global_prosperity_wonkcast

On Journalism and Global Development--Nicholas Kristof

Lawrence MacDonald — Tue, 14 May 2013 17:22:17 +0000

My guest on the Wonkcast this week is New York Times columnist and two-time Pulitzer Prize winner Nicholas Kristof. Nick’s incisive reporting on the lives of poor and vulnerable people—especially girls and women (see, for example, Half the Sky)—has led millions of his readers to empathize with people facing difficulties they could otherwise hardly imagine.

Since 2006 the NYT has run a “Win aTrip with Nick Kristof” contest, in which the lucky winner, often a new college graduate with no prior experience overseas, accompanies him to places like eastern Congo and Darfur. I think it’s a brilliant way to connect Americans with the reality of life in poor countries. I’m happy that since 2010 CGD has supported the contest by screening thousands of applicants, presenting Nick with a short list of finalists from which he picks the winner (see here, here and here).

With the backing of the New York Times, Nick has been remarkably successful in getting Americans to read and care about global poverty. But as a recovering foreign correspondent who did most of my reporting before the rise of the Internet, I worry that the media revolution—and the collapse of the old advertising-driven journalism business model—means that the today’s media consumers are even less well informed than a decade ago.

I asked Nick to join me on the Wonkcast discuss the current state and future prospects for international reporting, hoping he will reassure me.

No such luck.

“I am deeply concerned about the collapse in coverage of global news,” Nick tells me. “It’s particularly striking in the case of television but also in newspapers and news magazines. The [New York] Times is a bit of an exception because we see ourselves as having a comparative advantage of continuing to cover the world, as other people drop that coverage.”

“Your average news consumer is much less exposed to international stories, and those that they are exposed to are particular, segment stories: the selection of a new Pope, the crisis in the Korean peninsula. It tends not to be development stories and I think this is going to be a real blind spot in the US and also, to some degree, globally.”

“Can think tanks like CGD help to fill the gap?” I ask.

“I think that think tanks are filling some of the vacuum, whether it’s the Center for Global Development or the Human Rights Watch monitors. They are providing really serious, long-form [content], what we would think of as news coverage…The problem is that it’s not reaching the general public,” Nick says.

“If you were interested in what’s happening in Syria, you could find some amazing coverage from Human Rights Watch or Amnesty International but our average news consumer is not going to see that on the evening news or on the Today show.”

“But what about social media?” I ask. Advocates for new media often argue that people have more access to news than ever before. News is shared on Facebook and on Twitter. People are inundated with information.

“Here’s how I see it,” Nick replies. “There is indeed much more news available because of the Internet. So if you are an interested news consumer you can find much more about the world than you ever could before. For those people, the Internet and social media are just fantastic. It used to be that if you were interested in, say, Kenya, then there really wasn’t going to be very much in the New York Times, the Washington Post, or the Wall Street Journal. These days you can read the Kenyan newspapers online. So in that sense, it’s just terrific.”

“But if you’re looking at lowest common denominator, I’d say that news consumption is shrinking. People aren’t getting much news from social media because they’re following Justin Bieber; they’re not following NPR.”

“And I think one of the basic problems is that news organizations used to feel like they filled a special role, that they had an obligation to provide spinach in their broadcasts, to tell people things that maybe they didn’t really care about,” Nick says. “These days, given the crisis in the financial model and journalism, news organizations are dropping the spinach and it’s all dessert.”

Some highpoints from the rest of the interview:

Why ABC decided to not renew a $1.5 million grant from the Bill and Melinda Gates Foundation to improve coverage of global health and development. (Spoiler alert: the stories won prizes but ABC discovered that viewers weren’t watching. They were leaving the TV to get snacks or go to the bathroom).
What Fox News and MSNBC have in common: a dearth of international coverage.
What to think about VICE, the youth-oriented media darling that sent Dennis Rodman to North Korea, and its edgy approach to getting people interested in global affairs.
Nick’s own efforts—including the Win-a-Trip Contest and On the Ground blog—and the frustration he sometimes experiences in finding an audience for his global development stories.

Nick suggests that the crisis in journalism is likely to get worse before it gets better. But ultimately he ends on a hopeful note: the old guard newspapers, new magazines, and television outlets, he says, will eventually find a better business model. “Content is important enough that we will find ways to pay for it,” he says.

I hope he’s right.

My thanks to Catherine An for providing a draft of this blog post, and to Alex Gordon for editing the Wonkcast.

Authors:

Lawrence MacDonald

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How to Avoid Another Bangladesh Factory Disaster - Kimberly Elliott

Lawrence MacDonald — Tue, 07 May 2013 14:08:27 +0000

The recent collapse of a factory building in Bangladesh that killed hundreds of people making clothing for export has shined a harsh spotlight on the lack of worker protection in such low-income developing countries. But my guest on this week’s show, CGD senior fellow Kimberly Elliott, says that the disaster is unusual only in its magnitude.

Workers engaged in the production of goods for rich country markets endure dangerous working conditions daily, suffering countless smaller, yet nonetheless fatal accidents, as well as illnesses and deaths caused by poor ventilation and exposure to lint, soot, and dangerous chemicals, Kim says. Manufacture of garments is especially prone to such abuses, she adds.

“This is an industry that’s very low wage, very low skill, highly mobile, and highly competitive, so the incentives are for factory managers to cut costs as much as they can,” she says.

“Buyers are looking around the world for the lowest prices they can find, and unfortunately we as consumers are complicit, because we’re looking for the cheapest clothing we can find.”

The collapse of the factory building in Bangladesh killed hundreds of people.

Kim, an expert on global trade and labor standards, says that consumers alarmed by these practices can exert some pressures for improvement, by writing to manufacturers, participating in protests, and joining campaigns for better working conditions. But avoiding garments from Bangladesh would hurt the very people that such efforts are meant to help.

“I think the worst thing consumers could do is overreact – that is, look for a Bangladesh label and say, ‘I’m not going to buy this at all.’” Kim says.

Yet this is exactly what some retailers are doing. Disney pulled out of Pakistan after a factory fire last September killed more than 200 people. News reports say that Disney is now preparing to stop buying garments in Bangladesh. Kim says that Disney’s action alone may be a useful “shot across the bow” – a sort of wake-up for Bangladesh to begin enforcing its own labor laws—but it would be terrible if the rest of the industry followed suit.

“This is three million jobs – a huge part of manufacturing in Bangladesh. It’s primarily female workers who are in these factories and they’re taking these jobs by choice – this is not forced labor – because it’s better than any other alternative they have,” she explains. “The alternative is getting married at 14 or 15 and starting to have kids at a very young age. So you don’t want to lose all these jobs.” (See also NYT Room for Debate).

A better approach, Kim says, would be for the United States and other countries that import Bangladeshi garments to encourage Bangladesh to join the Better Work program, a joint effort of the International Labor Organization (ILO) and the International Finance Corporation (IFC), the private sector arm of the World Bank.

“The program is really aimed at being a win-win. It’s trying to improve labor conditions in factories by working with governments and industries in a way that improves labor conditions and – simultaneously – the productivity of workers. Healthier, happier, better-rested workers are also more productive workers,” she says.

In Cambodia, for example, a Better Work program has helped to improve enforcement of labor standards while keeping the country competitive. Cambodia has used the Better Work program to attract buyers who hope to avoid the public relations fallout of workplace disasters such as those that occurred in Pakistan and Bangladesh.

Kim says that the United States could encourage Bangladesh to start a Better Work program and otherwise strengthen the enforcement of labor standards by offering duty-free, quota-free access to US markets in exchange. While the US has extended preferential trading terms to many developing countries, garments are often exempt. Some 90 percent of Bangladesh’s exports to the United States are apparel and these face an average tariff of 15 percent.

Offering to eliminate the tariff is potentially “a big carrot,” Kim says. “My proposal is to offer Bangladesh and the other poor Asian countries duty-free, quota-free access to the US market contingent on taking some serious steps – like the Better Work program – to improve working conditions.” (African countries already have such access under the Africa Growth and Opportunity Act (AGOA).

Individual firms might have a hard time exerting this kind of pressure on garment factories, because they’re all competing against each other. But an across the board offer from the United States would be extremely appealing. I suggest it seems like a no-brainer.

“That’s right,” Kim said. “And this would create an immediate 15 percent reduction in the factory’s costs because they wouldn’t have to pay the tariff.” That cut in production costs could help to cover the costs of improving worker safety, she says.

Other high-income countries – like Japan and members of the EU – have already instituted similar duty-free, quota-free preferences for developing countries, she says.

The stumbling block in the United States so far has been opposition from the US textile industry, Kim says.

What’s needed, she adds, is strong leadership from the US president, the office of the US Trade Representative, and particularly from Congress – which has the authority to write the legislation that would allow for duty-free, quota-free access for developing countries in exchange for better labor standards that could finally make disasters like the Bangladesh factory collapse a thing of the past.

My thanks to Catherine An for providing a draft for this blog post, and Alex Gordon for editing the Wonkcast.

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Lawrence MacDonald

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US Immigration Reform and Guest Workers – Michael Clemens

Lawrence MacDonald — Mon, 22 Apr 2013 23:58:56 +0000

Last week, a bipartisan group of US senators known as the Gang of Eight introduced comprehensive immigration reform bill that includes a provision for increased temporary, low-skill work visas. CGD senior fellow Michael Clemens, a leading expert in migration, labor mobility, and development, has welcomed the proposal as good for development.

He and Lant Pritchett argue in a new CGD brief that the visas are a four-way win: for the US middleclass, US low-skill workers, border security, and for the migrant workers themselves. But he adds that

the proposed increase is too modest to address the huge, un-met demand for low-skill workers in the United States.

“I would call [The W Visa program] a modest program,” Michael says. “This is an incredible opportunity for people outside the country to benefit from the US labor market, and an incredible opportunity for the American economy to benefit from low skill labor, as it always has.”

Increasing the number of temporary work visas during a time of continued high unemployment is politically difficult. Why, some Americans ask, should we let more people cross US borders to find employment when so many US citizens can’t find jobs?

The answer, Michael says, is simpler than you may imagine. And he has the numbers to prove it.

“The US economy will need a lot of low-skill workers over the next decade,” Michael explains.

Even if all 1.7 million Americans who are expected to enter the labor force by 2020 took up low-skill jobs, he says, that still would be insufficient to meet the anticipated demand for just one subset of low-skilled work: home-based care, which is expected to require 1.9 million new workers during the same period.

“So there are only two options,” Michael says. “The jobs are not going to get done, or people from other countries will do them. The economy massively needs low-skill labor --make no mistake about it.”

Adding more authorized, low-skill immigrants to the US economy would bring many other concrete benefits to US citizens as well, Michael explains. Unfortunately, many of these benefits are not easily seen.

“The migrants that come here to work are also consumers, and they buy things,” Michael explains. “Migrants also help keep entire industries alive. Certain subsectors of agriculture would not be viable without migrant labor picking them.”

Some people argue that such workers are being exploited. Michael says this should be considered in light of the alternatives available if they had stayed in their home countries.

His research (see here and here ) shows that low-skill migrants who come to the US to work multiply their earnings by ten times or more when they cross the border to perform work such as picking crops, cleaning houses, or helping to care for children or elderly people in their homes.

“In many US states, minimum wage is $9.70 an hour. The minimum wage in Mexico is .57 an hour,” Michael says. “That’s the kind of economic opportunity we’re talking about. We’re talking about a life changing re-valuation of the labor of hard-working people.”

To learn more about many benefits of increasing the number of legal, temporary workers in the United States, read the brief. To understand more about the intersection of immigration reform politics and CGD’s work, see Beth Schwanke’s recent blog posts (here and here). Or just dive in and listen to the Wonkcast.

My thanks to Alex Gordon for editing the Wonkcast and providing a draft of this blog post.

Authors:

Lawrence MacDonald

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Illicit Financial Flows and the Three Ts of the G-8 Agenda – Alex Cobham

Lawrence MacDonald — Tue, 16 Apr 2013 13:11:24 +0000

The day before we recorded this Wonkcast news broke of an agreement between the United Kingdom, France, Germany, Italy, and Spain to pilot “multilateral automatic tax information exchange.” My guest, research fellow Alex Cobham, explains why this is so important, why financial secrecy and international tax law seem suddenly to be at the top of the global economic policy agenda—and why this could be especially good news for developing countries.

Alex, who joined us recently as a CGD research fellow based in our European office in London, is an expert in trade, tax and transparency—the so-called “Three Ts” that UK prime minister David Cameron has said will be his priorities during the 2013 UK presidency of the G-8. I tell Alex that while Cameron’s plan to push on these issues is understandably news in the UK, I haven’t seen much evidence that the issues are gaining traction in the United States.

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Blog post: Render Unto Caesar
Blog post: The ‘End of Tax Havens’ – but will development countries benefit?
Expert profile: Alex Cobham
Policy Paper: What’s Yours Is Mine: New Actors and New Approaches to Asset Recovery in Global Corruption Cases

“Give it time,” Alex replies. “It’s an agenda that’s been building slowly and it’s finally starting to be appreciated—not only for developing countries but for places like the UK and the US.”

To explain why trade, tax, and transparency matter so much for developing countries, Alex offers a story about research he conducted for the World Bank, and the findings with respect to Zambia which were featured in the Why Poverty documentary Stealing Africa.

A few years ago Zambia was on the brink of crossing into middle-income status, but eight out of ten people still lived on less than $2 a day and Zambia was—and remains—heavily reliant on earnings from the country’s main export, copper. For complex reasons involving the three Ts, Zambia has reaped only a fraction of the potential benefits from its copper exports.

“In 2008, if Zambia had received the price for its copper that Switzerland declared on re-exporting the exact same copper, then Zambia’s GDP would have nearly doubled,” Alex says. In fact, the vast majority of the copper never even transits Switzerland.

What seems to have been happening is this—though the process is far from transparent: A Zambian company, or a Zambian subsidiary of a Swiss company, sells the copper it mines to a Swiss-registered company at prices greatly below the market value. The Swiss-registered company then resells the same copper at world prices (and in some cases declares a price far above the world price), taking the difference as profit in low-tax Switzerland, and in the process depriving Zambia of both export earnings and tax revenue on the sale.

Despite the efforts of a new Zambian government to strengthen enforcement of trade and tax laws, Alex says, this sort of tax evasion continues to be rampant. “Zambia is still losing an enormous amount of corporate tax revenue,” he says. Although there are now controls on export prices, other avenues of profit shifting remain. Of the many copper mining companies in the country, only two have declared profit in the last two years, a time of booming copper prices. “Prices are at the highest they’ve ever been,” Alex says. “If these companies aren’t making a profit now there’s no reason for them to be in Zambia at all.”

This Zambian case is but one example of trade mispricing, a widespread problem that is attracting growing attention across the globe, Alex says. In recent blog posts on tax haven secrecy and anonymous company ownership, Alex explains how these problems are exacerbating the fiscal problems of rich countries. “That’s why we’re starting to see interest in this,” Alex says. “It’s not just a development issue; it’s an issue for all of us and I think we’re going to see real progress in the next year or so,” he adds.

The promise of progress is exciting, especially given the scope of the problem and the impact it has on developing countries. Though estimates of the size of illicit flows through mispriced trade vary widely—the practice is after all secret and illicit by nature—Alex suggests that illicit outflows from developing countries are about eight to ten times larger than official development assistance (ODA).

I’m astonished. On one hand, many development advocates focus their efforts on maintaining and increasing foreign assistance, arguing that foreign assistance is both the right thing to do and the smart thing to do. Yet on the other hand, there is a lively debate among development economists—and a general lack of consensus—about whether or not aid boosts growth or otherwise helps countries to develop (for a recent chapter on this debate, see this award-winning CGD paper.

But if what Alex is saying is true, then foreign assistance is but a tiny fraction of the wealth that flows out of developing countries through financial secrecy jurisdictions often under the control of the very countries that pride themselves on being generous aid donors—for example, the UK has responsibility for Crown Dependencies and Overseas Territories including Jersey, Guernsey, the British Virgin Islands, and the Cayman Islands.

I ask Alex: “Does this mean we in the rich world are assisting it the pillaging of developing countries, even as we pride ourselves on giving aid?”

Historically, Alex says, that isn’t far from the truth. Taking the UK as an example, Alex explained that 30 to 40 years ago, the UK encouraged small island states under its control to pursue the tax haven route to economic growth, fearing that without growth the islands would always be dependent on the UK. What happened, he says, was the opposite: the City of London, the UK financial hub, became very dependent on the large financial flows coming through those island states.

A similar relationship exists today between India and Mauritius, Alex says. Unilateral efforts to increase transparency could lead to short-term volatility for a number of developed and emerging countries, he says.

Given the interests at stake, I ask, is there any hope for reform? After all, recent US history shows that the financial sector has been extremely effective in fighting off unwelcome regulation, even after overly risky practices set off at financial crisis that placed the global economy in jeopardy and required billions of dollars in public funds to bail out struggling financial institutions.

Alex replies that he is nonetheless optimistic. “What we’re seeing now is a combination of the problem being very well recognized in developing countries, and rich countries increasingly feeling fiscal pressures themselves,” he says. “This combination of interests … has the potential to overcome … all of the interests on the other side.”

Alex points out that some of America’s biggest companies—he named Google, Amazon, and Starbucks—have recently been criticized for the impact of their tax practices. US-based multinationals in total declared nearly half their profits in five tiny jurisdictions with limited transparency and advantageous tax rules: Bermuda, Ireland, Luxembourg, the Netherlands, and Switzerland. This sort of activity, he says, is prompting public criticism and pushing rich countries to reconsider international tax rules.

The solution? A further movement towards unitary taxation is one option we discussed. Under this approach, a multinational company would be treated as a single entity and it’s global earnings would be taxed based on the location of economic activity, rather than where it may choose to declare profit. Other options and solutions are being considered by the Organisation for Economic Cooperation and Development (OECD) and the G-8, Alex tells me.

Looking ahead, Alex tells me he plans to delve deeper into these issues, in blogs and forthcoming research. Stay tuned.

My thanks to Alex Gordon for editing the Wonkcast and Catherine An for providing a draft of this blog post.

Authors:

Lawrence MacDonald

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Interview with WTO Candidate Amina Mohamed

Lawrence MacDonald — Thu, 11 Apr 2013 20:36:26 +0000

My guest on this Wonkcast is Amina Mohamed, Assistant Secretary-General of the United Nations Environment Programme (UNEP), and one of the nine candidates to become the next director general (DG) of the World Trade Organization (WTO). Mohamed tells me she is extremely familiar with the DG selection process, as she managed it eight years ago while working within the WTO. Now that Mohamed is herself a candidate, she says that she is well-qualified to lead the WTO and confident to let her track record speaks for itself.

She tells me her most significant contribution to the WTO was helping to negotiate the Agreement on Trade-Related Aspects of Intellectual Property Rights (the TRIPS agreement).

“This was a very humbling experience for me because it was negotiated at a time when Africa was going through an HIV pandemic,” Mohamed explains. “For the amendment, we were focusing on issues that relate to the compulsory licensing and importation of generic drugs -- specifically for HIV/ AIDS, malaria and tuberculosis, and these were issues that were of great concern to Africa.”

Mohamed tells me the negotiated TRIPS agreement was historic for several reasons. The agreement made affordable lifesaving drugs for people who previously could not afford them. In addition, prior to the TRIPS negotiation, a trade related treaty had never been amended.

I ask Mohamed if her experience amending the TRIPS agreement provided lessons for breaking the stalemate on the Doha Development Round of trade talks, which were designed to bring benefits to the least developed countries. Her answer: “Yes.”

“The WTO is not about dogma and fragility,” Mohamed says. “It can adapt and be flexible, and we can make the compromises we need to make to make sure we create progresses, address concerns, and rise to the occasion.”

In regards to the Doha Round, Mohamed tells me the negotiations should be inclusive and transparent, and members sitting around the table need to feel their voices matter. She also expresses a concern for the tendency to hold frequent mini-ministerials outside of Geneva. The professional trade negotiators with access to their home governments are stationed in Geneva, so it makes sense to do most of the work there, she argues.

Later in the interview, I note that Mohamed’s statement to the WTO General Council was the only statement to mention the WTO role in climate change.

“The WTO has to be part of global problem solving, and climate change is an issue of global concern… It affects the flow of goods and services,” she explains.

Specifically, Mohamed tells me she favors a special trade liberalization of environmental goods and services, above and beyond other goods.

“There was a meeting that took place on liberalization of environmental goods and services in Russia,” she explains. “A lot of the major players there agreed on a list on a list of products they could convince members of WTO in Geneva to move forward on.”

I ask Mohamed what her main priority would be if selected as the next DG.

“Negotiations. The WTO was established in order to set rules and open markets. That was the diamond standard that the WTO set for itself and we should not move away from that so that for me has to be the top priority.”

Mohamed also explains that other stakeholders should be involved in negotiations – including civil society and business. She tells me she is already working with WTO members to establish a business advisory council to meet these ends.

We end the Wonkcast by discussing the relationship between the WTO and the growing proliferation of bi-national and regional Free Trade Agreements (FTAs). Mohamed says these newly-negotiated FTAs should operate on a basis of non-discrimination, and they should not delegitimize the WTO by creating new dispute settlement mechanisms.

The full interview is available above. This is the seventh in a planned series of Wonkcasts with candidates to become the next director general of the WTO. To learn when new interviews are posted, sign up for our weekly Development Update.

My thanks to Alex Gordon for editing the Wonkcast and for providing a draft of this blog post.

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Lawrence MacDonald

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World Bank and IMF Spring Meetings – Nancy Birdsall and Todd Moss

Lawrence MacDonald — Tue, 09 Apr 2013 16:11:52 +0000

The World Bank and the International Monetary Fund (IMF) are the twin giants in global development and economic and financial stability, shaping the agenda for other international organizations and for governments across the world. What new issues face these institutions in a rapidly globalizing world? How are they responding? In this week’s Wonkcast, recorded in the run-up to the institutions’ Spring Meetings, we consider these questions.

My guests are Nancy Birdsall, founding president of CGD, and Todd Moss, vice president of programs and senior fellow.

On the day of this recording, World Bank president Jim Kim had just delivered an address at Georgetown University in which he set forth his vision for the World Bank, including setting a 2030 target date for an end to extreme poverty around the world.

I start by asking Nancy for her thoughts about the speech—and why demonstrators who once railed at the World Bank and the IMF during the Spring Meetings, and the Annual Meetings in the fall, have been mostly notable by their absence in recent years.

“The World Bank and the IMF have both changed. They’ve adjusted quite dramatically in the last ten years but particularly in the last couple of years,” Nancy replies.

“Jim Kim, in his speech today at Georgetown, talked about inequality – and he used the word injustice – which is a really different way of thinking about the problems in the global system. Of course, the other thing that’s changed is the rise of the emerging markets, and their more insistent demands for changes at the IMF and the World Bank. We are in a very different world,” she says.

This different world may require that the IMF and the World Bank change even faster than in the past.

I ask Todd about the future of the International Development Association (IDA), the concessional window of the World Bank that lends to the world’s poorest countries. In his Georgetown speech, Kim said that he would seek an aggressive replenishment for IDA, a promise that has been made by each new World Bank president.

Todd says it would be better to begin a discussion about how the role of IDA must change, as many recipient countries enjoy solid economic growth that will soon lift them above the IDA income ceiling.

“The soft loan window has eligibility criteria – usually income – and a lot of countries are bumping up against that threshold,” Todd explains.

“There are now 81 [IDA] eligible countries. We estimate that within the next 10 to 15 years, that number will come down to 31 countries; 25 of those countries will be in sub-Saharan Africa. That is a radical departure from what the world looked like a few years ago and from what it looks like today.”

In the face of this rapidly changing client base, what’s next for IDA? A CGD working group report, Soft Lending without Poor Countries: Recommendations for a New IDA, suggests several alternatives, from shrinking IDA to redefining its mission, for example, to include financing solutions to problems that transcend national boundaries, what economists call global public goods—most notably the threat of runaway climate change.

Nancy welcomes recent outspokenness on the issue from Kim and IMF managing director Christine Lagarde. Both leaders have urged international action, and both institutions have released major reports: Turn Down the Heat: Why a 4 Degree C Warmer World Must be Avoided, from the World Bank, and a March report from the IMF that found global energy subsidies—almost entirely for fossil fuels—are a staggering $1.9 trillion—about 2½ percent of global GDP or 8 percent of government revenues.

While each country waits for the next to take the first step in addressing this global problem, Nancy says the World Bank can lead by creating new grant instruments—perhaps funded in part by IDA—to push progress on this increasingly urgent issue facing the planet.

(On a more ambitious scale, Nancy and I have co-authored a brief, based on her longer policy paper, suggesting that the World Bank consider creating an entirely new arm to help address non-finance aspects of the global response to climate change.)

In our whirlwind tour of World Bank/IMF issues, we turn next to the seemingly arcane topic of IMF quota reform, a change agreed by all other major countries but held up by the inability so far of the Obama administration to get agreement from the US congress.

Nancy explains that IMF member countries pledge a certain amount of their reserves to the IMF, which the Fund then lends to countries in financial distress. The amount of each country’s pledge, or “quota,” is commensurate to the country’s influence within the IMF.

IMF members have agreed to double their capital commitments to the IMF, to give it the resources needed to address global shocks such as the 2007-2008 financial crisis. As part of the deal, the quotas were adjusted so that big emerging markets countries like China, Brazil and India would have larger quotas and, in turn, greater influence and votes in IMF proceedings, in keeping with their increased role in the global economy.

Todd and I discuss briefly why the US alone has yet to approve these changes. Nancy underlines why this matters, a point she explained in a recent blog post.

“It’s embarrassing for the US as a fading leader in international development and it’s a failure in safeguarding international financial stability,” she says.

“What this does is expose the dysfunction of our political system at a time when we are losing our leadership at the global level – which is bad for the US, bad for American interests, and bad for the rest of the world.”

This leads naturally to our next topic: the creation of a BRICS bank, a new multilateral institution led and financed by Brazil, Russia, India, China, and South Africa. Why do these countries want to create a new development bank? Would it compete with or complement existing institutions?

Todd says that frustration the BRICS countries feel about the existing institutions is at least part of the motivation. Nancy agrees, adding that the a smaller-than-expected recapitalization of the World Bank (resulting from US unwillingness to back more ambitious funding) and an unmet desire for a stronger focus on infrastructure may also be part of the explanation.

It’s a fast and wide-ranging conversation that covers a lot of ground. I hope you will listen!

My thanks to Alex Gordon for editing the Wonkcast and Catherine An for providing a draft of this blog post.

Authors:

Lawrence MacDonald

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Interview with WTO Candidate Herminio Blanco

Lawrence MacDonald — Mon, 01 Apr 2013 23:09:42 +0000

My guest on this week’s Wonkcast is Herminio Blanco, Mexico’s former minister of trade and industry, and one of the nine candidates to become the next director general of the World Trade Organization. Minister Blanco tells me the WTO is facing several challenges, and his experience negotiating numerous trade agreements including NAFTA, combined with more than a decade of experience in the private sector, equip him with the skills needed to push the WTO forward.

“The rules for the WTO were drafted 20 years ago, and as you know, the way of doing business has changed substantially,” Minister Blanco explains. “The network of free trade agreements that exist in the world, and very importantly the Trans Pacific Partnership (TPP), present big challenges for the WTO.”

Minister Blanco says his experience in the business sector gives him a different perspective on how the WTO can help to ensure that the investments businesses make will help to generate employment and prosperity for countries with lower levels of development.

“What I’ve learned from business is that we need to be able to invest and have transparency in rules for trade and investment,” Minister Blanco says. “I think it’s fundamental that the rules in the WTO are modern, so the organization keeps on being the benchmark for agreement on world trade.”

I ask Minister Blanco what he would do about the stalled Doha development round of trade talks if elected director general.

“My view is that it’s very important to get a substantive resolution to the Doha agenda,” he says. “I believe these negotiations should bring a call of attention to countries [represented] in Geneva… it’s time to be more flexible and it’s time to start moving.”

Minister Blanco also tells me the least developed countries stand the most to lose from a failed Doha Round. Therefore the larger countries should be more flexible, so the smaller countries can receive the benefits for which the Doha Round was intended.

Minister Blanco has outlined his program into a short and medium-term horizon, and a third portion he calls inclusiveness in integrating regional trade agreements. As part of his short term horizon, Blanco would like to see results from the trade ministerial in Bali this December. He tells me negotiators in Geneva are working on a promising trade facilitation proposal that could unlock billions of dollars in trade.

“The package will decrease obstacles for import and export in many countries,” he explains. “It’s an attempt to clean the borders of all the inefficiencies. That negotiation could be a very good signal of progress being made in Geneva.”

As part of a medium-term agenda, I ask Minister Blanco what role the WTO has in the international policy response to climate change, for example, how should the WTO regard the possibility countries that put a price on carbon imposing border tax adjustments on those that do not?

“I think it is important to protect the high values of humanity, one of them being the environment. But not to do it by putting obstacles that may go against the commitments of different countries within the WTO,” he tells me.

Minister Blanco ends our interview by discussing—and commending—the WTO director general selection process, a topic that CGD senior fellow Kimberly Elliott also discussed—somewhat more critically-- in this recent blog post.

The full interview is available above. This is the sixth in a planned series of Wonkcasts with candidates to become the next director general of the WTO. To learn when new interviews are posted, sign up for our weekly Development Update.

My thanks to Alex Gordon for editing the Wonkcast and providing a draft of this blog post.

Authors:

Lawrence MacDonald

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Interview with WTO Candidate Roberto Azevedo

Lawrence MacDonald — Tue, 26 Mar 2013 16:00:19 +0000

My guest on this week’s Wonkcast is Roberto Azevedo, the permanent representative of Brazil at the World Trade Organization (WTO) and one of nine candidates to be the next Director General (DG) of the WTO. Ambassador Azevedo has spent more than 15 years involved with the WTO and tells me his deep experience qualifies him to lead it into the future.

“To lead the WTO, you need to be a DG that operates at both the negotiating table level and also at the political and strategic level, and I have been doing this since 1997,” he says. “I believe I know the problems, I know the history of the negotiations and the sensitivities, and what we need now is leadership that is familiar with the problems of the organization, and can find solutions.”

Ambassador Azevedo’s agenda for the WTO focuses on three pillars – the first being the implementation of existing agreements. He tells me this WTO function keeps the trade system running smoothly and is one of the most important aspects of the organization because it ensures members are complying with their obligations and provides a forum for them to exchange differing views.

The second pillar is the WTO’s mechanism for resolving trade disputes and disagreements among member countries. Azevedo has voluntarily sat on adjudication panels three times, and tells me the system is effective and satisfactory.

The final pillar takes into account the evolution of the WTO, and what to do about the stalled Doha Development Round of trade talks, which has notoriously failed at reaching a consensus among member countries. I ask Ambassador Azevedo: should the WTO fix the Doha round or bury it?

“I don’t think burying it is an option. It’s going to be there, and if we want to move on with the organization, we need to find a solution for it,” he says. “I don’t think we should be discouraged. Is it going to be difficult and complex? Yes, but it can’t be any other way.”

In order to move forward with the Doha round, Ambassador Azevedo tells me the members have to inject confidence and trust into the system by identifying a small number of issues that could be agreed upon. He says the members are likely to find consensus on trade facilitation – the procedures and controls governing the movement of goods across national borders.

I ask Ambassador Azevedo what his views are, as the permanent representative of a large trading power such as Brazil, on the dynamics between larger countries like his own and smaller, least developed economies.

“I think the larger economies are very sensitive to the least developed economies, and they have been acting in a way which tries to push an agenda that helps the least developed countries,” Ambassador Azevedo says. “What we have today is a WTO with almost 160 countries of various shapes, sizes, and levels of development. What we have to do is find a dynamic of negotiations that accommodates all of them. We need to figure out how to have everyone interact in a positive and constructive way.”

Looking past Doha, I ask Ambassador Azevedo if the WTO has a future role in trade-related aspects of county efforts to slow climate change, for example, in ruling on the acceptability of countries that price carbon imposing border tax adjustments on imports from counties that do not. The answer is complex, Ambassador Azevedo says.

“The problem is figuring out how to impose border adjustments which will address climate change and (yet) not distort demand and competition among WTO members—and how to do it in a way which does not become veiled protectionism. It’s extremely complex to do it in a non-discriminatory way,” he explains.

While Ambassador Azevedo noted his interest in addressing climate issues within the WTO, he emphasizes that unlocking the Doha Round may be the most important task for the organization.

“The Doha Round is really where the WTO system has a problem, and development hinges on the multilateral system functioning -- especially for the smallest economies,” he says. “They need the multilateral system to work. If I can contribute to that, I would be very honored.”

The full interview is available above. This is the fifth in a planned series of Wonkcasts with candidates to become the next director general of the WTO. To learn when new interviews are posted, sign up for our weekly Development Update.

My thanks to Alex Gordon for editing the Wonkcast and providing a draft of this blog post.

Authors:

Lawrence MacDonald

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Protecting Forests with Global Forest Watch 2.0 – David Wheeler and Nigel Sizer

Lawrence MacDonald — Mon, 18 Mar 2013 19:22:36 +0000

My guests on this week’s Wonkcast are David Wheeler, senior fellow emeritus at CGD, and Nigel Sizer, director of the Global Forest Project at the World Resources Institute (WRI). They joined me after a presentation for CGD staff of Global Forest Watch 2.0, a real-time forest monitoring system that draws from David’s work on the Forest Monitoring for Action initiative (FORMA) here at CGD.

The ability to monitor the status of tropical forests worldwide could be a game-changer in efforts to slow and eventually halt forest clearing. Among the many benefits would be a reduction in the greenhouse gas emissions that are driving climate change.

“Forests are extremely significant when it comes to climate change,” Nigel explains. “Forest loss and degradation accounts for a significant percentage of global greenhouse emissions -- somewhere between 10 to 15 percent. So if we’re going to reduce emissions, clearly that’s one of the things we have to deal with.”

Global Forest Watch 2.0 uses improved satellite data and enhanced computing power to deliver regularly updated maps of tropical forests around the globe. “What we can do is bring that technology together and enable everyone around the world to have up-to-date, accurate picture of what’s happening to tropical forests,” Nigel explains.

David tells me he began constructing FORMA—the datasets and algorithms that underpin Global Forest Watch 2.0—several years ago when he realized that the available information on tropical forest clearing and degradation was scattered, inconsistent, unreliable and, most troubling for efforts to protect the forests, years out of date.

“I have always operated on the principal that the data is always out there somewhere, in either public or private hands, and the key to moving forward is to locate the information and then try to negotiate an arrangement with the proprietors to reveal the essence of that info that would be useful in a sector like forests,” David explains.

“In this case, there was a satellite dataset, but it had never been used in this way for this purpose, so we set about doing that.”

FORMA data also informs CGD’s Forest Conservation Performance Ratings -- a system of color-coded ratings for tropical forest conservation performance that can be implemented for local areas, countries, regions, and the entire pan-tropics.

The most recent ratings, published in a new CGD working paper by David, Dan Hammer and Robin Kraft, are quite alarming. Forest clearing continues to accelerate, and large scale logging is even occurring in officially protected areas in some of the world’s largest national parks.

I ask Nigel if Global Forest Watch 2.0—which delivers information from FORMA and other sources to a global network of governments, NGOs, and other actors concerned about forests—can put a dent in this disheartening trend.

“We are confident that Global Forest Watch 2.0 has the potential to be a game changer,” he says. “It fundamentally addresses a key component of governance—transparency—enabling people to communicate with each other around an agreed set of consistent information about what’s going on.”

Armed with this information, development agencies, governments, civil society, and others can shift their strategies and mobilize in different ways as the information becomes available, he explains.

The data could also be used to create pay for performance mechanisms, where rich countries or other donors financially reward developing countries for preserving their forests. David tells me that this could be done through an open offer to developing countries working to improve their performance on forests.

“The idea is that in each country you would establish a timeline toward very low forest clearing in some future date. Then over time you would watch progress toward that goal,” David explains. “You could provide financial rewards…There would be compensation to people who have suffered losses from holding their forests intact.”

We end the Wonkcast by discussing the role of the private sector in halting forest degradation. In response to consumer demand, large multinational corporations like Walmart and Nestle have recently pledged to reduce and eventually eliminate the sourcing of materials from land that was recently cleared of forests. Nigel tells me Global Forest Watch 2.0 can help hold these corporations accountable to their promises.

“We can help them measure what they’re doing and hold their feet to the fire,” he says. “These are very measurable commitments. As time goes by we’ll be able to do a better job in seeing how they're doing.”

David tells me these pledges from the private sector could have a large and positive impact on forest conservation. As more and more private corporations begin implementing forest-friendly policies, they’ll push for their competitors around the world to be subject to similar constraints. “Others will pay careful attention because there will inevitably be political pressure for them to conform,” David says.

My thanks to Alex Gordon for editing the Wonkcast and providing a draft of this blog post.

Authors:

Lawrence MacDonald

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Interview with WTO Candidate Taeho Bark

Lawrence MacDonald — Tue, 12 Mar 2013 17:15:13 +0000

My guest Taeho Bark, the Republic of Korea’s trade minister and candidate to be the next director general of the World Trade Organization (WTO), has witnessed the power of trade transform his country into a high-income, dynamic trading entity.

“Korea was one of the greatest beneficiaries of a liberal trading regime,” Minister Bark tells me. “It’s time for Korea to make a contribution to the international organization which is governing international trade.”

Aside from personal conviction, Minister Bark tells me his experience as a professor, researcher, and practitioner of trade policy, qualifies him to lead the WTO.

As trade minister, he has participated in regional trade negotiations with Colombia, Turkey, China and Japan. I ask him if these frequently negotiated bilateral and regional trade deals are eroding the multilateral agreements that are at the heart of the WTO. His answer: No, but the WTO needs to do more to ensure they don’t.

“The regional and multilateral trade deals must be complementary to each other,” he explains. “And the WTO must do more work in terms of monitoring regional trade deals in the future.”

I ask Minister Bark about another area of trade contention – the Doha Round of development trade talks. Is the pessimism surrounding the failed talks warranted?

“Somebody described the Doha Round and the WTO using 3 words: frustration, fatigue, and irrelevance,” he says. “So that describes how Doha and the WTO are situated recently. But we made a strong commitment to do this kind of multilateral trade negotiation because we want to see developing countries getting benefits out of trade liberalization. We have to come up with results, and that’s why we trade ministers are working very hard in Geneva to deliver something at the next round of talks in December in Bali, Indonesia.”

I ask Minister Bark what he sees as the most promising deal for the next Doha round in December. He tells me it’s likely the negotiators will come to a consensus on trade facilitation – the procedures and controls governing the movement of goods across borders.

“Many developing countries want to modernize their customs clearance procedures but it takes money,” he explains. “We can focus on trade facilitation, and persuade developed countries to help financially to achieve better outcomes. This is one of the most important issues to be delivered in Bali.”

As I’ve mentioned in previous Wonkcasts with director general candidates, the WTO is faced with a set of new issues, including dealing with carbon tariffs and export bans. I ask Minister Bark what he would do about these over-the-horizon issues.

“Since the WTO was born, we have had a special committee on trade and environment,” Minister Bark explains. “There are so many different interests and positions, so certainly [carbon border adjustment fees] will be a new issue to address.”

While Minister Bark conveyed his commitment to dealing with future trade issues, he tells me his number one priority would be to encourage more candid dialogue among WTO members, the director general, and ambassadors.

“Otherwise we can’t move ahead and gain consensus on difficult issues,” he says. “To rebuild trust in the Geneva environment is the first thing I would do. It may take some time, but it is the basis you must go back to if you have prolonged problems.”

We end the Wonkcast by discussing both the potential advantages and disadvantages that uniquely face a candidate from South Korea. I note that on one hand Korea is uniquely situated to be an intermediary between developed and developing countries, and perhaps between the West and the rapidly industrializing emerging powers in Asia. On the other hand, the current secretary general of the UN is Korean, and the head of the World Bank is a Korean-American. Are other countries willing to have the WTO also lead by a Korean?

“I’ve received a lot of similar comments,” Minister Bark responds. “The WTO is very different from the UN, and to some extent, the World Bank. I understand the concern of geographical allocation, but the first criteria should be qualification and merit. I can give you several examples of same-country citizens who are the heads of international organizations.”

The full interview is available below. This is the fourth in a planned series of Wonkcasts with candidates to become the next director general of the WTO. To learn when the interviews are posted, sign up for our weekly Development Update.

My thanks to Alex Gordon for editing the Wonkcast and providing a draft of this blog post.

Authors:

Lawrence MacDonald

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