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April 14, 2017

FTAs and NAFTA


The history of trade is that two or more parties enter into agreement to exchange goods or resources exclusively within their respective territories of negotiated values. It happened the World over as exploration expanded the reach of humanity. The purpose and usage of the traded resources was not discussed but was intrinsic to valuations placed upon the resources exchanged. Also, of importance, is the stage of development of the societal communities engaged in trade partnership. Industrial developed societies were trading for raw materials to supply manufacturing while their trading partners were farmers and tribesmen that thrived from livestock and agriculture. The result was strip mining of territories for commodities such as precious metals, oil & gas, gems, etc. in exchange for livestock and developed economy coinage (money).

Trade balances (surplus and deficit) result from a multivariate dependence of development levels of trading countries, among other things. While one country conducts trade in manufactured goods, its partner may be trading livestock or even the labor of it citizens to manufacture goods with a lesser expense of capital. The NAFTA agreement is an example of the creation of a three country trading bloc establishing a North American marketplace where corporations, to take advantage of the variances, created business strategies to break up the manufacturing process for a comparatively lower wage labor in Mexico. The strategy also gets reflected in the Foreign Direct Investment comparisons between Mexico and the United States and Canada. Politics recognize the foreign direct investment in Mexico as the United States’ lost opportunity to create jobs for its citizens. However, no evidence supports the fact that the FDI in Mexico would take place in the United States absent NAFTA. This leads to the geopolitics of renegotiating trade agreements for better job creation and location of the creation.

The Congressional Research Service published a NAFTA report authored by M. Angeles Villarreal and Ian F. Fergusson summarizing NAFTA and its impact along with possible renegotiations. Potential topics include:

Automotive sector – rules of origin

Services – removal of barriers to electronic payment card services, electronic signatures, mobile telecommunications, international roaming rates, and additional market access in areas such as audiovisual services.

E-Commerce, Data Flows, and Data Localization – cross-border transfer of information by electronic means or forced localization of data centers.

Intellectual Property Rights (IPR) – consideration for expanded provisions related to widespread use of the Internet on copyright in the digital environment.

State Owned Enterprises (SOEs)- addressing potential commercial disadvantages to private sector firms from state supported competitors receiving preferential treatment.

Investment – NAFTA was the first FTA to contain investor-state dispute settlement (ISDS) provision, which allows investors to bring arbitration against a host government to binding arbitration to resolve disputes over alleged violations of a host government’s investment obligations.

Dispute Settlement – a binational dispute settlement mechanism to review anti-dumping (AD) and countervailing duty (CVD) decisions of a domestic administrative body.

Labor – strengthening provisions related to the protection of worker rights.

Environment – hold parties to more enforceable environmental provisions such as those that require parties to adopt, enforce and not derogate from their environmental laws to attract trade and investment.

Energy – The United States may seek greater access to Mexico’s oil sector or to enhance bilateral cooperation on energy production and security.

Customs and Trade Facilitation – Discussions could address customs automation procedures, the creation of a single-access window at one entry point for importers and exporters.

Sanitary and Phytosanitary Standards (SPS) – considerations such as science-based and transparent regulatory activities, including the use of risk analysis to improve the scientific basis of SPS regulation, notification to importers or exporters of shipments detained for SPS issues, or consultative mechanisms to seek quick resolution of such detentions.

As evidenced by the topics and renegotiation summaries, a major alteration of NAFTA is not likely. What is likely is a tightening of the trading bloc integration to create a more seamless marketplace similar to the European Union and the economic political developments of China – Asia. 

March 6, 2017

R&D Spending Around the Globe


Organization for Economic Co-operation and Development (OECD) has a 35 nation membership and provides economic analysis and guidance in an effort to sustain open democratic governance with a mission to promote policies that will improve economic and social well-being of people around the world. This analysis of R&D spending is one of the many reports issued by OECD and reflects country spending relative to GDP which provides an indicator of future technological development within society. The associated national wealth is measured through patents and patent protections for development of the technological breakthroughs for ownership claims of corporate and industry developments for expansive application around the world. Included is the use of military R&D for national defense which can have application within social technology usage and country business systems.

The analysis measurement is R&D spending as a percent of GDP and although other nations may have a higher spending rate than the United States, the United States still spends more on a dollar basis due to the larger economy.
"The United States, which spends more than any other country on R&D and accounts for around 40% of total OECD R&D expenditure, saw its R&D intensity rise slightly from 2.76% in 2014 to 2.79% in 2015. Meanwhile, China continued its steady increase in R&D intensity, reaching 2.1% in 2015 – only 0.3 of a percentage point below the OECD average. In volume terms, China’s R&D spending was equivalent to 81% of the United States level in 2015 and 9% higher than that of the EU. The latest patent data show the number of patents filed by Chinese inventors continued to rise in 2014, while filings under the Patent Cooperation Treaty by United States inventors declined."


February 22, 2017

Planetary Discoveries

One tends to think about planetary governance systems in conjunction with these new discoveries. The democratic and capitalist society tends to work, but it has vulnerabilities such as wealth distribution inequalities and certain discriminatory behaviors impacting quality of life for certain groups. What really comes to mind is whether the system is duplicable and transferable for interplanetary governance?

https://www.nasa.gov/press-release/nasa-telescope-reveals-largest-batch-of-earth-size-habitable-zone-planets-around


January 18, 2017

Democracy for Sale


The implication of the conflicts of interest from the elected - Executive branch maintaining private sector business interests while politically leading the country is the United States becoming more alike the non-democratic countries that the U.S. is trying to influence with Democratic principles of governance. International politics have shown the regional differences in governance systems whereby “family” royalty governance models accumulate resource wealth of a country while their populations struggle in poverty for basic standards of living. In such cases capital wealth accumulates within a small percentage of the population that then attempts to protect such wealth through distribution management. The impact limits the expanse of economic development among the population necessary for a vibrant social development and tax base to support public services.

The attempts to lead the country through the executive branch of government while maintaining private sector business interests create opportunities for non-democratic business norms of “pay to play” accusations where payoffs for favorable policy and regulatory practices to enhance certain industry dynamics of benefit to “family” oligopolies. In such environments, Capitalism is reduced to the exchange of financial capital using industry for wealth accumulation as opposed to constructing social developments. The effect also destroys the network of sanctions designed to support the building of Democratic norms where countries' economic resources are used to further “family” royalty wealth in lieu of building democratic institutions managing society for the betterment of mankind. At risk is the moral authority used by the United States to protect mankind for political influence within international affairs otherwise the Executive Branch of government is viewed as just another oligopolistic business family directing international politics.


The United States economy is also at risk in the current environment of international supply chains supporting American business within a multitude of foreign countries from the arrangement of international trade agreements. Because many of these countries lack all of the democratic institutions of governance, American corporate leaders are negotiating deals with foreign government entities for development of their countries in exchange for resources included in the manufacturing supply chain. Disruptions within any part of the supply chain impacts the availability of goods which impacts corporate earnings which in turn impacts stock prices which impacts corporate leadership compensation and tenure.  Actions creating the Executive Branch conundrum by acting as a CEO instead of leader of a Democracy dependent upon the international recognition of Moral persuasion in international affairs as well as domestic leadership of government.