Tackling China's Pollution Problem

           Pollution is a huge problem for China; there are no doubts about it. Due to the growing environmental concern around the world, not to mention the high spike in adverse health effects, something needs to be done. 

           Is China truly moving into action? They are supposedly trying to cut back on emissions as both domestic and international concern cultivates.  Nonetheless, they are still a long way off. Their Climate Change Performance Index is still poor, demonstrating the need for a greater emphasis to be placed on the issue; their reluctance to fix the issue is startling. 

          What are some ways in which China could confront the issue? For starters, stricter laws must be enacted. Understandably, China is trying to maintain their global appeal for cheap labor/manufacturing. However, the problem at hand needs to be fixed, otherwise countries will begin to reject their services, even at the “lower prices” (the negative environmental externalities could, at some point, outweigh the amount countries are gaining through “lower prices”). 

            Another idea is for other countries to impose import tariffs on those Chinese goods specific to high pollution rates during production. This would, in theory, limit the amount of Chinese goods countries would purchase, establishing an equal playing field for those countries that follow the pollution rules to provide goods at similar prices. This is not an ideal situation; global terms of trade would worsen and the WTO would need to get involved as tariff wars would most likely be a resultant. Additionally, some countries would have game-theory-like incentives to cheat regarding the tariffs. 

            The last idea is that of a carbon tax, as we discussed in class. Countries could write out contracts to propose carbon taxes in each respective country, ensuring enforcement through the United Nations/WTO. The tax collected could go towards lowering other consumer taxes, as consumers would likely get hit with higher prices on goods, thus evening out the losses.

 

The Fear Of European Banana Producers

Recently, European banana producers felt their livelihood at risk because of the increasing presence of bananas from the third countries in the EU.According to the article, there are two  main reasons lead to this situation. First, the EU continued to reduce the import tariffs of bananas from third countries.the world price was increased which lead to large amount of bananas come into European market from the third countries. Also, the bananas from the third countries are able to enter European market in a relative lower price which may damage the internal banana industry. Second, the lack of insistence to the food safety and easing phytosanitary regulation made it possible for bananas from the third countries accessed the EU at much lower price.
As we learnt in the classes, one of the best way to solve this problem is to increase the banana import tariffs. After the rise of tariff, the world price may go down while the internal price may go up. It will hurt consumers because consumers have to pay more money for the same amount of bananas. However, both government and European banana producers are better off due to the increasing internal price of bananas. And the EU's terms of trade will also increase since the import price is decrease. Seemingly, the EU will gain from the increasing tariffs, but it is depended by which part is larger, the loss of consumers or the gain of government and banana producers. In other words, it is depended by how much amount of tariffs that the government will  take. And we can't ignore the impact of the tariffs from the third countries' government.
In my opinion, it is hard to say who is the winner or loser during the trade. Every countries' government will take several trade policies to protect their trade environment. And international organizations will also take measures to keep balance among the member countries. These policies and measures will be changed periodically. so it is meaningful for us to know the original reasons why these policies and measures should be used, so that we are able to be the winner in most time.http://www.freshplaza.com/article/115236/Europe-Reduction-of-banana-import-tariffs-puts-Pl%C3%A1tano-de-Canarias-in-danger

                  WHY IS CHINA ATTRACTIVE IN AFRICA THAN THE WESTERN?
              China has become a very famous and a known investor in the African continent. It has and it is investing in various spheres of human life such as health sectors, social sectors, agriculture sector, and above all and in particular China has immersed in economic sector. In all these sectors not mentioning how China has invested in, I would like only to confirm that it invests a lot of funds not less that $ 200 Million in the sectors. For instance, just to mention a few, in particular is that the trade between China and Africa has grown as quoted from the article "Already trade between Africa and China has grown at a breathtaking pace. It was $10.5 billion in 2000, $40 billion in 2005 and $166 billion in 2011. China is currently Africa’s largest trading partner, having surpassed the US in 2009" This is a total trade involvement of China with Africa.

    Now, in this article, as the title of the post states is to why is China attractive to African continent?Most of the people have said it is because of large population that grows high, or it is because there is high technological advancement and others have gone far that most of the companies that offshore there manufacturing industries have firms over there so it becomes easy for China to look for raw materials for the industries; a thing which might be true. Despite the inequality in trade partnership where by China takes raw materials, but still the countries in Africa import poor products, still they trade with China. Why?
           But, the general secret for China being attractive in the African continent is its neutrality in African politics and other internal social affairs. China has never done anything pertaining to political or social unrest in the region. Whereas other countries involve in business while also ensuring political stability, China has not done such things, but rather sticks on the business and trade partnership and agreement, and not on any political affairs. So, with greedy politicians and other business guys, it becomes easy for them to withstand China than falling in the Western countries which interfere with internal affairs of the particular government. China is lets us do business, and deal with your own problems. But other countries say, we can do business, but be politically stable, be a democratic state. And as I said, with greedy leadership, then it becomes easy to fall to China than to the other Countries particularly the western Countries that emphases democracy and political stability. In this article, good explanations are given to show how this trade is not fair for it neglects other aspects of trade like peace and stability which also involves equal distribution of the wealth.
     So, my questions are,is it fair for having business partnership in one aspect of social life and neglect the other?Should China also deal with political affairs with Africa to reduce poverty as it due to inequality in terms?If not, should the western countries restrict aids to those countries that have trade partnership with China and still no peace in their Countries?

http://www.un.org/africarenewal/magazine/january-2013/china-heart-africa
     

African Women Add to Total Trade

The African trade system is limited.  There are no women allowed to open into the trade sector.  Some women in Africa are in the manufacturing business or agricultural sector.  The agricultural sector is the biggest trade sector between African countries.  Womenare key to trade, they deliver, produce, and provide services.  Women need to develop an even more important role to trade.  They would like to trade, but the countries limit women’s wages and activities.  Many are trying to approve regulations on utilizing women in the trade force.

Accepting women into the trade sector will be similar to migration.  Even if there is no one moving in, the sectors are seeing a very large increase in their labor.  Trading within Africa will change many African inhabitants’ lives.  The benefits for women would include a wage difference in the home and ability to provide better for their family.  Women do assume the risks of not being able to trade with their business.  Wages overall may decrease but for families, the extra income of the mother will help their household.  Capital and land returns will increase.  Especially land in this case because women can join the large agricultural sector.  The extra revenue from having the women help will make a huge impact on each country.  The price of exports will likely decrease because there will be a higher amount to export and the price of imports may increase because the countries will have a greater ability to import so they may import more just in general.  So the home countries will improve the terms of trade.  Are there any other effects by adding women’s efforts into the workforce and trading sectors? Who (home country vs. foreign country/producers vs. consumers) will gain or lose from the increased trading?

The United Kingdom's Trade gab

The United Kingdom is running its biggest trade deficit for a year. This is because their biggest trading partner is the European Union where their demand has been very weak. But consumer spending in the United Kingdom has been rising very quickly. Which is sucking all their good from across the ocean to the UK. The EU has far too many cars than it can sell. And the demand for them has been rising like crazy in the UK. This has led to them importing a lot of goods and not exporting as many because there is little demand in the EU.

This is an interesting trade situation, because the UK has an issue of them importing too many good without being able to export as much because of lack of demand in the EU. I think that in order to fix this the UK should impose an import tariff. This would help to regulate the amount of goods coming in and would allow for them to close up the negative Terms of Trade. The could also consider an export subsidy which would help them to produce and export more and have the same effect on the terms of trade. Do you think that this would be a good idea? Which one would you choose? 

Auto Export Subsidy in China

 Over the last year the Obama administration has been challenging China to end their export subsidies in regards to autos and auto parts. The United States has tried to address this issue at the World Trade Organization, but has had no such luck in success yet. Advisors currently argue that the export subsidies used by China are not compliant with WTO regulations. According to this article about 1$ billion in subsidies have been made available for auto producers between 2009- 2011. The main political reasoning for the United States challenging China is that the Obama administration believes China is infringing on the rights of 800,000 American workers in the auto sector. This would make sense because terms of trade overall worsen, because of the influx in supply the price of autos must drop. This then causes a drop in wages that workers can earn. In this example, the United States. China is also a large country so, we can see that the Chinese government looses big by the subsidies and the consumers who have to pay the subsidy. Many of these subsidy problems with China seem to be reoccurring. This has happened with wind power and raw materials. The WTO is now in consultation with the two parties. This could result in China ending the export subsidy or them saying no and the United States retaliates by enforcing a tariff on Chinese auto imports. Some of the questions that I have is, how long can The Chinese government sustain and continue to allow export subsidies? And, besides enforcing a tariff to get back at china, what else can the United States to economically strike back at China?     

Decline in US Terms of Trade

Between 1982 and 1992, the TOT for developed market countries saw an increase of about 12% according to The Slow Decline of US Terms of Trade, which was due in large part to a decline in oil prices.  This was despite fears that decreases in the TOT of advanced countries would hurt the growth of third world countries.  However, this was not an issue as TOT continued to increase in the time period, and clear up until 1998 when they reached their peak.  In 1994, Paul Krugman "dismissed concerns that trade was lowering average US wages" since US TOT had been improving.  In 1994, when trade accounted for 10% of NDP, a 10% decline in TOT only amounted to a 1% decline in wages due to trade.  Therefore, Krugman did not have a large concern for potential decline.    Since 1998, TOT in the US have decreased about 10%, which they say is not a large decrease.  However, since US trade accounts for 1/4 of GDP, a 10% decrease this could lead to a much larger reduction in real wages than was estimated in 1994, about 2.5 times more of an impact.

While US trade has not accounted for a majority of GDP, the impact on wages should not be detrimental with slight changes in US TOT, as briefly discussed in the article.  Also, there was a plateau of wages prior to 2000 when TOT started to decline, which means that these decreases in wage can not be attributed, at least fully, to effects of international trade.  The article says that tariffs are one way of increasing a country's TOT.  This is true when looking at an example of a large country.  When a tariff is imposed, consumers lose, producers gain slightly, and government gains.  The net effect of this is a deadweight loss, but an increase in the country's TOT due to a decrease in price of imports.  It is good for domestic welfare not only because of the increase of TOT, but also because it reduces other countries' TOT.  However, this is only true with a relatively small tariff because the increase in TOT will outweigh the deadweight loss because it imposes a small tax on a large quantity.  If the tariff is too high, the deadweight loss will outweigh the increase in TOT which will make domestic welfare worse off instead of better off.

India: Govt may roll over Rs. 40,000 crore oil subsidies to 2014-15

In the article by the Hundustan Times, There is say in India to keep a subsidy on crude oil going for the remainder of 2013 and 2014-2015 this would cause a burden or expenditure of  Rs. 1,40,000 crore compared to the targeted Rs. 65,000 crore target. This is expected to increase the deficit, but in the article it states that this subsidy is expect to be cancelled out by decreasing expenditure in other areas so that a deficit does not occur or to weaken the impact of expenditure,
Now In class learned that a subsidy will increase the Pw to the red line as displayed in this graph. The effects of this would be Consumer Surplus would lose a and b, Producer surplus would gain a,b and c, Government would lose b,c,d,f,g and h as displayed by this graph. This would leave the net effect of death weight loss of b and d and a loss of terms of trade of f,g,h assuming that India is a large country when it come to crude oil and can have an effect on world price. The item we did not consider was the fact that government need to pay this subsidy to producers and find a way to pay it. That is the problem that India faces,

At the end of the article it made statement where the government had a hard time deciding if they should subsidize oil at all but it was stated to them that it would hurt domestic production and increase imports. This leads us to the question: Should government subsidize, we all ready know that if its a large country what the effects would be, but if government did subsidize would that hurt domestic production? Product would probably decrease and there would be an increase of imports but would that effect our terms of trade worse than if we subsidize the good?

Japan's Oct. consumer confidence down after sales tax hike decision

On Oct 1, Japanese Prime Minister Shinzo Abe announced that the government would increase the consumption tax from 5 percent to 8 percent next April so that they could support social-welfare programs. After a few weeks, four components, “consumers’ view of employment conditions”, “consumers’ near-term readiness to buy new durable goods”, “consumers’ assessment of livelihoods” and “consumers’ income growth”, decreased, showing consumer confidence going down. And some economists had warned that the increasing consumption tax would hurt consumer spending as well as hinder the economic recovery.

In my opinion, I disagree with the decision that Japan is going to raise consumption tax next year. The first reason is that consumers may buy many things before the tax takes effect, because the prices of the products are cheaper, and the future consumption will go down. As we know, investment, consumption and net export are the three important factors to push the economy forward. Thus, the decreasing of consumption will have bad influences on the development of economy in the long term.  In addition, as the economists said, it is not advisable to have a rapid tax hike when Japan is recovering from stagnation. If they take this measure, it will generate some bad effects and their efforts for recovering maybe in vain. Last but not least, we learned that a rise in consumption tax leads to deadweight losses. Although the government can gain, it loses in general, because the losses of consumers and producers are larger than the gain of the government. As a result, Japan will suffer deadweight losses.

Therefore, I think it is bad to increase consumption tax in Japan.

Source:

http://www.globalpost.com/dispatch/news/kyodo-news-international/131112/japans-oct-consumer-confidence-down-after-sales-tax-hi

Aviation bodies agreement

The article that I read was Aviation bodies hail agreement to curb carbon emissions. This article discusses that an agreement among 191 countries at the International Civil Aviation Organization (ICAO) had decided to curb carbon emissions. Because of this the EU abandoned their plans to impose a "carbon tax" on all flights over the EU skyways. The EU had suspended its carbon dioxide Emissions Trading Scheme for all flights, after facing large amounts of criticism. This regulation would have made it required to buy pollution credits to cover 15% of emissions for the entire flight of planes flying over EU airspace, no mater where this flight originated. This could have potentially lead to a trade war amongst EU and non-EU countries.

From what we discussed in class we could see how the original plan proposed by the EU could have lead to a trade war. This would have lead to tariffs going back and forth among the EU and non-EU nations attempting to have the highest optimal tariff, causing all nations involved to end up at autarky levels. We discussed how this scenario is almost like a prisoner's dilemma. The countries involved would choose the best case scenario in each case of a tariff. In this case that would be to tariff back. This would cause the downward spiral to the autarky level. The World Trade Organization is in place to help stop things like that to happen, and actually work to create a scenario that works in the opposite direction with trade talks.

 I feel the proposition by the EU could start interesting discussions however. If the EU creates an "air pollution tax" what would this do to other nations. Would other countries fall in line and start creating a new tax based planes flight patterns, pr would they impose tariffs on other areas instead.

A nuclear Iran.

Currently Iran is the subject of some very severe economic sanctions, with the main goal of deterring Iran from nuclear weapons. Many sources indicate that these sanctions have had a strong impact on Iran's economy. Daily News Egypt reported that due to sanctions from international community, oil exports fell by half, Iraqi oil exports overtook Iran’s for the first time since the 1980s and the Iranian rial fell by a record low to the US dollar in September 2012. The article also reported high levels of inflation, at the end of 2012 Iran's inflation rate was reported at 27%, although some reports suggest the level to be twice that, the price of food went up 60% in 2012 according to official figures, although some also find that figure low.
Most sources would agree the sanctions on Iran have worked, but is this the time to loosen these sanctions? Some argue it is, saying it is causing extreme damage to the average Iranian. That may be the case but can we allow Iran to gain nuclear weapons. News sources have recently been reporting on the talks between the U.S and Iran, in regards to reduced sanctions in exchange for promises from Iran that they will not continue working toward nuclear weapons. Many people see the new Iranian president as someone who can bridge the gap between the U.S and Iran, i'm not so optimistic.
It was a little more than a year ago that Israel's PM Benjamin Netanyahu warned the U.N assembly that Iran would be close to nuclear weapons in a year. I fear Iran could be presenting a friendly face, in the hopes of having sanctions lowered allowing the final stages of the nuclear process to be completed. The USA Today reported yesterday that "Netanyahu reminded U.S. Secretary of State John Kerry, who is visiting Israel, the West Bank and Jordan this week, of "Death to America" chants in Tehran on Monday, when the 34th anniversary of the Iran hostage crisis was celebrated."
I believe there is still strong anti U.S views in Iran and i feel we need to be cautious of the sudden change in attitude from the Iranian government. However this is just my opinion, what do you guys think?