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World Economy Highlights
November was a fairly quiet month in international economics but there were at least three developments that are relevant to the work of peacemaking.
Regional Trade Negotiations
Western Hemisphere nations met in Miami November 16-21 to discuss the Free Trade Area of the Americas (FTAA). After the failure of the WTO to move forward at its meeting in Cancun in September, this represented an effort by the U.S. to produce a hemisphere-wide NAFTA. The basic issues were the same hoary ones present at Cancun: the less-developed countries trying to get the U.S. to reduce barriers on importing agricultural and other goods and the U.S. trying to get the others to accept more U.S. investment and services under the guise of more transparent rules for foreign investment, repatriation of profits and business practices. An agreement was signed but it contained an "out" for both sides in that any of the signatories may opt out of any clause with which it does not agree. As in Cancun , Brazil led the group in opposition to the U.S. The meeting pointed up the debate now taking place on "free trade". It had been accepted that global -- or in this case, regional -- free trade would help all participants but this notion has been called into question in the past few years. The net result is that the concept has become a point of controversy between developed nations and the developing world and the chances of free trade helping the disadvantaged grow dimmer. It seems it will be more difficult to use trade as an instrument to contribute to a more peaceful world. The U.S. will continue to work on bi-lateral and regional trade agreements but these will be limited by self-interest. The Christian community must keep informed about developments in trade and press our government to be fair in dealings with poorer countries on these issues.
U.S. Dollar Falls
The second development was the spectacular drop in the value of the dollar as compared with other currencies. The Euro, in particular, has increased in value from about one Euro to 80 cents in July 2001 to about one Euro to $1.20. This could help U.S. exports -- and thus the U.S. economy -- as it will make our goods cheaper for foreign buyers. On the other hand, it will make foreign investment in the U.S. less attractive especially U.S. Treasury assets -- and we depend of foreign investors to cover our propensity to buy more foreign goods than we export. The significance is that it may well cause disruption in international currency and investment markets adding to instability in the world economy. As always, the poorest countries will be most hurt by this movement since their imports will become more expensive and they will not export more.
Steel Tariffs and Restrictions on Chinese Imports
Finally there have been two developments with domestic political import which will impact on foreign relations. There is good news and bad news. The good news is that the U.S. has decided to remove tariffs on steel imports, avoiding a trade war with the European Community. This will lower the temperature of relations between the U.S. and Europe at a time when we need to work together on a whole range of issues. On the other side of the equation, the U.S. for the first time is imposing restrictions on some imports from China . This is in response to domestic political pressure to do something about the flight of manufacturing jobs from the U.S. but it will make our relations with the Peoples Republic difficult during a time when other issues, the status of Taiwan in particular, are smoldering.
Submitted by Ed Dillery, Member of the International Economics Committee of the Commission on Peace. Comments: C Edward Dillery cedillery@juno.com
Reviews of recent, important international economic developments
A monthly venture by members of the International Economics Committee, a part of the Diocesan Commission on Peace will be reviews of recent, important international economic developments. Occasionally there will be a second short article written from a Christian perspective on a particular issue of interest to a Committee member. While the opinions expressed will be those of each contributor, the Committee believes they are reasonable interpretations of complex realities.
Canon Michael Hamilton
Chair, International Economics Committee
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