Dani Rodrik writes:  With global trade negotiations deadlocked for years, regional agreements – long a dormant route to trade liberalization – are back with a vengeance. The United States is at the center of two mega-deals that could shape the future path of world trade.  It has just taken a step back.

Trade agreements have long stopped being the province of experts and technocrats. So it is not surprising that both initiatives have generated significant and heated public discussion. The perspectives of proponents and opponents are so polarized that it is hard not to be utterly confused about the likely consequences.

On the economic front, the trade agreements’ defenders tend to talk with both sides of their mouth. Reducing trade barriers is said to promote economic efficiency and specialization; but it is also supposed to increase exports and create jobs by increasing access to trade partners’ markets. The first of these is the conventional comparative-advantage argument for trade liberalization; the second is a mercantilist argument.

From the standpoint of comparative advantage, gains from trade arise from imports; exports are what a country has to give up in order to afford them. These gains accrue to all countries, as long as trade expands in a balanced fashion. Trade agreements reallocate them across industries.

In the mercantilist worldview, by contrast, exports are good and imports are bad.

Either argument for trade agreements is thus inconsistent with their advocates’ key claim that such deals will simultaneously create jobs and be mutually beneficial. Strangely, supporters of the TPP and TTIP simultaneously rely on both arguments.

On the political front, proponents argue that TPP and TTIP will enshrine good, liberal rules for world trade. Lower barriers and greater transparency in regulation are generally good things. But here, too, the reality is much more complex.

For the US, a great attraction of the TPP is that it will enforce tighter intellectual-property rules on other countries.

In the TTIP, the reduction of so-called non-tariff barriers to trade between the US and Europe will almost certainly restrict the space for domestic regulatory action.Perhaps most worrisome are the provisions establish a separate judicial track, outside a country’s own legal system, that allows firms to sue governments for apparent violations under trade treaties. Proponents defend ISDS by saying that it will not have much consequence for countries, such as the US, where there is good rule of law, and that it will promote investment in countries, such as Vietnam, where there is not.

One of the most important, and equally ambiguous, objectives of these agreements relates to a subject that will not make any appearance in the texts: China. Both the US and Europe would like China to play the trade game by their rules. Negotiating these rules without China’s participation can be viewed as part of a strategy aimed at eventually coaxing China into a liberal global system.

The secrecy of the negotations are a real problem. It does make sense to subject the final text to an up-or-down legislative vote without allowing amendments. But this can be done while making draft texts public. The time for secrecy is past, if it ever existed.

Entrepreneur Alert: Dromes

Get ready for a drone-saturated world. Over twenty nations have or are developing armed drones and many more possess unarmed drones, including non-state actors. The Center for a New American Security (CNAS) project, A World of Proliferated Drones, will examine the implications of drone proliferation and policy options the United States and its allies and partners could adopt in the near term in order to prepare for such challenges. This project will examine the technology available to state and non-state actors, potential uses of that technology, political and strategic implications of those uses, and possible U.S. policy options. The project will result in recommendations for how to address the challenges associated with a drone-saturated world.

The proliferation of weapons-capable drones around the world, to not only states but also non-state actors and even individuals, raises difficult challenges for crisis stability, escalation dynamics and norms regarding sovereignty violation. Small, fully autonomous GPS-programmable drones can be purchased online by anyone for a few hundred dollars. Outfitted with small explosives, chemical or biological weapons, they could be converted into short-range precision weapons. In 2013, China sent a drone into contested airspace in the East China Sea. In response, Japan scrambled manned fighter aircraft. If one nation shoots down another nation’s drone, is that an act of war? Are states more willing to shoot down a drone, since there is no one on board? And are states more willing to engage in acts of brinkmanship with drones in the first place, since there is no human at risk?

The answers to these questions hinge not principally on the technology itself, but how states and non-state actors will use the technology, and how they will perceive its use by themselves and others. Anticipating the likely contours of a drone-saturated world will help the U.S. government take steps today to influence, as best it can, the shape of a future most conducive to American interests. Proactive policy measures that can be taken now include: reform of export control policies, declaratory policies on hostile actions by other nations with drones, and communication and actions regarding expectations of appropriate drone use.

A World of Proliferated Drones is a joint project between CNAS’ Technology and National Security Program and 20YY Warfare Initiative.

United States Senators Elizabeth Warren (D-Mass.) and Edward J. Markey (D-Mass.) today introduced an amendment to the National Defense Authorization Act (NDAA) that asks the Department of Defense (DOD) to accelerate efforts to provide American-made athletic shoes to Armed Forces recruits. A statute known as the Berry Amendment requires DOD to spend appropriated funds only on products made in the U.S. that pass the military’s performance standards. U.S. companies, including Massachusetts-based New Balance, are able to manufacture Berry Amendment-compliant footwear, but DOD continues to delay its purchase of these products.Shou

“Long ago Congress required the Department of Defense to purchase American-made supplies whenever possible, giving our troops high-quality equipment while supporting U.S. businesses,” said Senator Warren. “American companies are ready and able to manufacture athletic shoes that meet the military’s needs, but DOD continues to delay their purchase. Now that American-made footwear has been tested and approved for military use, DOD should move quickly to provide this gear to servicemembers.”

“If U.S. companies like New Balance commit to manufacturing American-made sneakers, we should commit to putting them on our servicemembers’ feet,” said Senator Markey. “We can support our troops with high-quality gear and U.S. companies and workers with good jobs, but we need DOD to do what they committed to doing. It’s time for DOD to stop the delays and move quickly to purchase these products, and I will continue to work with Senator Warren and Rep. Tsongas to make sure this gets done.”

In 2013, Congress required DOD to determine whether there are domestic manufacturers of Berry Amendment-compliant athletic footwear that meet the military’s needs. More than a year ago, in April 2014, DOD issued a new policy stating that the Armed Services would seek to ensure recruits use Berry Amendment-compliant footwear.

A New Balance shoe was approved as the first Berry Amendment-compliant footwear earlier this year; however, DOD testing of other shoe models could delay the purchase of American-made footwear into winter of 2015 or early 2016, a full eighteen months after DOD issued its new policy.

Michael Grogan writes:  While Slovakia is a member of the Eurozone, its growth trajectory has been markedly different to that of many Eurozone countries. Private consumption has been a driver of growth in the country, with the same rebounding by 2.2 percent in 2014, which was the product of higher disposable income and decreasing unemployment rates. Moreover, Slovakia is on track to obtain a budget deficit below 2 percent, standing at a current rate of 2.8 percent of GDP; which is just slightly higher than the 2.3 percent figure for Germany.

Moreover, the country’s financial system appears to be in very good shape. For instance, in the 2014 Global Competitiveness Report, Slovakia received a “Soundness of banks” measure of 20th out of 144 countries. This lies in contrast to a measure of 55th place for Germany. Slovakia’s financial sector has benefited from high capital adequacy ratios and high net interest income. With quantitative easing by the ECB, use of such financial capital has been highly efficient with lower interest rates resulting in the second-fastest growth in credit for Slovakian households – which has disproportionately allowed Slovakia a higher rate of private consumption than other EU countries.

Moody’s Investors Service also affirmed positive sentiment for Slovakia’s banking system at the end of last month, upgrading their outlook for the industry to stable from negative. Moreover, in spite of increased credit lending, it is anticipated that the non-performing loans ratio for Slovakian banks will rise by less than 50 basis points. In this regard, return on equity is expected to remain at 10 percent while net interest margins will still remain at 3 percent; Slovakian banks have the advantage of being able to increase lending growth even in a low-interest rate environment thanks to adequate capitalisation.

In conclusion, while the effects of the ECB’s quantitative easing has not been universal across all euro member states, Slovakia’s financial system has benefited quite substantially. In this regard, I am optimistic on Slovakia’s prospects, and expect it to continue producing among the highest growth rates across eurozone countries.

There have never been more ways to watch TV without actually paying a cable or satellite company each month for a bundle of channels, many of which you probably never watch.  Streaming services over the internet are offering customers the opportunity for paying only for what they want to watch.  The forces driving this change are at least partially demographic as younger viewers are more and more opting out of the traditional TV distribution model.

Mark Drajem and Jim Snyder write:  Hydraulic fracturing has contaminated some drinking water sources but the damage is not widespread, according to a landmark U.S. study of water pollution risks that has supporters of the drilling method declaring victory and foes saying it revealed reason for concern.
The draft analysis by the Environmental Protection Agency, released after three years of study, looked at possible ways fracking could contaminate drinking water, from spills of fracking fluids to wastewater disposal.

“We conclude there are above and below ground mechanisms by which hydraulic fracturing activities have the potential to impact drinking water resources,” the EPA said in the report. But, “we did not find evidence that these mechanisms have led to widespread, systemic impacts on drinking water resources.”  The study was commissioned by Congress and represents the most comprehensive assessment yet of the safety of fracking.

Thomas Burke, the EPA’s top science adviser,said “the number of documented impacts on groundwater resources is relatively low.” Still, it’s not accurate to say that there have been no cases of contamination.

The American Petroleum Institute, an industry trade group, said the study was a validation of the safety of fracking. It said it showed existing oversight from state regulators is working..

“The process of fracking itself is one risk factor. But in fact it’s not the biggest one,” said Mark Brownstein, vice president of the Environmental Defense Fund. “Ongoing physical integrity of the wells and handling the millions of gallons of wastewater coming back to the surface after fracking, over the lifetime of each well, are even bigger challenges.”
Amy Mall, a senior policy analyst for the Natural Resources Defense Council, said the study provides “solid science that fracking has contaminated drinking water across the country.”

Mall said, however, that a lack of cooperation from industry meant EPA lacked key data necessary to fully assess its safety.
Another environmental group, Earthworks, said EPA analysis points to the need for regulation.

The EPA said as many as 30,000 fracked wells were drilled annually between 2011 to 2014, as oil production reached its highest level in more than three decades.
“People in favor of drilling will see this as vindication,” said Rob Jackson, a Stanford University professor who has tested drinking water near fracking sites in Texas, Pennsylvania and other states. “People opposed to it will see this as a whitewash.”

Keith Johnson writes:   President Barack Obama’s administration is taking plenty of heat from environmentalists after opening the Arctic to oil drilling by Shell. But the administration’s polar policy has a less noticed, if potentially very important, flip side: It’s using its leadership of the Arctic Council to launch an offensive to curb emissions of short-lived climate pollutants that pose a particular threat to the melting ice at the top of the world.

Since Obama opened Alaska’s Chukchi Sea to drilling this summer by Shell, greens have excoriated the environmental priorities of a U.S. president who says he wants to make the fight against climate change one of his legacies. Arctic oil and gas exploration, they say, poses not just local environmental dangers due to oil spills and the like, but exacerbates the use of fossil fuels that drive climate change in the first place. Obama even fended off angry questions about the topic Thursday during a Twitter chat on climate change.

But if climate change itself is helping to melt the ice and open the Arctic to drilling in the first place, Obama and Secretary of State John Kerry say they have a plan to cheaply and easily pluck low-hanging fruit and slow down the rate of warming in the far north. It involves an international effort to rein in emissions of “black carbon,” or soot, as well as methane and other so-called short-lived pollutants that drive temperatures higher. While carbon dioxide gets most of the attention in the fight against climate change, black carbon and other short-lived pollutants account for more than 40 percent of global warming.

In recent years, climate scientists have increasingly begun to look at the immediate benefits of tackling black carbon and other short-lived pollutants, such as slowing the rate of rising sea levels or potentially avoiding catastrophic tipping points such as further Arctic melting. Obama and Chinese President Xi Jinping made reductions in hydrofluorocarbons the centerpiece of their countries’ cooperation on climate change in 2013, for example. Now, it has taken center stage at the top of the world.  Tackling Black Carbon

Jack Ma founded Alibaba with 18 other people in 1999. Mr. Ma was an English teacher prior to forming Alibaba.

His goal was to help small businesses use technology to sell more effectively in the domestic Chinese market and internationally. From these humble beginnings and with such a clear, precise goal, Alibaba has grown exponentially. And today, Alibaba handles 80% of the e-commerce in China.

Ankita Rao writes:  With the introduction of chemicals such as urea, phosphate and pesticides as well as new farming technologies and irrigation systems, this fertile northern Indian state quickly became the seat of the country’s agricultural revolution in the 1970s and 1980s. And farmers like Singh, now a vibrant 69-year-old with a snow white beard, started to see their harvests multiply.

But alongside this burst of prosperity came the harrowing side effects of pouring chemicals into the ground: People’s health deteriorated rapidly, as did water and soil quality, and neither the government nor consumers took action. In the past decade, however, farmers like Singh have taken matters into their own hands and returned to the chemical-free, organic farming practices they used before fertilizers showed up.

Punjab now has approximately 1,500 hectares of certified organic land, and India has emerged as a global leader in organic farming, with 600,000 certified producers. The countries with the second- and third-largest outputs are Uganda and Mexico,
Motivated by growing international demand, the Indian government has encouraged the shift toward organic.

At the beginning of 2013 the government launched a nationwide organic certification program to help India increase its organic exports. During the year, organic exports rose 7.73 percent, and the country produced 1.24 million metric tons of organic produce.

While government interest in organic is largely market driven, for independent farmers in Punjab, the choice is about more than the economics; it’s about grappling with the legacy of the Green Revolution, an agricultural overhaul that began in the 1940s and reached the state more than 50 years ago.

India’s Green Revolution began in 1967, when then–Prime Minister Indira Gandhi took 18,000 tons of hybrid Mexican wheat seeds to Punjab. At the time, starvation plagued much of the country, and the introduction of high-yield seeds and chemical fertilizers resulted in a massive increase in the production of wheat, rice and pulse. India produced 50.8 million tons of food grain in 1950; by 1990, that output jumped to 176.3 million tons, creating a surplus.

But the Green Revolution also brought a host of problems. Rice fields, introduced in Punjab during the overhaul, required heavy irrigation and threatened the state’s water supply. Farmers poured dangerously high levels of government-subsidized phosphate and urea into the soil and water to grow more food.

Punjab’s public health crisis became public knowledge in the 1990s after the discovery of toxic chemicals in the state’s soil and waterways. The region now has the highest cancer rate in the country, and J.S. Thakur, a researcher at the Post Graduate Institute of Medical Education and Research in Chandigahrh, has linked these chemicals to premature aging, skeletal issues and threats to children’s health. Organic farming may be a requirement now.