data analytics division under theDGFT to analyse real-time data for fine-tuning the policy are indeed futuristicinitiatives.

The mid-term review has ushered ina promise for interesting times ahead.This reaffirms the government’s resolveand belief in Make-in-India. This showsthe government is paying seriousattention to the issues faced bybusinesses and is ready to takeimmediate action to resolve them. It ishoped the central government willclosely collaborate with all stategovernments to implement thisefficiently at the ground level.

Amidst a series of changes in the taxframework of the country, theGovernment of India recentlyannounced the highly anticipatedpolicy development with regard toforeign trade.

No. 4, 2017CONOMIQUITYE3

Trade WindsPulling US out of NAFTA Deal

Pro-trade republicans in Congressare gearing up for fight with the USPresident Donald Trump to protect the23-year-old North American Free TradeAgreement (NAFTA) which they see asvital to the US economy. They areexamining how to block a potentialmove by Trump to pull the US out of theNAFTA trade deal.

Robert Lighthizer, Trump’s trade tsar,said he is hoping for significant supportfrom Republicans and Democrats for arenegotiated NAFTA. But they havegrown increasingly frustrated withLighthizer over the conduct of the NAFTAnegotiations and radical proposals hehas tabled, such as a five-year sunsetprovision and new US content rules forcars that are opposed by the autoindustry. (FT, 20.10.17)

UK-EU Supply Chains to BreakChartered Institute of Purchasing

and Supply (CIPS) found out in a surveythat a fifth of UK companies involvedin supply chains have struggled tosecure contracts that run after March2019, when the UK is due to leave theEU.

Some 63 per cent of EU27 supplychain managers who work with UKcompanies said they expected to movesome of their supply chain out of Britainas a result of Brexit and 40 per cent ofUK companies said they were lookingto replace EU suppliers. Splittingexisting supply chains on both sides ofthe channel is likely to raise costs and

reduce efficiency and will beparticularly important in complicatedmanufacturing sectors such as theautomotive industry. (FT, 06.11.17)

India Violating Anti-dumping ProvisionsJapan, Russia and Qatar have

alleged that India was violating WorldTrade Organisation (WTO) rules on anti-dumping provisions. The threecountries are questioning theprocedures followed by India forcarrying out anti-dumpinginvestigations against import ofcertain chemicals.

Japan voiced concerns that Indiafailed to respect key anti-dumpingagreement provisions on injuryanalysis and causation as well astreatment of confidential information.Russia had the similar concerns thatIndia’s dumping investigation intoimports of ammonium nitrate wasinconsistent with WTO norms.

Qatar stated that the petitionersfailed to show that they were beinginjured by the imports as profits,capacity and the number of employeesin competing domestic firms allincreased during the investigationperiod. (BL, 02.11.17)

US to Penalise for Delaying InformationThe US introduced the proposal to

penalise countries that fail to shareinformation about their trade regimeson time at the WTO. A key element ofthe US proposal includesadministrative measures to withdraw

certain privileges from WTO memberswho fail to provide a requirednotification two years after thesubmission deadline.

But this has been strongly opposedby developing countries, includingIndia, China and Bolivia because it goesagainst the interests of poorercountries and such a decision could hitpoor countries the most.

Some developed member nations,too, questioned the US proposal. Norwaysaid that it believed positive incentivesmay be more effective than punitiveactions to achieve the improvementsbeing sought. (BL, 06.11.17)

Crashing out without Trade DealThe prospects of UK exiting the EU

without a trade deal escalated afterBrussels warned that negotiationscould not limp on indefinitely. PhilipHammond, UK Finance Minister hasbeen criticised by pro-Brexit cabinetcolleagues for failing to fundcontingency plans to prepare for Britainleaving the EU without a deal in 2019.

But the Treasury announced £412mwhich was earmarked for theDepartment of International Trade, theDepartment for Exiting the EU and theForeign Office to cover the costs ofdelivering Brexit.

But, so far, there has been little spenton hiring the thousands of customofficials and regulators needed ifBritain has a clean break from the EU,let alone new IT systems and property,such as new customs clearing facilities.

(FT, 11.10.17)

The electric carmaker Tesla Inc. has decided to set up its ownmanufacturing facility outside of the US in Shanghai. This move

is an exception to China’s manufacturing norms because so farChinese manufacturing laws have required foreign automakers toset up joint ventures with local partners, which involves splittingprofits and sharing some technology.

Tesla CEO Elon Musk’s decision to build a wholly owned factoryin China and not in India could be that China’s electric-vehicle(EV) market is the world’s largest and is expected to continuegrowing since the government plans to require that all automakers’sales include a certain percentage of EVs from 2019.

On the other hand, in India the concept of EVs is still at anascent stage. Therefore, it provides the justification for Tesla tobuild its first automobile factory outside of the US in China.

(Mint, 23.10.17)

China Wins First Tesla Factory

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Trade WindsUK in Bombardier Tariff Row

Brussels has given the warning toUS authorities, which are consideringimposing duties of 300 per cent onBombardier ’s C Series jets. TheEuropean Commission insisted that theproposed duties had no basis in law.

Brussels’ move comes in spite of theUK’s impending exit from the EU. But thesupport from the commission is anawkward blessing for UK,demonstrating the potential benefits ofbeing a member of such a large tradingbloc just as negotiations on the UK’sEU exit reach a particularly difficultphase.

Cecilia Malmstrom, the EU TradeCommissioner, said the proposedtariffs seemed ‘disproportionate’ andthat ‘we will try to help our Britishfriends as much as we can’.

(FT, 16.11.17)

US, EU and Japan Pressurise ChinaThe EU, Japan and the US are set to

form a new alliance to tackle concernsover trade issues such as overcapacityin steel and forced technologytransfers. This is a rare effort atinternational economic co-operationby the Trump administration.

The three economies will target the‘severe excess capacity’ in importantsectors such as steel and the role of

illegal subsidies, state financing andstate-owned enterprises in fuelling it.Trump and his aides have lashed out atChina and it reflects the growing angstin all three economies’ about China’scontinuing economic rise.

EU Trade Commissioner CeciliaMalmstrom said the EU sharedconcerns with the US and Japan overthe issue of overcapacity. At the sametime, EU officials are also keen toconvince the Trump administration toembrace the WTO as a venue for fightingits trade battles rather than going italone. (FT, 13.12.17)

EU27 Clear Path for Brexit TradeThe EU leaders confirmed that

‘sufficient progress’ has been made inthe first phase of UK’s Brexit talks andthe stage has been set for discussionson future ties and pact on post-divorcetransition.

The EU stepped up calls on the UKPrime Minister to clarify what UK wantsfrom its future relationship with thebloc. May responded “We will deliveron the will of the British people and getthe best Brexit deal for our country,securing the greatest possible accessto European markets, boosting freetrade with countries across the world,and delivering control over ourborders, laws and money.”

But UK business warned that delaysto discussions on an EU-UK trade dealcould have damaging consequences forbusiness investment and trade, as firmsin 2018 review their investment plansand strategies. (FT, 16.12.17)

Schulz to Strengthen the EUMartin Schulz, the social Democrat

leader, said he would make‘strengthening the EU’ a priority of anyGerman coalition, in a sign the SocialDemocrats (SPD) could back Frenchideas for reform of the Eurozone. MSMercel is now seeking a ‘grandcoalition’ with the SPD, the party herCDU/CSU bloc has governed with for thepast four years.

Schulz’s comment reform of EUcould play a big role in loomingnegotiations. She also stated thatGermany needed to respond to Macron’svision, especially with elections to theEuropean Parliament less than twoyears away.

The breakdown of coalitionnegotiation between the CDU/CSU, FDPand Greens left Mercel with threeoptions: trying to form a minoritygovernment, pushing for repeatelections or seeking a continuation ofher coalition with SPD. (FT, 28.11.17)

India’s Approach to Global GovernanceIndia is gradually shifting its

approach to global governance andmultilateralism. The primary objectiveof this new approach is to help shapethe global rules and external realitiesin favour of India’s economic growthand strategic interests.

For this purpose, India demands therepresentation in global governanceinstitutions. It now campaignsaggressively for permanentmembership in the UN Security Council.Secondly, India has been willing topartner with other countries, includingChina, to shape new institutions thatare challenging the frozen post WorldWar II order.

Third, India’s membership in thesenew institutions does not mean that itis, like China, aiming to mount afundament challenge to the politicalWest. This is clear from India stayingout of China’s BRI that has cleargeopolitical ambitions.

(Mint, 24.11.17)

Tough time for ‘Belt and Road’Dispersion of terrorists, growing political instability and regional conflicts

with a number of countries along China’s Belt and Road Initiative (BRI). Expertshave emphasised that new security risks are hanging over the mammoth initiativestarted by the Chinese as it is expected to enter a new stage in 2018 with more

than 140 countries and 80 international organisations supporting andparticipating in the BRI in an opinion piece published by The Diplomat.

The article also highlighted that terrorism threat is likely to reach BRI’s rootsthat is China, as the terrorists are especially moving towards Pakistan andAfghanistan. (DNA, 24.12.17)

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Trade Winds‘Market Economy’ Status for China

The US has opposed China’srecognition as a ‘market economy’ inthe WTO, citing decades of legalprecedent and what it sees as signs thecountry is moving in the oppositedirection under Xi Jinping.

Market economy status would makeit more difficult for the US to defend itsanti-dumping rulings against Chinesecompanies at the WTO.

The US also rejected China’sargument that it would automaticallybe considered a market economy 15years after joining when it faces anti-dumping cases from fellow membersand argued that China remains subjectto the same WTO rules as othermembers. Chief US concern is that theWTO was not set up to deal with acommand economy such as China’s.

(FT, 01.12.17)

China Doubles Logistics DealsBRI, a signature ambition of Xi

Jinping, China’s leader is driving asurge in Chinese acquisitions overseasof warehousing, trucking and otherlogistics operators. According toGrisons Peak, a London-basedinvestment bank total announcedacquisitions by Chinese firms oflogistics companies in Europe, Asia andelsewhere more than doubled toUS$32.2bn in 2017 from US$12.9bn in2016.

The geographical distribution ofthe logistics acquisitions correspondswith the area covered by the BRI whichaims to revamp ‘Silk Road’ commercebetween Asia and Europe. AlibabaGroup, one of the world’s largest e-commerce companies, announced thatit will invest US$15bn over five yearsto build the most efficient logisticsnetwork in China and around the world.

The biggest Chinese logistics dealof the year involved China InvestmentCorporation, the sovereign wealth fund,which agreed to buy Logicor, a leadingEuropean logistics company withwarehouses in 17 countries.

(FT, 11.12.17)

The Pineapple’s Brexit TaleNim’s Fruit Crisps dries fruits into

snacks and serves them like potatochips. They get pineapple from Costa

Rica and ship them in through anAmsterdam based trading company.But since the Brexit came into play,prices of pineapple started soaring andthe company had to fire threeemployees to cut costs.

This is in general the overall pictureof UK currently. The prices are soaringand the growth rate is rising veryslowly. Consumer spending is goingdown and credit is rising up.

Companies fear basing theiroperations in the country. Postponedinvestments and rising fears are doingmore damage than anticipated in thebeginning. (ET, 03.11.17)

UK to Avoid Trade ‘Hindrances’Wilbur Ross, US Commerce

Secretary, said that US industry had alarge stake in Brexit and asked theCommerce Department to work closelywith the UK government to minimisedisruption.

Ross set out the US’s ambitions fora ‘historic trade deal’ that wouldestablish the UK as its ‘number onetrading partner worldwide’.

Key hindrances to transatlantictrade cited by Ross included the US’limited or non-existent access to theEU’s standard-setting process; a lack oftransparency and a lack of ability toparticipate in the EU’s regulatory

process; potential barriers to trade andinvestment in the digital space and,finally, the limited role of science inassessing risk especially in sanitaryand phytosanitary matters.

(FT, 07.11.17)

India-South Korea to Hold Joint IPRsWith South Korean companies

establishing themselves as big playersin India, the two countries plan tojointly hold intellectual property rights(IPRs) in areas of manufacturing,energy and healthcare.

In the fourth round of negotiationsof India-Korea ComprehensiveEconomic Partnership Agreement(CEPA), two countries finalised aFutures Group comprising experts fromacademia and industry to work on jointresearch, development and networking.The Futures Group is likely to be set upearly in 2018 and will give an impetusto India-Korea trade and investment.

Korea has also proposed to bringon board some of its industrial giantsin the group. Major Koreanconglomerates such as Samsung,Hyundai Motors and LG have madesignificant investments in India,estimated at nearly US$3bn, whileIndian investments in South Koreahave already exceeded US$2bn.

(ET, 26.12.17)

Brexit and the Dover ProblemDover, Britain’s main artery for

trade with EU & non-EUcountries, processes customsdocumentation for around 500Lorries with the latter every day. Butthe number could go up to 10,000after Brexit. This is sure to make theDover port clogged and the task ofcustoms documentation herculean.

It takes two minutes for a lorryto clear through customs but a fewminutes more than that is bound toclog the 300-space lorry park.Conservative MP Charlie Elphickeproposes to build a lorry parkaccommodating 300-HGVs near theM20 in Kent to deal with thecongestion and make Brexit a success from day one.

Trade experts, however, believe that any transition period after Brexit wouldat least take three-five years in order to cope with the customs paperworkcongestion. (FT, 18.10.17)

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Economic IssuesInequality Gatecrashes Open Economy

The first World Inequality Report,released 2018, states that deregulationand opening up reforms in India since1980s have led to substantial increasein inequality to the extent that the top0.1 per cent of earners have capturedmore of the growth than the entire 50per cent in the bottom level of earners.

This rising inequality is sharplycontrasted in the report to the first 30years after independence when theincomes of the bottom 50 per cent grewat a faster rate than the nationalaverage, decreasing inequality.

Similarly, the report finds thatglobally, since 1980 the richest one percent have captured twice as much asthe poorest 50 per cent of the world’spopulation. (ET, 15.12.17)

Rich to Get Still RicherGlobal income inequality has

worsened over the past four decades,and the world’s middle class, made upmostly of people in North America andEurope, has by some measures faredthe worst.

Globalisation has boosted incomesfor hundreds of millions of people indeveloping countries, particularlyChina and India. And it has lowered payfor manufacturing workers and othermiddle-income employees in thedeveloped world.

Policy choices can also worseninequality, says Gabriel Zucman, aneconomist at the University ofCalifornia, Berkeley. The tax cutplanned in the US will mostly benefitwealthier Americans and worsen thewealth gap, according to Zucman.

(DNA, 16.12.17)

Bitcoins Breaches New MilestoneCME Group, the world’s largest

exchange operator by market value,said it intended to add bitcoin to itsstable of futures on interest rates, stockindices, commodities and currencies bythe end of the 2017.

Bitcoin, the biggest of thecryptocurrencies, is controlled bycomputer algorithms rather thancentral banks, unlike mainstreamcurrencies. Advocates applaud itstraceability while critics say it is anavenue for money laundering and fraud.

The price of bitcoin has explodedby 570 per cent in 2017, smashing pastUS$5,000 mark and luring traders boredby the lack of volatility across othermarkets. (Mint, 13.11.17 & FT, 01.11.17)

Despite Hurricanes, US Economy RisesThe fastest six-month stretch of

growth in three years in November,2017, despite the impact of the Texasand Florida hurricanes has given theUS’ Federal Reserve the confidence to

end post-crisis monetary stimuluspolicies.

The three per cent annual growth inthe third quarter came despitepredictions of a slowdown by privatesector economists, and followed a 3.1per cent growth in the second quarter,making it the first six-month stretchsince 2014 in which US GDP grew morethan three per cent consecutively.

Ian Shepherdson of PantheonMacroeconomics said the datasuggested a rebound in US jobs was justa matter of months away. (FT, 28.11.17)

Global Finance Chiefs on EconomyThe mood was upbeat at the annual

International Monetary Fund (IMF) andWorld Bank meeting. The IMF bumpedup its forecast for global economicgrowth in 2017 and 2018.

Stocks are surging, credit spreadsare tight and market volatility is low.Still, the fund’s policy panel warned its189 member countries that there is ‘noroom for complacency’.

The recovery is still a work inprogress with inflation below target inmost rich nations, productivitysluggish and many not feeling thebenefits of stronger demand. The WorldEconomic Forum estimated a furtherUS$2.5tn needed in financing to reachthe UN’s Sustainable DevelopmentGoals. (Mint, 17.11.17 & FT, 11.11.17)

The world economy has the potential toincrease by anywhere between US$12tn

to US$28tn if it is able to close the gendergap, World Bank Chief Executive OfficerKristalina Georgieva said.

She cited the instance of Japan where datashows that bringing full participation ofwomen in the economy means nine per centlarger gross domestic product (GDP). To closethe gap, the Shinzo Abe government has nowintroduced a slew of women-oriented workreforms, such as longer childcare leave forboth parents and flexible working hours.

She added, “If we leave this issue to itsown device, it will take a hundred years toachieve equality.” (IE, 01.11.17)

Closing the Gender Gap

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Economic IssuesConcerns over US Senate Tax Bill

Global banks raised concerns overa provision in the US Senate Tax Billaimed at cracking down on taxavoidance by multinationalcorporations that they said could hurtthe banking industry.

The provision that has banksworried is aimed at stamping outtactics employed by multinationalcorporations to reduce US taxobligations by shifting money earnedin the US to less heavily-taxed overseasaffiliates.

The current Senate bill aims toreverse this by imposing a tax of up to10 per cent on payments made by a UScompany to its related foreign company,if the payment exceeds certainthreshold. (IE, 17.11.17)

G20 Fear Lack of Future OptionsThe G20 countries are all growing

for the first time since 2010, and theIMF predictions show global growthpicking up from 3.2 per cent in 2016 to3.6 per cent in 2017 and 3.7 per centthe next year.

However, some are worried. OlivierBlanchard, former IMF Chief Economiststated that the necessary tools to dealwith any upcoming recession periodsmight not be there. Either interest ratecuts, or spending and tax cuts might bedifficult in the near-future, and theseare the traditional tools to revivegrowth.

Public indebtedness is also at itshighest in advanced economies sincethe IMF record began in 2001.

(FT, 13.10.17)

Thaler Wins Nobel Prize for EconomicsRichard Thaler, the brain behind

‘nudge’ economics, has won the Nobelprize for economics for his work inincorporating insights from psychologyinto economic theory. Economists havetraditionally assumed that individualsbehave rationally, making decisions onthe basis of all information available.

Thaler’s work explains somewhatwhy people may behave irrationallysuch as struggling to save for retirementor placing a higher value on alreadyowned assets rather than what couldbe gained. He is credited for bringing

behavioural economics into themainstream.

He has co-authored, with CassSunstein of Harvard, the book ‘Nudge.’Richard Thaler is currently Professorof Behavioural Science and Economicsat the University of Chicago.

(FT, 10.11.17)

World Divided on CryptocurrencyCompanies have raised about

US$3.2bn in 2017 through coinofferings up from less than US$300mnin 2016, according to Coindesk. TheInitial Coin Offerings (ICOs) market letsstart-ups bypass banks and traditionalunderwriters and is becoming rapidlypopular.

Much of this demand is driven fromAsia, even as regulators in China andKorea try to curb them. In fact, despite70 per cent of bitcoin miners(companies that produce new bitcoins)being based in China, China has bannedthem since September, 2017.

Meanwhile, the European Securitiesand Markets Authority, Europe’sfinancial watchdog, joined a number

of respected regulators in warninginvestors against ICOs. (FT & ET, 15.11.17)

Economy Spurring Capital InvestmentSpurred by higher profits and

buoyant stock markets, some of theworld’s best known companies fromAmazon.com Inc. to Volkswagen AG areramping up spending on new plants andequipment after years of caution. Foran international economic expansionalready gathering speed, that couldprove a boon.

The thinking is that capitalinvestment, or capex, will stoke not justdemand, but ultimately higher wagesand inflation. That is a positive forcentral banks and governmentsyearning to see profits trickle intoworkers’ pockets.

Employers have been reluctant tospend even amid an economic upswingspanning 75 per cent of the globe. TheIMF lifted its 2017 global growthforecast to 3.6 per cent in October, 2017but cautioned the recovery is far fromcomplete. (BL, 30.10.17)

Super-rich to Benefit from TaxFrench President Emmanuel Macron faced renewed criticism over measures

to slash France’s contentious wealth tax and introduce a flat rate ondividends after it emerged the super-rich would benefit most from the taxbreaks.

France’s top 100 wealthiest households will see their tax bill cut by Euro582,380 on average, according to estimates from the finance ministry. Overall,about one per cent of France’s families will capture about 44 per cent of thetax breaks.

Amongst the measures enacted were the removal of wealth levy oneverything except property assets and introducing a flat rate of 30 per centon capital gains. (FT, 28.11.17)

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Economic IssuesIMF Warns Debt Threat to Recovery

The IMF has warned that good timesin the global economy were breedingcomplacency that was spawningfinancial excesses.

This masks longer-term risk,including a US$135tn debt, brewing upin the G20 nations that companies andconsumers are already struggling toservice. This appeared to be laying theground for a new financial crisis.

The US and China each accountedfor about a third of the US$80tnincrease in debt since 2006. And inmost G20 countries, companies andhouseholds had loaded up on so muchdebt that the debt service ratios – ameasure of affordability – hadincreased. (FT , 12.10.17)

OECD Predicts Weak Growth for UKThe Organisation for Economic

Cooperation and Development (OECD)issued a forecast for weak economicgrowth in the UK over the next twoyears, from 1.5 per cent in 2017 to 1.2per cent in 2018 and 1.1 per cent in2019.

In contrast, the OECD expects mostof its 35 member countries toexperience increased growth in 2018,continuing the strongest economicupturn this decade. However, it saysthat without more investment globalgrowth momentum will fade in 2019.

The OECD’s UK forecast issignificantly below UK’s own estimate,published by the Office for BudgetResponsibility. If Brexit provesdamaging, then the OECD warns thatthe UK government may need to furthersupport the economy. (FT, 29.11.17)

Republicans Fears on Tax ReformRepublican lawmakers have told

multinational companies that they areprepared to resolve their concernsabout international tax issues as theparty races to finalise the mostsweeping package of reforms in 30years.

Company lobbyists said businessconcerns centered on the proposedtreatment of cross-border paymentsrelated to debt, intellectual property,and goods and materials, which add

up to billions of dollars formultinationals.

On corporate debt, businesses areworried by proposals designed to limitcompanies’ ability to deduct interestpayments from their taxable income, abenefit that has come under fire assome have abused it to avoid taxpayments previously. (FT, 07.12.17)

Emerging Markets to Thrive or Sufer?For all the hype about the decline of

the West, it still largely controlswhether emerging markets thrive orsuffer. The broad global pick-up ingrowth in 2017 propelled emergingmarkets toward the biggest gains instocks and currencies in almost adecade.

China’s debt binge did add ballastto the global expansion, and thecountry’s neighbors are vulnerable toany sudden blowup there, asimplausible as it is. But in a yearcluttered with commentary about theretreat of the US and the contentiousdivorce proceedings between UK andthe EU, the developed-developingcountry dynamics still remain.

The withdrawal of monetaryaccommodation in the US and the eurozone enters a new phase in 2018, andhow that plays out will matter far morethan anything emerging markets dothemselves. (ET, 22.12.17)

Sovereign Funds to Sell AssetsEconomist Sony Kapoor ’s think

tank, Re-Define, has long campaignedfor the Norwegian Government PensionFund’s oil and gas divestment. In areport published in 2013 they explainthat the Fund gets new money from thesale of oil and gas every year, but thusits final value is very highly dependenton the price at which it is able to sellthis oil.

And thus the Fund has a largenegative exposure to policy actions thatneed to be taken to tackle climatechange. This high exposure to oilfluctuations isn’t limited to Norway.

Of the world’s 20 biggest sovereign-wealth funds, 11 are oil and gas-based.Their portfolios are generally nottransparent, but research showed thatthey have tended to overinvest inhydrocarbon-related stocks.

(ET, 21.11.17)

WB Overhauling Lending to ChinaJim Yong Kim, World Bank President, has been pushing for extra financial

resources and had hoped that shareholders would agree on at least a timetablefor the increase at the annual meeting in Washington.

The Trump administration demanded that the Bank examine its balance sheet,with particular emphasis on lending to China. The US has been tussling withChina for a few years over control of international institutions such as the WorldBank, China occasionally responding by setting up their own body including theAsian Infrastructure Development Bank. (FT, 13.11.17)

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No. 4, 2017CONOMIQUITYE9

Article

In its purest economic form, globalisation represents freemovement of capital, goods and labour across national

boundaries. The reality, of course, frequently departed fromthis ideal type. Compared to capital and goods, labor wasalways allowed lower freedom to move. Moreover, sincedifferent countries opted for varying degrees of integration withthe global economy, even the movement of capital and goods,while less constrained than before, was not entirely free.

The US President’s starkly anti-global rhetoric has beenwell-noted over the past year. He is still to appoint hisemissaries to the World Trade Organisation (WTO). Opposedto multilateralism in trade, he also wants Americancorporations to invest less abroad.

Globalisation’s RetreatBut globalisation’s retreat is not confined to the US alone.

Germany, Britain, France and Italy are the four biggestEuropean economies. Via Brexit, Britain has already givenin to an inward-looking pullback; right wing populistpolitical forces are showing signs of revival in Italy; thenativist party led by Marine Le Pen finished second in France;and now, a right-wing populist party has emerged fromnowhere in Germany to become the third largest party inparliament, causing a substantial erosion of popular supportfor the center right and center left, and making it hard for agovernment to emerge.

Under Merkel, Germany was unambiguously committedto the European project and, by extension, to a lessnationalistic, more pro-global stance. We do not know howthe political crisis will be resolved in Germany, and whetherthe resolution will be stable.

India-China: The Worst SufferersIndia and China were among the worst sufferers during

the first globalisation. But they have been two of the biggestbeneficiaries of the second globalisation. In 1980, China

Globalisation in RetreatAshutosh Varshney*

* Director, Centre for Contemporary South Asia, Sol Goldman Professor of International Studies and the Social Sciences, WatsonInstitute for International and Public Affairs, Brown University; excerpts from an article appeared in The Indian Express onNovember 30, 2017

and India were not even among the 45 largest economies ofthe world. In 2016, at US$11.2tn, China’s GDP was secondonly to the US (US$18.6tn) and at US$2.3tn, India’s GDP wasthe seventh largest in the world. China and India have notobjected to Globalisation 2.0; the West has.

Further, it is not economic arguments againstglobalisation that have forced the retreat. It is the newpolitical forces that have done so. If market-basedeconomics mastered politics for the last four decades,politics is now displaying its mastery over economic policy,though in a manner disconcerting to most liberals.

Two economic argumentsTwo economic arguments against full-blown

globalisation, made in the 1990s, are worth noting. In 1998,Jagdish Bhagwati, famous for his arguments in favor of tradeglobalisation, wrote vehemently against free movement ofcapital, arguing that capital markets were prone to extremeinstability — ‘panics and manias’ — unlike trade in goods,which was more stable and durably welfare-enhancing. Ayear before, Dani Rodrik, though not against globalisationper se, had argued against unrestricted free trade, claimingthat many losers from trade liberalisation would losepermanently.

Where might all this end up?The short run is clearer than the long run. Labour

migration will almost certainly be badly hurt: Ethnicitycontinues to be an obsessive concern of modern nation-states. Capital is likely to be hit least. Its power is ubiquitous.Moreover, the complex supply chains and other internationalnetworks in which businesses have got deeply embeddedcannot be easily broken. Trade restrictions are the mostunpredictable. The tricky part for populist rulers will be howto impose higher tariffs to protect domestic businesseswithout triggering a trade war.

It is being challenged by a

nationalist politics. But a

nationalist economics is

unlikely to take its place

The Indian Express

10No. 4, 2017CONOMIQUITYE

Article

Poorest Nations Are Also Most at Risk from Climate ChangeMartin Wolf*

* Associate Editor and Chief Economics Commentator at the Financial Times; excerpts from an article appeared inThe Financial Times on November 18, 2017

Coping up with Climate ChangeThe international community must

do more to help low-income countriescope with the climate change, says theIMF in its ‘World Economic Outlook’report released in October, 2017.

With an unprecedented increase inglobal temperatures over the past 40years, and significant further warmingpredicted unless greenhouse gasemissions are massively reduced, low-income countries are set to suffer theworst of the extreme droughts, floodsand rising sea levels that will result –even if their emissions are relatively low.

Furthermore, the increasedfrequency of extreme events will alsodo relatively more damage to thepoorest countries. This is so for tworeasons: these countries are located inthe regions of the world most likely tobe adversely affected; and they are leastable to protect themselves against, ormanage, the impact.

Obstacles to ActionIf little or no action is taken,

average temperatures could rise by 4°C,or more, above pre-industrial levels bythe end of the century. Aware of thelengthy lead times needed if effectiveaction is to be taken, both to mitigate

climate change and adapt, rationalpeople would act now.

The main obstacles to such actionare three. First, specific economicinterests, notably in the fossil fuelindustry, are understandably opposedto action and, not infrequently, to thescience. Second, free-marketeers, whodespise both governments andenvironmentalists, reject the science,because of its (to them) detestable policyimplications. Third, few wish toinconvenience themselves, let alonethreaten their standard of living, for thesake of the future, or people in poorercountries.

The impact will be long-lasting andaffect productivity, agricultural output,health and even conflict. Adaptation toextreme weather remains very hard forpoor countries. We have witnessed thisautumn the far more damaging impactof huge storms on poorer countries,such as those in the Caribbean, thanon the much wealthier US. It is possiblefor well-managed nations to reducethese adverse impacts.

Countries with superiorinfrastructure, better-regulated capitalmarkets, flexible exchange rates andmore accountable and democraticinstitutions recover faster

economically from the adverse impactof temperature shocks than others. Hotregions in high-income countries alsocope better than those in poorer ones.All this supports the view that thepoorest countries are likely to be themost damaged by rising temperatures.The populations of such countries aremore vulnerable because they arecloser to subsistence.

Serious ImplicationsThe IMF’s analysis has a number of

serious implications. First and mostimportant, low-income countries needto develop quickly to be better able tocope with weather shocks. Second, theirdevelopment needs to be consistent withmitigating the rise in globaltemperatures. Third, we need rapidimprovements in the relevanttechnologies and their swiftdissemination. Fourth, we also need tohelp poor countries adapt to thechanges in climate already sure tohappen. Fifth, we need to developinsurance against weather-relatedshocks to poor countries.

Finally, a moral case also exists forcompensating losers from the costs ofthe unmitigated climate changes beingimposed by richer countries.

IMF data show low-income nations sufferfrom events for whichthey bear no blame

The Financial Times

No. 4, 2017CONOMIQUITYE11

Environment & EconomicsEurope to Regulate Car Emissions

Regulators have proposed thatvehicles in Europe would have to reducecarbon dioxide emissions by almost athird by 2030. The proposals by theEuropean Commission, the EuropeanUnion’s executive arm, would forceautomakers to cut vehicle carbondioxide emissions by 30 percent by2030 compared to 2021 levels, and toachieve half of the cuts by 2025.

The Commission declined to setquotas for how many zero-emissionelectric vehicles carmakers must sellby 2030. Instead, the plan offersfinancial rewards to carmakers if theyexceed certain benchmarks for electric-vehicle production.

The German government hasintervened previously to blockemissions regulations that it perceivedas harmful to the country’s automotiveindustry. (ET, 10.11.17)

Global Pact Curb on Climate ChangeGovernments, scientists, industry

groups and environmentalcampaigners met in Germany inNovember, for the 23rd Conference ofParties presided over by the Republicof Fiji to discuss implementing a globalagreement to curb climate change,despite uncertainty over how the US willfigure into the effort.

Negotiators will try to agree onways to measure each country’s

greenhouse gas (GHG) emissions andto make sure everyone is playing by thesame rules.

Since the Paris agreement does notforesee sanctions for countries that failto meet their targets, peer pressure isthe main mechanism for ensuring thatgovernments abide by theircommitments and continue to increasetheir efforts in future.

(DNA, 05.11.17 & HT, 19.11.17)

EU Emissions Send a Smoke SignalEuropean industry faces a higher

cost of GHG emissions after reforms tothe EU’s carbon trading scheme wereagreed following two years ofnegotiations.

The deal, between EU member statesand the European Parliament includedmeasures to reduce the surplus ofpermits that has caused the EU’s‘carbon price’ to fall by almost 70 percent over the past nine years,undermining efforts to cut emissions.

Analysts predicted a surge in theprice of carbon permits as a result ofthe agreement, increasing the economicincentive for companies to reduce theircarbon footprints.

(FT, 09.11.17 & 10.11.17)

Global Action on Plastic LitterAt least 8 million tonnes of plastic

and possibly 50 per cent more than thiswas dumped in the sea globally in 2010,

according to research carried out inthe US. The UN estimates there were 480billion plastic bottles in the world in2016, a number that is expected to growto 583 billion by 2021.

Multinationals like Coca-Cola andUnilever are announcing somevoluntary initiatives under pressurefrom public opinion. Some governmentsare also starting to act.

Taiwan, for example, has imposedplastic levies on 14 industries and morethan 90,000 shops. Experts opine thatthe problem is global and co-ordinatedaction is required.

(FT, 04.12.17 & 11.12.17)

Corporate Action on Climate ChangeSeparately, 225 global institutional

investors controlling assets worthUS$26.3tn launched an initiative to putpressure on 100 of the world’s morecarbon intensive companies to step uptheir actions on climate change.

Climate Action 100+, as it is known,is the biggest shareholder action planever launched. The aim, says AnneSimpson, Investment Director forSustainability at Calpers, the closelyinvolved Californian governmentemployees’ pension fund, is to “put thepower of money on the biggestcorporate GHG emitters and hold theirboards to account”. To meet the Pariscommitments they will have to cutemissions by 80 per cent. (FT, 16.12.17)

India is among a small group of countries that are on track to achieve their self-declared climate targets under theParis Agreement with their current policies in place, said a new report released prepared jointly by the New Climate

Institute, Netherlands Environmental Assessment Agency, and the International Institute for Applied Systems Analysis.India was likely to overachieve its target for 2020 and on course to achieve the promises made in the NDC for the

year 2030.Ajay Kumar Bhalla, Secretary of the Ministry of Power made the same point at the launch of a project partnership for

‘Creating and Sustaining Markets for Energy Efficiency.’ (IE, 08.11.17 & BL, 02.11.17)

India to Achieve 2030 Climate Targets

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Environment & EconomicsCarbon Trading Schemes Get Boost

In the lead up to the 2015 Parisclimate summit, premier Xi Jinpingannounced China would launch acarbon market in two years. Xidelivered on his promise, opening upwhat will become the world’s largestcarbon market. China has been runningtrial carbon markets in seven provincesin order to figure out details.

Similarly, US voters picked climatechange advocates in a handful ofgubernatorial and state legislatureraces in November, providing apotential boost to state-level efforts tofight global warming through carbontrading schemes.

The Regional Greenhouse GasInitiative and the western state carbonmarket were formed in the US to helpdevelop market-based approaches.

(FT, 06.11.17, 10.11.17 & 19.12.17)

World under Grave RiskA 2017 UN Report from the World

Meteorological Organisation found2017 to be amongst the three hottestyears on record, with 2015 and 2016the other two in the running.

This comes along with the warningfrom top research organisation WoodsHole Research Centre that the Tropicsnow emit more carbon than they absorband are acting as net carbon source dueto widespread deforestation anddegradation.

Additionally, the ozone layer may beunder threat as well, with researchersfrom the University of East Angliahaving found that unregulatedsubstances such as dichloromethane(which is in widespread use) may beendangering the ozone layer.

(Mint, 07.11.17, 13.11.17 & IE, 02.11.17)

India to Ratify Hong Kong ConventionIndia has drafted legislation to

implement the ‘Hong Kong InternationalConvention for the Safe andEnvironmentally Sound Recycling ofShips’, which was adopted by theInternational Maritime Organization(IMO) in 2009, according to ShippingMinister Nitin Gadkari.

The Convention is yet to come intoforce as it has not been ratified by 15states, representing 40 per cent of theworld merchant shipping by grosstonnage (capacity).

Only six countries – Norway, Congo,France, Belgium, Panama and Denmark— have ratified it. India follows thebeaching method to dismantle ships,which is often criticised for its laxsafety and health aspects but is notprohibited by the IMO. (BL, 29.11.17)

China’s Role in Climate ChangeStronger Chinese economic growth

is set to push global GHG emissions toa record high in 2017 up 3.5 per cent.This is despite China’s active push

against climate change and pollution.On August 21, 2017, the

environmental authorities orderedmore than two dozen cities to reduceair pollution by 15 per cent by winterof 2017 and Li Ganjie, Minister forEnvironmental Protection has warnedthat tougher measures are on the way.

Other countries have also crackeddown on pollution, with Singapore tostop adding cars in the city fromFebruary 2018 and London havingimplemented a ‘pollution tax’ ondrivers of the most polluting vehicles.

(ET, 24.11.17; FT, 13.11.17 & 14.11.17)

Reality of Climate Change ActionAcknowledging that the US

withdrawal from the Paris Agreementwould hurt efforts to raise financialresources to fight climate change,China said it was the responsibility ofother developed countries to fill thegap.

Developed countries have promisedto raise at least US$100bn every yearfrom 2020 to help developing countriesdeal with the impacts of climate change.

Chinese emissions have begunrising again on the back of a revival incoal-intensive industries. Each year ofrising emissions makes the task oflimiting climate change moreformidable. The UN issued a starkwarning in 2017 on the scale of thechallenge. (IE, 11.11.17 & FT, 15.11.17)

During January 2014-September 2017,international banks channelled

US$630bn to the top 120 companiesplanning to build new coal plants, accordingto campaign groups including the RainforestAction Network, Bank-Track, and Friends ofthe Earth.

The top two lenders to coal plantdevelopers during this period were Japanesebanks Mizuho Financial and Mitsubishi UFJFinancial. Environmentalists protest thatthis flies against the Paris Agreement, andagainst the need to facilitate movement toalternative energy sources.

(FT, 11.12.17)

Environmentalists Criticise Coal Deals

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No. 4, 2017CONOMIQUITYE13

Development Dimensions

Child Labour in Cobalt MiningAs demand for rechargeable

batteries grows, companies haveresponsibility to prove that they are notprofiting from misery of miners workingin terrible conditions in DemocraticRepublic of Congo (DRC).

According to Amnesty international“the world’s largest electronics andelectric vehicle companies are not doingenough to ensure the cobalt in batteriesthey make or supply is not mined bychild labour in DRC”.

Cobalt’s demand is rising rapidly asthe world’s largest carmakers launchmass market electric vehicle that usesthe metal in their batteries. Amnestysaid that children as grow to seven aremining cobalt in DRC. (FT, 15.11.17)

Truth about Cobalt CrisisAn attempt by one of the world’s

biggest car makers to secure long termsupplies of cobalt for its push intoelectric vehicles has been shunned byleading producers of the metal.

Volkswagen issued a tender seekinga minimum of five years of supply atfixed price, but struggled to find anytakers. It put off miners by suggesting aprice well below current market levelswhich have jumped more than 80 percent in 2017.

“Volkswagen is looking for longterm-term strategic solution forimportant e-mobility raw materials inorder to ensure capacity and pricestability,” the company stated. VWGroup, whose 12 brands includePorsche, Audi, Skoda and Bentley, haspledged to spend €70bn to electrify 300

models by 2030. The company aims tobecome the biggest producer of electricvehicles by 2050. (FT, 16.10.17)

Free Movement of Persons in AfricaSix countries in central and western

Africa have breathed life into long-running plans to allow visa-freemovement of people among theirnations. The agreement gathers sixfrancophone states - Cameroon, CentralAfrican Republic, Chad, EquatorialGuinea, Gabon and the Republic ofCongo - in a bloc called the CentralAfrican Economic and MonetaryCommunity (CEMAC).

The association, set up in 2000, hasa potential market of 30 millionconsumers, many of whom, however, livein poverty. Negotiations on the dealbegan more than 15 years ago in 2013that awaited ratification by all itsmembers.

Visa-free access for workers willremove one of the many bureaucraticheadaches for transport companiesand other providers of cross-borderservices in the region. (BL, 01.11.17)

Women First, Prosperity for AllThe Global Entrepreneurship

Summit inaugurated by Indian PrimeMinister Narendra Modi, is expected tocatalyse entrepreneurship, the growingstart up community, help forge linkagesand pave way for investments.

The theme, “Women first, prosperityfor all,” has brought together about1,500 entrepreneurs from across theworld with more than 400 from the USalone, another 500 plus from other

parts of the world and about 500entrepreneurs from India, which is seento serve as a platform for networking,build bridges and consolidate the start-up sector.

Addressing media a day before theevent inauguration, NITI Aayog CEOAmitabh Kant said, “Women have takencentre stage in various developmentactivities and when women areempowered, countries thrive. In tunewith this thought, this summit will havea large contingent of women, who willbe in majority.” (BL, 27.11.17)

Economic Gender ParityThe global gender gap will take 100

years to close at the current rate ofchange, researched by World EconomicForum. WEF’s annual report took intoaccount disparities between men andwomen in health, education, politicsand workplace-The world has closed 68per cent of the gap between total genderinequality and total equality.

Of 142 countries covered in the 2017report, the gender gap had increased in82, with countries such as Kenya, Brazil,Japan and India regressing in terms ofthe number of women in ministerialroles. The region with the smallest gendergap is Western Europe, which hasclosed 75 per cent of the gap, followedby North American and Eastern Europe.

The Middle East and North Africa islowest-ranked region, closing the gapat an average of 60 per cent, and ishome to four of the world’s five lowest-ranking countries on female politicalempowerment, Kuwait, Lebanon, Qatarand Yamen. (FT, 02.11.17)

Xi Jinping has broken with a quarter-century of Chinese Communisttradition to give himself the option of heading the world’s largest

political party, with more than 88 million members, until 2027 andpossibly beyond.

When Xi became party head in 2012, previous precedentsuggested he would relinquish the post in 2022 after serving twofive-year terms. The key question now is how Xi now exercises all thepower he has accumulated and how he will translate formal powerinto real authority.

While Xi has proven himself adept at purging rivals for allegedcorruption, cementing his control over the party and military, he hasbeen less successful at pushing through transformative economicand financial reforms as Deng did. (FT, 26.10.17)

Xi Set to Bolster his Power

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14No. 4, 2017CONOMIQUITYE

Development DimensionsGender Pay Gap Rise in EU

The UK registered the biggestincrease in EU’s gender pay gap in 2015,making it one of the worst performersfor earning disparities between menand women according to EuropeanCommission Figure.

The gender pay gap has risen fasterin UK than in any other EU country,according to the latest figures from theEuropean Commission. Men in the UKearned 20.8 per cent more than womenin 2015 compared to 19.7 per cent in2014, well above the average EU pay gapwhich stood at 16.3 per cent.

The government recently introduceda new law requiring any companyemploying more than 250 people in theUK to publish the average wage of maleand female employees from April 2018.

(FT, 31.10.17)

Creating Rules for Cyber SecurityTimo Soini, Minister for Foreign

Affairs of Finland said there is a needto create a global set of rules in the areaof cyberspace and on issues of whatshould not be allowed on internet, suchas child pornography.

Soini, said cyber security is ofutmost importance in today’s digitalage. Cyber security is a growing industryin many ways and very important thatwe agree to rules.

What should we prevent all over theworld? In case of human rights, thecharter of United Nations should berespected in that social media as wellas in other media. It is really powerfulmedia and it could be also powerfulweapon. (IE, 28.11.17)

Ivanka Trump Nods to ‘WomenomicsIvanka Trump, daughter and adviser

to US President Donald Trump, during avisit to famous Golkonda Fort inHyderabad stated that it is incrediblyimportant that policies support modernfamilies.

She said that there is a need to startthinking about ways to support themodern workforce and the modernreality in household. Technologyreduces barriers to start businesses,creates flexibility and offerstremendous opportunities to women andwomen entrepreneurs.

Stating that there is a need to fuel

skill training and workforcedevelopment, Ivanka said it is necessaryto align what is being taught in theclassroom with economic realities.

(IE, 29.11.17)

Bombardier-Airbus Deal ChallengedThe US Commerce Department has

made two preliminary rulings thatBoeing is threatened by subsidisedimports of C Series passenger planesmade by the Canadian manufacturerBombardier.

It has proposed defensive anti-dumping and anti-subsidy dutiestotalling 300 per cent. The tariffsthreaten to hurt not just Canadianworkers but also several thousandBombardier workers in NorthernIreland, which has got the EU involved.Bombardier’s response will serve onlyto consolidate further an alreadyoligopolistic market in airlinemanufacturing but handling Airbuscheap market share.

The episode also underlines athreat to global trade peace. Thesubsidy wars between Airbus andBoeing have somewhat been kept incheck by litigation at World TradeOrganisation. (FT, 18.10.17)

Electric Car Push Drives PremiumsAs the world’s largest car companies

focus on producing more electricvehicles, they are facing greaterscrutiny about the ethical andenvironmental effects of their supplychains.

Such a development may wellprompt a permanent price divergenceacross commodity markets, with higherprices for low-carbon products as wellas highly processed forms of metal forelectric-car batteries.

The London Metal Exchange isworking on new contracts that reflect alikely premium in price for batterymetals. Norwegian aluminiumcompany Norsk Hydro launched twolow-carbon metal products, which theywill sell at a premium.

Chile’s state-owned copper companyCodelco will start pricing copper in away that takes into account itsenvironmental and ethical footprint.Australian lower-grade iron oreproducer Fortescue would shift itsproduction to high-quality iron ore.

(FT, 06.12.17)

US Jobless Rate FallsThe US unemployment rate dropped to 4.1 per cent, the lowest since 2000. The

report leaves intact the broader story: US’s recovery is fuelling an increasinglytight jobs market, supporting the Federal Reserve’s basic case for gradual increasesin short-term interest rates.

Some analysts said the calls within the Fed for further tightening will bereinforced by the continued drop in the jobless rate, which are now not far offlevels seen in the heyday of the tech bubble.

“Looking through the volatility from the hurricanes, the US job market is ingood shape,” said economist Gus Faucher of PNC Bank. Job growth is running atabout double the pace of underlying growth in the labour force, meaning jobmarket slack continues to decline. (FT, 04.11.17)

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Article

* Bloomberg View Columnist; excerpts from an article appeared in the Bloomberg on November 15, 2017

Nothing Trump Does Can Save CoalBarry Ritholtz*

Do not blameliberals and

regulations; blamecapitalism and

technology

On the campaign trail and in theWhite House, Donald Trump has

warmly embraced coal. He has rolledback regulations on its use andeliminated some federal subsidies foralternative energies like solar andwind, along with electric cars. A fewcoal miners even landed jobs in theindustry as the producers anticipaterising use. “Coal is BACK, baby!,”Breitbart News declared.

Coal is Not BackSorry, but coal is not back. If

anything, it is on life support. Contraryto the arguments some have made, itwas not killed by regulations andliberals, but by capitalism andtechnology. Eliminating subsidies forclean alternatives will only force themto become relentlessly more efficient,further damping demand for coal.

‘King Coal’, as Upton Sinclair calledit in his 1917 novel about the dreadfulworking conditions in mines, wasdominant for so long for many reasons:It is cheap. It is abundant. It is stable,and unlikely to explode or catch fire.Yet, it can easily be converted into heat,light and electricity. For the better partof three centuries, coal was the primaryenergy source for industry andtransportation.

The rise of oil and natural gasbrought closer scrutiny of the externalcosts of coal. It did not withstand thisreview well. It is incredibly dirty; coalcontributes to a variety of pollutions,including particulate matter (soot) and

ozone (smog). It is also not especiallyefficient; for instance, readily power ajet airliner with coal.

Despite all of that, coal generatedmost of the electricity in the US for along time; as recently as 20 years ago,it accounted for the majority of powerproduced. That was down to about 30per cent in 2016.

Trump’s Support for CoalWe can debate the reasons why the

president is so enthusiastic about coal,but at this point, the specifics are allbut irrelevant. The arc of coal’s usefullife is coming to a close. The enormousinvestments made in coal-fired powerplants in the last century are nowfading, so the argument about sunkcosts as a justification for continueduse is losing force. When presentedwith a choice to upgrade to a cleaner,low-sulfur coal or retrofit to naturalgas, almost all utilities choose gas.

So there are at least two reasons.Trump’s support for coal and antipathyfor clean alternatives is misplaced: a)clean, green energy sources havealready achieved critical mass, and b)alternatives have become globallyaccepted.

Consider electric-car maker TeslaInc. for a moment. Regardless ofwhether there is a federal rebate isalmost beside the point. Everyautomaker fears the Silicon Valleyupstart will bypass them. As a result,most have embarked on a huge effort tobuild more hybrid and/or electric

vehicles. General Motors Co. plans onhaving 20 all-electric vehicles on themarket by 2023. Volkswagen AG expectsto spend US$81bn to develop electricversions of all VW models by 2030.

Toyota Motor Corp. has already sold10 million hybrid cars, and has soldalmost 4 million Prius hybrid vehicles.Volvo, owned by Geely AutomobileHoldings of China, will begin phasingout gas-only cars in 2019. BMW’s entry-level i3 and its high-end i8 show thecompany is targeting the full range ofprice points.

Can Coal be Saved?In zero-emission electrical

generation, a similar story is playingout: Costs are falling while efficiencyis rising. The Energy Departmentreported that in the first quarter, windand solar for the first time accountedfor 10 per cent of all US electricitygeneration. But China has leapt aheadof the US in renewable-energyproduction; it employs 10 times asmany people in the sector as the US. Aresearch report suggests China willinvest as much as US$780bn inalternative energy by 2030.

For both transportation and energyproduction, the toothpaste already isout of the tube. Coal cannot be savedby Trump or anyone else it. The onlyrelevant question now is whether theUS will cede the leadership mantle ongreen energy to China. That seems to bethe direction the President’s plan istaking the country.

newsletter: Published by CUTS Centre for International Trade, Economics & Environment (CUTS CITEE),D-217, Bhaskar Marg, Bani Park, Jaipur 302 016, India, Ph: 91.141.228 2821, Fx: 91.141.228 2485, Email: citee@cuts.org,Website: www.cuts-international.org, www.cuts-citee.org. Also at Delhi, Calcutta and Chittorgarh (India); Lusaka (Zambia);Nairobi (Kenya); Accra (Ghana); Hanoi (Vietnam); and Geneva (Switzerland).

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We put a lot of time and effort in taking out thisnewsletter and it would mean a lot to us if we could

know how far this effort is paying off in terms of utility tothe readers. Please take a few seconds and suggest waysfor improvement on:€ Content€ Number of pages devoted to news stories€ Usefulness as an information base€ Readability (colour, illustrations & layout)W

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SOURCES: BL: The Hindu Business Line; DNA: Daily News and Analysis; ET: Economic Times;FT: The Financial Times; HT: Hindustan Times; IE: Indian Express

ReguLetterThe October-December 2017 issue of ReguLetter carries cover story entitled, ‘Nigeria is

Finally Adopting Competition Law. Is Ghana Next? which states that Nigeria has recentlypassed the harmonised version of the Federal Competition and Consumer Protection Bill whichis now slated for the President’s assent, when it will become a law. On the other hand, Ghana isin a long drawn process of having a functional competition policy and law. While the prospectof Ghanaian businesses operating under a competition law and policy from 2018 is encouraging,there is a need to ensure that bills in both Nigeria and Ghana does not get entangled intobureaucratic wrangles and vested interests lobbying.

A special feature by Nisha Kaur Oberoi opines that the year 2017 has been a year ofsignificant changes for India’s competition law regime, with several positive changes madeboth by the Competition Commission of India and the Ministry of Corporate Affairs.

Another article by Leonid Bershidsky states that the EU’s tax cases against Amazon, Appleand Google rest on a teetering foundation.

This newsletter can be accessed at: www.cuts-ccier.org/reguletter.htm

UNCTAD’s Reform Package forthe International Investment Regime

€ The Reform Package combines the policy options from UNCTAD’s Road Map for IIA Reform (2015) and UNCTAD’s 10Options for Phase 2 of IIA Reform (2017) into one single document.

€ The Reform Package factors in latest developments in investment treaty practice and recent debates on the reform ofthe IIA regime.

€ The Reform Package is the result of a collective effort, led by UNCTAD, pooling global expertise in the investment andsustainable development field from international organisations and numerous international experts, academics,business, practitioners and other stakeholders.

€ Different parts of the Reform Package have been field-tested in countries and were peer-reviewed at numerous high-level, multi-stakeholder meetings, including the UNCTAD Ministerial Conferences and the World InvestmentForums 2012, 2014 and 2016, as well as UNCTAD’s High-Level IIA Conferences (most recently in October 2017).

€ In line with UNCTAD’s Road Map for IIA Reform, great progress has been made in the five priority areas for reform (i.e.safeguarding the right to regulate while providing protection; reforming investment dispute settlement; promotingand facilitating investment; ensuring responsible investment; and enhancing systemic consistency).

€ Countries and regional groupings have been consolidating Phase 1 of the reform and are now moving to Phase 2. TheUNCTAD Secretariat has started preparations for Phase 3 of reform, which will focus on issues of policy coherenceand consolidation.

€ In so doing, UNCTAD responds to its mandates received from the United Nations Financing for Development Conference,enshrined in the Addis Ababa Action Agenda (July 2015), and to its institutional mandates, in particular fromUNCTAD’s Ministerial Conferences.

For more, please visit: goo.gl/QJJPnq