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Hi from Brussels, where this coronavirus thing is getting quite serious. Never mind empty aeroplanes and falling tourist numbers. As things go bureaucrats won’t be able to get together to talk trade, and what then? The vast negotiating teams for the post-Brexit EU-UK trade deal have been told not to shake hands. But if there is a major outbreak here, will they really be able to keep meeting in person at all? Maybe the virus will give UK prime minister Boris Johnson leeway to ask for the extension of the transition period beyond the end of 2020 he insists he doesn’t want but it might prove prudent to invoke. It’s an ill wind, etc.
Today’s main piece is on the US battling China for dominance over global economic regulation — no biggie. Tall Tales is about the renewed Greek refugee crisis exposing the EU’s claims to have a rules-based foreign policy. Our chart of the day looks at US drug imports after India said it was restricting exports.
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World supremacy, one dull UN agency at a time
Of all potential arenas for a battle over running the global economy, the World Intellectual Property Organization is not the most obvious. We’d expect Trade Secrets readers to be more familiar with it than most, but even advanced nerds might need reminding. It’s a specialised UN agency with headquarters in Geneva, a repository for registrations of patents and trademarks, information about IP laws and tools to search and assess IP technologies. It’s deeply worthwhile but not shudderingly sexy.
This week, however, if you believe some of the rhetoric, it witnessed a dramatic counterattack by the rich economies and particularly the US against a sustained Chinese power grab over global regulation. Yesterday Daren Tang of Singapore became the next director-general of Wipo, defeating the Chinese candidate Wang Binying.
Was this a big deal? If you’re the US, yes. For months they’ve been running a campaign against the Chinese candidacy — including White House trade warrior Peter Navarro writing in the FT — arguing that it is absurd to give a country with such a record in violating IP control of the agency protecting it (China hit back, pointing out Ms Wang’s long experience in IP in general and Wipo in particular). A Singaporean candidate — Singapore is regarded as one of their own by many developing countries — was an obvious alternative.
Thus a trend is paused, if not necessarily ended. China has successfully run a campaign to increase its influence in quietly powerful regulatory agencies. The International Telecommunication Union has traditionally lurked even more unobtrusively in the Geneva shadows than Wipo. But its influence in codifying global tech standards means Chinese companies have been lobbying it intensively on issues such as facial recognition and surveillance. It acquired a Chinese head in 2014 who was reappointed in 2018.
Similarly, the Food and Agriculture Organization in Rome, which has a big role in governing standards and food security, last year appointed as its head the Chinese former agriculture minister Qu Dongyu. American and European officials complain about aggressive campaigning by China, including writing off debts for governments that vote the right way.
This week the rich countries and specifically the Americans finally got their act together and united behind a single candidate. Previously they’ve been all over the shop: the US often going missing, the European countries not coordinating. There was considerable irritation in Europe last year, for example, when the US split the not-China vote for the FAO by supporting a nominee from Georgia rather than the French candidate. This week at Wipo the US had four officials at ambassador level working the delegations.
Chinese companies have pressed the International Telecommunication Union on issues including facial recognition and surveillance © Bloomberg
A hand-to-hand battle between Washington and Beijing over world regulation will certainly add a bit of spice to the lives of earnest UN bureaucrats. But a fair-minded person, if you can find such a creature on the global governance circuit (we’ve looked for years), might regard a US campaign against politicised China hegemony a touch ironic.
For one, an administration such as Donald Trump’s that treats multilateral institutions with contempt can hardly complain at who ends up running them. Second, even before Trump, the transatlantic duopoly over the leadership of the IMF (Europe, with a US deputy) and the World Bank (the US) has endured for decades. To say that the two institutions have been run purely for the benefit of Europe and the US is pushing it. But you don’t have to be Joe Stiglitz to think that the Wall Street mindset has had too much influence.
Nor has the choice of personnel been uniformly stellar. In the past 15 years, the US has installed as president of the World Bank: the architect of the Iraq war who subsequently had to leave after intervening to get a Bank employee with whom he was romantically involved a bigger pay package; a politically lightweight physician/anthropologist who was not up to the job of managing such a big institution; and a hard-money ideologue who seems to have been sent to the Bank to get him out of the US Treasury.
The Americans (and the Europeans) are pleased that they’ve won at Wipo this week. But the governance of international economic institutions might be more harmonious in the longer run if they gave a better impression of caring that the best candidate got the job.
Charted waters
In the latest sign that coronavirus is affecting global supply chains, India said this week that it was restricting exports of 26 key pharmaceutical ingredients and the medicines made from them — which includes paracetamol. The US said it was trying to work out the effect this would have on its medical supplies — but the move could mean the country is even more reliant on European drug imports, which have accounted for a larger share in the past year.
Tall Tales of Trade
Scenes of migrants arriving on Greek shores reveal that minimal progress has been made in creating a fair EU migration system since the 2015-16 crisis © AFP via Getty Images
What’s the tall tale?
It’s not a tale of trade as such, but we’re about globalisation more generally and it’s about one of our favourite subjects — the EU’s claim to be projecting a culture of rules-based multilateralism — so here goes. More distressing scenes of migrants arriving on Greek shores reveal how much progress has been made in creating a fair and coherent EU migration system since the crisis of 2015/16: almost none. Brussels types often cite creating a stricter border regime including the Frontex agency as an example of a long-awaited coherent EU foreign policy.
Why is it wrong?
Call us dim, but we don’t quite see how throwing up walls around Europe constitutes the maintenance of an open rules-based global order rather than inept and heavy-handed homeland security. We’re not lawyers, but when Greece cites EU law as a reason to suspend the acceptance of claims for asylum, and the UN refugee agency gives chapter and verse explaining how it really isn’t, we’re inclined to believe the latter. Still waiting for that geopolitical commission, folks. No rush. When you’re ready.
Don’t miss
- US companies say the spread of coronavirus in China has already affected manufacturing and tourism around the country, according to a report from the Federal Reserve.
Read more - Britain’s ability to clinch a trade deal with the US on financial services could be complicated by pursuing regulatory “equivalence” with the EU, a group of UK peers has suggested — calling into question one of the economic opportunities of Brexit.
Read more - EU and UK negotiators have knuckled down to detailed negotiations on their future relationship, but one of Britain’s most economically important sectors — its financial services industry — is barely covered.
Read more
Tokyo talk
The best trade stories from the Nikkei Asian Review
- Chinese buyers of Tesla’s first batch of Shanghai-made Model 3 cars have threatened to take the US electric vehicle maker to court, accusing it of substituting promised new control chips with an older version without notice.
Read more - The global steel industry is worried there will be another export wave that floods the global market, as inventory piles up to an all-time high in Chinese factories hamstrung by coronavirus.
Read more
Source: Economy - ft.com
