Monday, March 9, 2009

Lula on DOHA

Lula has become an influential voice on the world stage and he needs to be listened to.

Most Americans, unless they are directly affected, leave the niceties of international agreements and international behavior to whoever has the job and ignore it totally with the belief that it does not affect them in any way.

Yet as USA direct economic interest as a percentage of the global economy wanes and that is not a bad thing because the global economy is not a zero sum game, it has a residual influence far in excess of its direct hitting power.

Yet it also has a political culture that horse trades on every little issue that permits nationally and internationally damaging policy to be imposed as capriciously as any despotic royal lunatic.

The sheer size of the USA economy has massively shielded the USA from unintentional blowback. We have now entered a period were there is serious risk of blowback mistakes been made. Is our present government up to not letting it happen?

More importantly, is Hillary up to the challenge? I think so and certainly hope so. There is no area of the present regime more in need of an overhaul than the area of trade liberalization and rationalization. There are hundreds of stakeholders all grasping for petty advantage, yet not effectively trading them off.

My personal pet peeve is the outrageous agricultural market distortion that has been imposed by all developed countries of their own economies. That everyone is massively subsidizing this situation in a perverted race to the bottom is gross folly that is in fact inducing poverty world wide.

It is easily solved by a ten year withdrawal program as was established on the implementation of NAFTA. All that has to happen is for NAFTA and the EU to sit down and decide unilaterally to set a start day and establish a dispute mechanism to strong arm anyone trying to game the system inside and out.

Today, twenty years on, NAFTA has almost completely faded as a source of conflict, because it works and everyone’s pie is hugely bigger.

SAO PAULO (Reuters) - Brazil's President Luiz Inacio Lula da Silva urged leading economies to complete stalled global trade talks, warning on Monday that protectionism could tip the economic crisis into chaos.

"If the United States, Europe, Brazil close themselves, the crisis could become much bigger and produce chaos instead of a solution," Lula told industry leaders in Sao Paulo during a visit by Jan Peter Balkenende, the prime minister of the Netherlands.

Brazil said last month it may challenge the legality of a "Buy American" clause in the U.S. economic stimulus package at the World Trade Organization, or WTO.

Lula also intends to speak against global protectionism and for the completion of the WTO's Doha round at the Group of 20 meeting of leading economies in London next month.

"The Doha round was almost finished but we had elections in the United States and then India and politics dominated. Now, nothing stands in the way," said Lula. "The Doha round is more of a political than a financial decision."

The seven-year-old talks intended to further global free trade collapsed in July over differences between India and the United States on safeguards to protect farmers from a flood of food imports.

As a major commodities exporter, Brazil has been a key player in the Doha round and had hoped the G20 would honor a November pledge in Washington to avoid protectionism.

The United States Trade Representative warned on Monday there would be no agreement on the Doha round until other countries made stronger commitments to open their markets to U.S. goods.

Lula frequently urges other countries to pour cash into anti-cyclical measures to help keep their economies afloat amid the global crisis but has himself refrained from massive public spending plans at home that would increase government debt.

"The solution to this crisis is more (free) market, more free trade and more competition -- like the developed world always said over the past 30 years," Lula said.

(Reporting by Carmen Munari; Writing by Raymond Colitt; Editing by John O'Callaghan)

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