Issue 53| August 22, 2014
Expansion of Euro-zone trade surplus 
The Euro-zone economy showed some improvement according to official figures that highlighted an increase in Euro-zone trade surplus with the rest of the world in June. However, Euro-zone exports to Russia were lower this year than the previous year due to a weakening relationship with Russia. In June, surplus in goods trade with the rest of the world was EUR16.8 billion ($22.5 billion) that was higher compared to its previous quarters. This progression is due to higher exports to China, U.S. and U.K. Meanwhile, exports to Russia and imports from Russia are declining because of a slowdown in its economy. The European Central Bank has taken measures to stimulate growth in the region by including cheap cash for banks to lend to households and businesses. Read more.
 
Lawmakers push for a beneficial TPP Deal for agriculture 
In a letter sent to Obama, 140 members of the House of Representatives pushed for the White House to pursue a Trans-Pacific Partnership (TPP) only with countries that were willing to fully open their markets to all U.S. agricultural products. They stated congressional support for the TPP would be jeopardized if the U.S. accepted anything less in the agreements. Japan, which is the fourth largest agricultural market for U.S. agriculture, had demanded special treatment for its agricultural sector which included exemption from tariff elimination for certain "sensitive" products such as pork. Canada, which is the second largest export destination for U.S. agricultural goods, also provided a less-than-ambitious offer regarding the agricultural sector. The National Pork Producers Council stated that accepting these agreements would set a harmful precedent for future U.S. negotiations. Read more.
 
FTC pressed to take action on tech firms violating privacy 
Under the Safe Harbor deal, companies are required to be upfront and honest about their data collection and data user practices. On the contrary, a number of companies have failed to follow data collection standards. An investigation revealed these companies to be collaborating with powerful data broker partners who use their data on individuals in order to track and target them online. The Center for Digital Democracy (CDD) claims Federal Trade Commission (FTC) is failing in its responsibility to enforce the standards established. Meanwhile, an urgent reform of the Safe Harbor deal is needed before the situation further worsens. Read more.
 
Sec. John Kerry discusses the TPP and relations with Asia
U.S. Secretary John Kerry spoke about the Trans-Pacific Partnership (TPP) as well as the United States' relationship with China and five other key players in the region (Australia, Indonesia, Vietnam, the Philippines and Thailand) in his address to Hawaii's East-West Center think tank. The TPP is currently facing objections from U.S. labor groups and disagreements with Japan and other countries, but Kerry believes that the TPP is crucial to increasing U.S. exports to the Asian markets and for the U.S. to assert its influence in the region. The United States has increased military relations with Australia, Indonesia, Philippines and Vietnam. The United States now has the ability to add 2,500 Marines to a joint training hub in northern Australia and station U.S. troops to operate out of the Philippines. They have also been militarily assisting Indonesia's Special Forces, and increasing military training with Vietnam. Only in Thailand, the United States relations with the country remain unsure due to the May 22 coup that overthrew the elected government in the country. China sees all of these military agreements with the United States as part of the United States' plan to encircle the region so China has been courting investments in Thailand to gain influence. Read more.
 
The importance of passing a new trade promotion authority 
New figures released by the Commerce Department shows that the economy's Gross Domestic Product (GDP) fell 2.9 percent in the first quarter of 2014 and corporate profits declined more than 9 percent from last year. One method to counter this situation is to introduce a Trade Promotion Authority that will increase exports, increase GDP, expand job creation and inflate the local economy. The purpose of the Trade Promotion Authority is to ensure that the Congress will follow the agreement as discussed and will not attempt to make changes through amendments. For the local economy to grow internally, it is essential to encourage free trade that will allow American businesses and workers to flourish. For this to occur, a Trade Promotion Authority should be established so that more American goods and services can reach foreign markets. Read more.
 
The effects of currency manipulation
Currency manipulation takes place when a currency is devalued purposefully. It has a strong impact on manufacturers because it increases the difficulty to enter closed markets, results in an unearned export subsidy for countries manipulating their currency, and makes it harder for countries that are competing for exports. It is expected of the Trans-Pacific Partnership to establish standards as a means of determining if a country is manipulating its currency, and to implement a penalty on countries that fail to follow standards. Furthermore, currency manipulation aggravates the global job market, trade deficit and supply chain. It affects the entire trade agreement and creates an unbalancing effect for the economies involved. Read more.
 
Compiled by Global Initiatives Interns Michelle Dong and Ranika Perera.

For more information, contact Aaron Borboa, 213.580.7583.