The 75th anniversary of Bretton Woods is an ironically low point in global trade

This month marks the 75th anniversary of the Bretton Woods conference. In July 1944, 44 nations agreed to new rules for establishing an international monetary order and open trade system. The World Bank and International Monetary Fund were then created to promote international trade and development, and facilitate greater exchange rate stability minus the gold standard. Such coordinated decisions were an important step by countries to rebuild the world economy after World War II. Multilateral cooperation strengthened thereafter, morphing into the rules-based international trading system at World Trade Organization in 1995. But since then, dissatisfaction over the international monetary ‘non-system’ has grown; the asymmetric World Bank and IMF governance structure has diluted their legitimacy. But all countries nonetheless progressed steadily towards greater openness in trade, finance and exchange rate flexibility. That is, until recently. Multilateral cooperation has consistently weakened since the global financial crisis in 2008, marking a distinct reverse turn in recent years. It is ironic that the Bretton Woods anniversary coincides with possibly the lowest point in international economic cooperation.

Divisive trade policies and retaliatory import tariffs have reached dangerous levels, dragging down world growth. Outstanding damage is inflicted by trade tensions between the United States of America and China, triggered by Donald Trump’s trade policies. The downshift is significant: manufacturing activity has shrunk across advanced and emerging economies as exports contract; Chinese growth has slipped to its lowest in three decades, and the US economy is slowing too. The IMF lowered its world output growth forecast by 0.2 percentage points to 3.3 per cent in April 2019 and pared this by 0.1 point last week, underpinned by weaker-than-anticipated global activity owing to sluggish global trade. In April, the WTO estimated goods’ trade volume growth to fall to 2.6 per cent in 2019 from 3.0 per cent last year from heightened trade tensions and economic uncertainties.

It is worth recalling that trade was the key propeller of the pre-crisis global boom that dramatically reduced the number of global poor, including in India. Over 2003-08, trade volumes grew an average 3 percentage points (8.5 per cent) each year above the preceding five-year average. World trade plunged to -10.5 per cent in 2009 with the 2008 crisis. It was outstanding multilateral cooperation and macroeconomic policy coordination led by the G-20 that averted a global recession and financial meltdown. An informal forum of 20 countries representing 80 per cent of world gross domestic product and two-thirds its population, the G-20 constantly avowed its commitment to free trade, shunning protectionism. Positive outcomes followed: global trade rebounded to 12.5 per cent and 7.3 per cent in 2010-11, weakening thereafter to an average 3.1 per cent annually in 2012-16. An uplift in 2017 (5.4 per cent) proved short-lived and global trade slipped back into the 3 per cent region last year. This year’s performance looks set to worsen.

The interesting feature in relation to declining volumes of world trade is the progressive increase in trade restrictions imposed by G-20 members since 2012, that is, inversely proportional to world trade growth. The WTO computes the total number of restrictive measures — at 145 from mid-October 2015 to mid-May 2016, these reached an all-time high in 2018-19. The reasons why world trade never recovered its pre-crisis levels are many — structural changes induced by demography, low productivity and secular stagnation in advanced economies, the changing nature of global manufacturing and restructured supply chains, technology shifts, and so on. But the adverse effect of increased trade barriers upon exports and imports is undoubted.

It is unfortunate that the world’s largest nations fail to see this. The captive hold of trade protection to combat domestic depression and high unemployment — beggar-thy-neighbour trade policies that temporarily benefit the endorsing country but harm trading partners — is proving counterproductive. Worse, this is threatening to spill over into competitive currency devaluation as the US mulls weakening the dollar to spur its exports. Trump hopes its import barriers will force China into agreement on liberalizing its trade policies, leading to their eventual removal. These talks are on a bilateral basis. The G-20 leaders’ meeting in Japan last month was unable to resolve the US-China trade impasse. The US has shifted towards bilateralism in trade matters elsewhere too, undermining the multilateral framework built since Bretton Woods. Global growth is the chief casualty of the weakened multilateralism in global trade, capital and labour flows. Many countries, including India, still have to reap the full benefits of free trade.

The weak economic cooperation observed today contrasts with the joint cross-country efforts seen at the time of Bretton Woods. The latter aimed to revive the world economy; the former is actually pulling it down. This raises the question as to who exactly safeguards global economic objectives in the current times. In a somewhat different but equally concerning context, the G-20 arose to be the premier forum for global economic cooperation to combat the 2008 crisis shock and forestall a worldwide recession. Since then, the G-20’s effectiveness has steadily diminished as national interests dominate, eluding consensus and cooperation at the forum. At its leaders’ summit in Argentina last year, even the G-20’s steadfast commitment to “fighting protectionism” yielded to “strive to realise a free, fair, non-discriminatory, transparent, predictable and stable trade and investment environment, to keep our markets open”. After 75 years of Bretton Woods, the turn from multilateral cooperation is notable as is its drag upon the global economy.

Source:The Telegraph

Logged out: On protecting Amazon rainforest

It is a matter of global concern that deforestation in the Amazon rainforest in Brazil is increasing rapidly since January, when Jair Bolsonaro took office as President. Satellite images show that about 4,200 sq km of forests have been destroyed up to July 24 under the new government. While most nations tend to view their land and forests through the narrow prism of short-term economic gain, climate science data show that they play a larger environmental role. The Amazon basin, spread across millions of hectares in multiple countries, hosts massive sinks of sequestered carbon, and the forests are a key factor in regulating monsoon systems. The rainforests harbour rich biodiversity and about 400 known indigenous groups whose presence has prevented commercial interests from overrunning the lands. Much of the Amazon has survived, despite relentless pressure to convert forests into farmlands, pastures and gold mines, and to build roads. That fragile legacy is now imperilled, as Mr. Bolsonaro has spoken in favour of “reasonable” exploitation of these lands. Although the forest code has not been changed, his comments have emboldened illegal expansion into forests. Armed gold-hunting gangs have reached tribal areas and the leader of one tribe has been murdered in Amapa in an incursion. These are depressing developments, and the Brazilian leader’s criticism of satellite data and denial of the violence are not convincing at all.

As the custodian of forests in about 5 million sq km of Amazon land, Brazil has everything to gain by engaging with the international community on meeting the opportunity cost of leaving the Amazon undisturbed. Mr. Bolsonaro lost a valuable opportunity to seek higher funding for forest protection by refusing to host the annual convention of the UN Framework Convention on Climate Change this year, but he has been wise not to exit the Paris Agreement. Abandoning that pact would jeopardise Brazil’s access to the important European Union market. Globally, there is tremendous momentum to save the Amazon forests. Brazil must welcome initiatives such as the billion-dollar Amazon Fund backed by Norway and Germany, which has been operating for over a decade, instead of trying to shut them down. Remedial funding, accounting for the value of environmental services, is the most productive approach, because forest removal has not helped agriculture everywhere due to soil and other factors. One estimate by the World Bank some years ago noted that 15 million hectares had been abandoned due to degradation. Brazil’s President must recognise that rainforests are universal treasures, and the rights of indigenous communities to their lands are inalienable. The international community must use diplomacy to convince Mr. Bolsonaro that no other formulation is acceptable.

Source: The Hindu

Burning bright: on India’s tiger census

If India has increased its population of tigers to an estimated 2,967 individuals in 2018-19, putting behind fiascos such as the Sariska wipeout 15 years ago, it adds to its global standing as a conservation marvel: a populous country that has preserved a lot of its natural heritage even amid fast-paced economic growth. Since the majority of the world’s wild tigers live in India, there is global attention on the counting exercise and the gaps the assessment exposes. The National Tiger Conservation Authority (NTCA) has asserted in its report, ‘Status of Tigers in India 2018’, that 83% of the big cats censused were individually photographed using camera traps, 87% were confirmed through a camera trap-based capture-recapture technique, and other estimation methods were used to establish the total number. Previous estimates for periods between 2006 and 2010 and then up to 2014 indicated a steady increase in tiger abundance. Such numbers, however, are the subject of debate among sections of the scientific community, mainly on methodological grounds, since independent studies of even well-protected reserves showed a lower increase. It is important to put all the latest data, which are no doubt encouraging, through rigorous peer review. Conservation achievements — and some failures — can then be the subject of scientific scrutiny and find a place in scientific literature to aid efforts to save tigers.

There are several aspects to the latest counting operation — a staggering exercise spread over 3,81,400 sq km and 26,838 camera trap locations — that are of international interest, because some tiger range countries are beginning their own census of the cats. Moreover, even developed countries are trying to revive populations of charismatic wild creatures such as wolves and bears through a more accurate outcome measurement. For India’s tigers, not every landscape is welcoming, as the official report makes clear. The less accessible Western Ghats has witnessed a steady increase in numbers from 2006, notably in Karnataka, and Central India has an abundance, but there is a marked drop in Chhattisgarh and Odisha; in Buxa, Dampa and Palamau, which are tiger reserves, no trace of the animal was found. It is imperative for the NTCA to analyse why some landscapes have lost tigers, when the entire programme has been receiving high priority and funding for years now at ₹10 lakh per family that is ready to move out of critical habitat. Ultimately, saving tigers depends most on the health of source populations of the species that are estimated to occupy a mere 10% of the habitat. The conflict in opening up reserves to road-building has to end, and identified movement corridors should be cleared of commercial pressures. Hunting of prey animals, such as deer and pig, needs to stop as they form the base for growth of tiger and other carnivore populations. As some scientists caution, faulty numbers may hide the real story. They may only represent a ‘political population’ of a favoured animal, not quite reflective of reality.

Source:The Hindu

Bending the rules — on nod for Neutrino project

A year after the National Green Tribunal suspended the environmental clearance granted to the India-based Neutrino Observatory (INO), the Expert Appraisal Committee (Infra 2) of the Ministry of Environment, Forests and Climate Change has overturned the NGT verdict and granted environmental clearance for the project. The observatory, which is to come up in Bodi West Hills in Theni district, Tamil Nadu, is regarded as a symbol not just of India’s push for research in particle physics; it also signals the intent to nurture centres of excellence. Neutrinos are subatomic particles that are extremely difficult to detect. The laboratory cavern will be located 1,300 metres underground, with an access tunnel. The rock cover is necessary to minimise the naturally occurring cosmic ray backdrop. The project has become controversial on environmental grounds, given the proposed site’s proximity to the Mathikettan Shola National Park in Kerala’s Western Ghats, a global biodiversity hotspot. However, considering the project’s national importance, the Environment Ministry had taken up the proposal for clearance as a “special case”. The green signal is conditional on getting the consent of the Tamil Nadu Pollution Control Board and the National Board for Wildlife. Despite the 17 conditions laid down by the Expert Committee while granting approval, the manner in which the clearance was granted leaves much to be desired.

The project has been approved under category B item 8(a) — building and construction projects — of the Schedule to the Environmental Impact Assessment (EIA) Notification, 2006. But it should have been treated as category A as the project lies just 4.9 km from the national park in Idukki district of Kerala. The NGT had ruled that it was indeed a category A project and the Tamil Nadu State expert appraisal committee also noted that it could not be appraised under category B 8(a) as tunnelling and other activities went beyond the scope of the section. According to the 2006 notification, projects or activities that come under category A require “prior environmental clearance” from the Environment Ministry. Side-stepping the EIA requirement on technical grounds both by the project proponents and the Ministry is surely not the ideal way to go about such matters. For one, the EIA was done by the Salim Ali Centre for Ornithology and Natural History, which is an “unaccredited agency”. And though a public consultation with local people who have a “plausible stake” in the project was conducted in July 2010, the details of the meeting were submitted only by the end of February 2018. The importance of the project notwithstanding, treating it as a special case and bypassing the environmental clearance protocol sets a wrong precedent.

Source:The Hindu

Accord under strain — on Colombia peace pact

Colombia’s presidential election, due in May 2018, will have a bearing on the fragile peace accord of 2016 that ended one of the longest civil wars in history. The result of the parliamentary election held this month has framed the stiff challenge the pro-peace parties face. The accord between the Colombian security forces and the Revolutionary Armed Forces of Colombia (FARC) had won President Juan Manuel Santos the Nobel Peace Prize; it is to his credit that the government managed to implement the accord in bits and pieces despite unremitting hostility from the right-wing opposition led by former President Álvaro Uribe. Now, in the March 11 parliamentary vote, Mr. Uribe’s Democratic Centre Party has emerged as the largest bloc in the Senate with 19 seats. Two other right-wing parties, Radical Change and Conservative Party, finished second and third with 16 and 15 seats, respectively. In all, the anti-accord parties have 50 seats in a House of 102. They may not have a clear majority, but the popular support they have mustered is undeniable. The ruling Social Party of National Unity won just 14 seats. FARC, contesting polls for the first time, finished with less than 1% of the vote, but is assured representation in parliament thanks to the accord.

Over the last year, the record of implementation of the steps in the peace accord has been patchy, though major strides were made in the form of demilitarisation and disbanding of the FARC and its conversion into a legitimate political force. The other key aspects of the accord required Bogota to protect mainstreamed FARC leaders and to prevent right-wing militias from targeting left-wing leaders sympathetic towards the FARC. Yet, in the past year, several left-wing activists — such as leaders of teachers’ unions and mining workers’ unions — have been assassinated by right-wing militia groups. This has prevented the possibility of a similar peace accord with the other remaining insurgent group, the National Liberation Army (ELN), whose leadership fears reprisal by militias if they lay down their weapons. Moreover, while the FARC leadership is committed to the accord, some elements of the group are holding out in the jungles, refusing to demilitarise and instead keep fighting. The next couple of months will be crucial for the pro-accord forces, with the parliamentary vote showing how much work they have ahead of them if they want to convince a sceptical electorate — for which memories of the civil war are still quite raw — that peace deserves a chance. For this, they will have to take dedicated steps to overcome the urban-rural disconnect in Colombia. If this not done, the chances of the accord coming undone are dispiritingly high.

Curbing misuse: on SC ruling on the anti-atrocities law

Will laying down procedural safeguards to curb false accusations work against the interest of protecting the oppressed from discrimination and caste-based atrocities? This is the salient question that arises from the Supreme Court verdict that has taken note of the perception that the Scheduled Castes and the Scheduled Tribes (Prevention of Atrocities) Act, 1989, is being rampantly misused to settle personal scores and harass adversaries. On the face of it, it is difficult to fault the court’s approach. It is settled law that the mere scope for misuse of an Act is not a ground to invalidate it. Constitution courts seek to preserve the spirit of such legislation on the one hand and to evolve guidelines to prevent its misuse on the other. This is precisely what the two-judge bench has aimed to do. It has ruled that Section 18, which bars grant of anticipatory bail to anyone accused of violating its provisions, is not an absolute bar on giving advance bail to those against whom, prima facie, there is no case. In addition, the Bench has prohibited the arrest of anyone merely because of a complaint that they had committed an atrocity against a Dalit or a tribal person. In respect of public servants, no arrest should be made without the written permission of the official’s appointing authority; and for private citizens, the Senior Superintendent of Police in the district should approve the arrest.

In doing this, the Supreme Court has sought to strike a balance between protecting individual liberty and preserving the spirit of a law in favour of oppressed sections. Without any doubt, atrocities against Dalits are a grim social reality, necessitating a stringent law to combat it. The Act was amended in 2015 to cover newer forms of discrimination and crimes against Dalits and tribals to add teeth to it. It is true that conviction rates under the Act remain low. The lackadaisical approach of investigators and prosecutors to bring home charges against perpetrators of such crimes among the dominant castes is reflected in statistics. Even if courts are right in taking note of the tendency to misuse this law, society and lawmakers must be justifiably worried about the sort of messaging contained in their rulings and observations. In an ideal system, as long as every charge is judicially scrutinised and every investigation or prosecution is fair and honest, one need not worry about misuse and its adverse effects. However, social realities are far from being ideal. It ought to concern us all, including the courts, that some laws designed to protect the weakest and most disempowered people do not lose their teeth. Words of caution and rules against misuse may be needed to grant relief to the innocent. But nothing should be done to de-fang the law itself.

Source:The Hindu

Xi unlimited: on Xi Jinping's presidential term

The Chinese Communist Party’s proposal to abolish term limits on the presidency, and thereby allow Xi Jinping to stay on in power beyond 2023 when his second term ends, is not completely unexpected. When he was re-elected party chief and President for a second term in October, no one was projected as a potential successor. This was a break with tradition and triggered speculation about him remaining President beyond the second term. Mr. Xi is arguably the most powerful leader of China since Mao Zedong. At the 19th Party Congress in October, “Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era” was written into the party charter, setting him apart from his recent predecessors. He does not just control the main pillars of the Chinese state — the party, the government and the military. In 2016, the party accorded him special stature by making him the “Core Leader”. Just as Deng Xiaoping oversaw China’s economic rise, Mr. Xi has raised its profile in global geopolitics. He has pursued a more assertive foreign policy in China’s neighbourhood and launched massive infrastructure programmes across the world as part of the Belt and Road Initiative. But despite the power amassed, long-term projects launched and his own apparent ambitions, the constitution was seen as a limit to his stint in power. With the latest proposal on removing the term limit, which is certain to be endorsed by parliament, Mr. Xi may find greater room for manoeuvre in speeding up the next generation of economic reforms.

The timing of the announcement itself, however, has taken many by surprise. Mr. Xi was about to begin his second term as President next month, and so has five years to introduce the constitutional changes needed. But with a proposal moved to amend the constitution a week ahead of a People’s Congress convention, Mr. Xi has made it clear he does not want to leave anything to chance while consolidating his position. At present there is no rival power centre within the Communist Party to challenge Mr. Xi. But the centralisation of so much power in one individual, which is the antithesis of China’s professed commitment to ‘collective leadership’, may well impact the power dynamics, given the succession battles of the past. The party introduced the term limit in the post-Deng era principally to bring in order and stability at a time when China was becoming an economic powerhouse. Two of Mr. Xi’s immediate predecessors stepped down after their second term, having groomed the next generation of leaders, including Mr. Xi. By breaking with this pattern, Mr. Xi risks taking China back to the days of personality cults, internal power struggles and possibly chaotic successions.