Tag: free trade

Categories
ASEAN Economics

[1273] Of a tit-for-tat with a happy ending

In game theory, tit-for-tat is one of the most common strategies utilized with cold effectiveness. Recently within the realm of ASEAN, Thailand played such tactics on Malaysia due to the latter’s protectionist automotive policy. Accusing that thee Malaysian approved permit system acts as a non-tariff barrier, Thailand refused to grant ASEAN Free Trade Agreement tariff on Malaysian vehicles. Malaysia later relented, probably realizing that a better outcome could be reached if the two cooperated with each other to lower down trade barrier. Defection is a sad strategy, no matter how efficient it is.

Thanks to such sensibility, Thailand has agreed to lower down the barrier its imposed on Malaysian automotive goods:

The Thai Cabinet agreed on Tuesday to slash the country’s import tariff on Malaysian cars in line with the ASEAN Free Trade Area (AFTA), an assistant government spokesman said Tuesday.

The move came after Malaysia had abolished its own trade restrictions protecting its automotive sector, Mr. Chotechai Suwannaporn said.

The reciprocal moves are recognised both as gestures of goodwill within ASEAN, but also as tangible steps on the part of both countries to work towards an integrated regional trade area.

The former Thaksin administration delayed implementing tariff cuts for Malaysian cars, arguing that the neighbouring country had been implementing trade measures that were the main obstacle keeping Thai-built cars from penetrating its market. [Thailand to cut tariff on Malaysian Cars. Bangkok Post. June 27 2007]

Ah. A tit-for-tat with a happy ending. Hip hip hooray. More free trade please and let us tore down the wall of protectionism!

Categories
Economics

[1203] Of ASEAN-EU FTA

After a stalled and disappointing Malaysia-US FTA negotiation, a better deal is coming our way. Today in Brunei, ASEAN and EU representatives met and agreed to start talking about a regional-wide FTA:

BANDAR SERI BEGAWAN, May 4 (Bernama) — The European Union (EU) today agreed to enter into free trade area (FTA) talks with the Association of South-East Asian Nations (Asean) despite its strong feeling on the absence of Myanmar’s democratic reforms.

Trade Commissioner, Peter Mandelson, told Bernama the 27-country EU’s stance on the junta-led Myanmar’s rights record has not changed although both blocs agreed that an FTA would provide for a comprehensive trade and investment liberalisation. [EU Puts Myanmar Aside, Proceeds FTA Talks With Asean. Bernama. May 4 2007]

While I am supportive of a bilateral FTA between Malaysia and the United States, multilateral FTAs such as the proposed ASEAN-EU are many times better than bilateral ones. A successful Doha Round would be best but pragmatism unfortunately forces us to choose less preferable paths toward greater prosperity and freedom.

I suspect that the EU would try to insert climate related issues into the proposed FTA. It would be interesting to see that.

Categories
Economics

[1163] Of blog war between DeLong, The Street Light and Free Debate

Economists are taking sides. It starts at The Economist:

Despite a dispiriting start that saw the imposition of steel tariffs, the Bush administration has made great efforts on trade, pushing forward with both multilateral and bilateral deals. Its biggest goal, a substantive deal from the Doha round of World Trade Organisation negotiations, is currently on life support. But the administration has managed to secure a variety of smaller deals, while letting steel tariffs die a death at the hands of the WTO. Now even progress of that sort may end. [Trouble with trade. April 2 2007. The Economist]

The Street Light fires the first shot:

The Economist takes a massive dive today, as they continue to bizarrely and irresponsibly assume the best (or maybe “the least bad” would be more accurate) of the Bush administration. [The Economist on Bush on Trade. April 2 2007. The Street Light.]

The DeLong as reinforcement:

Kash Mansouri writes… [Kash Mansouri Is Very Unhappy with the Economist on Bush on Trade. April 3 2007. Grasping Reality with Both Hands]

Free Debate, the blog of the Economist, counterattacks:

BRAD DE LONG approvingly links Kash Mansouri, as he goes after us for claiming that the Bush administration has been relatively strong on free trade issues…

[…]

Despite the good professor’s endorsement, this take on the Bush administration’s trade policy is an implausibly uncharitable reading. I confess I am stonkered at the willingness to blame the Bush administration for being insufficiently active on Doha, since without the trade team’s efforts, Doha would not be on life support; it would be dead. The Bush administration did everything but a fan dance to lure all parties back to the table after the catastrophe at Cancun, and while it has not gone as far on farm subsidies as anyone would like, this is widely regarded as driven by (Democratic and Republican) farm interests in Congress, not some failure on the administration’s part. It does the administration no good to negotiate a treaty that can’t be signed.

[…]

The Bush administration is far from perfect on trade; I think particularly of its ridiculous stance on sugar ethanol. But the Bush administration is constrained by political realities. It has failed to take many damaging steps despite intense political pressure, such as declaring China a currency manipulator, and where it does impose anti-trade measures, they are pleasingly often something like the steel tariffs, which were guaranteed to be overruled by the WTO. And as Mr DeLong’s commenters point out, whatever Mr Bush’s trade sins, they are at this point thoroughly overshadowed by the Democratic protectionists currently flexing their muscles in the House. That’s less an endorsement of the Bush administration than a sad comment on the state of trade policy in the world today: the Bush administration is the best we’ve got. [Tu quoque. April 3 2007. Free Debate]

Would Mankiw and Krugman (or heh, by proxy, Mark Thoma) get a keg and make a merrier party?

Categories
Economics

[1158] Of keen Koreans and myopic Malaysians

In Malay, there is a saying that roughly goes “hendak seribu daya, tidak hendak seribu dalih“. It means where there is a will, there is a way. The proverb aptly describes the just recently agreed upon free trade deal between South Korea and the United States of America. The deal is agreed upon despite the fact that both parties missed the first two deadlines twice. As such, while “hendak seribu daya” belongs to the Korean, “tidak hendak seribu dalih” truly belongs to the Malaysian.

As reported by AP earlier:

The United States and South Korea successfully concluded a free trade agreement after almost 10 months of contentious negotiations, a U.S. official said Monday.

The deal, which requires legislative approval in both countries, is the biggest for the United States since the North American Free Trade Agreement signed in 1992 and ratified in 1993. It is the biggest ever for South Korea. [South Korea, U.S. Reach Free Trade Deal. AP via Forbes. April 2 2007.

With the deal, the South Koreans are probably going to move farther up the economic ladder, leaving behind Malaysia which is too scare to face the reality out there in the world. So far behind that we would, as our leaders ever so proudly declare, be first among third world nations.

We, unfortunately, seem to prefer to sit in the dark inside a box, ignoring the wave of changes outside the box. While South Korea will continue to roar, there we are, sleeping with policies crafted nearly half a century ago, thinking such outdated policies are our savior.

Between the world of wonders in one hand and world of stagnation in the other, Malaysia chooses the latter, thinking it is not worth it to be better tomorrow than what we are today. We would rather defend an outdated policy that has failed instead of creating new one that promises greater prosperity.

All is not lost though. Malaysia and the US plan to get back to the negotiation table in mid-April:

WASHINGTON, April 1 (Bernama) — Malaysia and the United States Saturday missed their deadline to submit a bilateral Free Trade Agreement (FTA) to the US Congress that would have secured fast-track approval from Capitol Hill.

US Ambassador to Malaysia Christopher LaFleur said here Friday “although the two countries won’t make the deadline, what’s important is not the timing but the substance of the agreement.”

The goal of the two countries was “to reach a high quality FTA that would benefit both countries,” he said when addressing the Malaysian-American Society at the American University here.

[…]

Meanwhile, US-Malaysia trade talks which stalled in Sabah will be revived in Washington in mid-April. [Malaysia And US Miss FTA Deadline. Bernama. April 2007]

The ambassador is right in every sense. Nevertheless, with the Democrats in control of Congress, it will be harder to get a free trade agreement that comes close to the the spirit of free trade. Further, previously, Malaysia had great advantage over the US negotiators. Time was the leverage and time was on our side.

Alas, that window had come and passed. With the end of the TPA, Malaysia now truly stands alone against a giant, unless we jumpstart the Doha round.

Categories
Economics

[1154] Of in the name of the few, at the expense of many

With one more day to catch the window granted to the US Trade Promotion Authority by the US Congress to fast track trade negotiations, it becomes increasingly clear that both the Malaysian and the US negotiators are going to miss it. As stated earlier, with the Democrats in control of the Congress, it would be hard to carve out a free trade agreement between the two countries without the TPA. The same scenario is applicable to the South Korea-US FTA:

SEOUL, South Korea — As the deadline looms for the potentially historic free-trade talks between the U.S. and South Korea, the biggest obstacles are turning out to involve the same thing as in most trade discussions: food.

The two countries aim to finish a comprehensive trade agreement Friday, the biggest such deal ever for Korea and since 1993 for the U.S., and one that is being closely watched by other countries. They still need to reach major compromises in areas such as automotive trade and investment protections, according to people close to the discussions.

But those aren’t areas that might cause the deal to fall apart, these people say. Instead, it is two commodities that are closer to the hearts of both sides-beef for the U.S. and rice for South Korea. [Food is biggest obstacle in Seoul-U.S. trade talks. WSJ Asia. March 30 2007]

Also, observe how the interest of many is held hostage by the few:

South Korean is afraid that boosting imports of beef and rice will hurt business for its farmers, though it would reduce food prices for a far greater number of its consumers. [Food is biggest obstacle in Seoul-U.S. trade talks. WSJ Asia. March 30 2007]

The same event is being played out in Malaysia, as in many other country, at the expense of many, in the name of the few.

Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved

p/s — One last try by the South Korean and the American:

March 31 (Bloomberg) — The U.S. and South Korea agreed to extend talks toward a free-trade agreement by 48 hours, said Kim Jong Hoon, the chief South Korean negotiator for the agreement.

“Both sides formed a consensus that additional negotiations would be helpful and necessary, and therefore the U.S. delegation discussed this closely with its government and the Congress overnight, and decided to extend the talks by 48 hours, to April 2, 1 a.m. Korea time,” Kim said. [U.S., South Korea Extend Their Free-Trade Talks. Bloomberg. March 31 2007.

For Malaysia, the deadline has officially passed, because we as Malaysians are too afraid to grasp for prosperity, in spite of our rich history as trading civilizations.

Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved

pp/s — It is 1 A.M. in Seoul and no news has come out yet. I am assuming that the negotiation has officially failed.

Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved

ppp/s — Wow. These people are serious. The deadline for the negotiation has been extended yet again:

SEOUL, April 2 (Yonhap) — Top-level officials from South Korea and the United States struggled Monday to come up with major compromises in their final stage of negotiations on a proposed free trade agreement (FTA), with the deadline for the talks extended for the second time in two days. [South Korea-U.S. FTA talks go past extended deadline to salvage deal. Yonhap News. April 2 2007]

Damn. I wish that was Malaysia.

Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved

ppp/s — The second deadlines has come to pass but optimism is running high:

SEOUL, April 2 (Yonhap) — Top South Korean and U.S. negotiators worked through the night past a second deadline on Monday to try to forge a bilateral free trade agreement (FTA) amid growing indications that a deal was imminent.

A South Korean government official close to the talks said his government was waiting for a rely from the United States after delivering its final proposal for the terms of an agreement.

“The ball is now in the U.S. court,” the official said, asking that he not be identified. [Deal imminent in South Korea-U.S. FTA talks: sources. Yonhap News. April 2 2007]