Chinese Firm Planning a Canal Through Nicaragua Has PLA Ties

The proposed canal routes (red) crossing through Nicaragua. The Panama canal is marked blue. Image: Soefrm/Wikimedia

This article was originally published by on 5 December, 2014.

A Chinese company is preparing to begin work on the Nicaragua Interoceanic Canal. Once — and if — the canal is ever finished, it will size up to more than 170 miles (about 275 km) and connect the Caribbean Sea to the Pacific Ocean, with Lake Nicaragua in the middle. It’s a major project — larger than any other geo-engineering project underway in the world. Officially, it’s an opportunity for development championed by Nicaraguan President Daniel Ortega. But critics look at the canal as a boondoggle, and a means by which Ortega is developing a long-term relationship with Beijing — and China’s geopolitical interests. The builders of the canal also have important ties with the Chinese People’s Liberation Army (PLA).

Why Australia Wants the UK to Stay in the EU

Parliament House Canberra
Parliament House in Canberra, Australia. Photo: JJ Harrison/Wikimedia Commons.

When the United Kingdom (UK) sought to join the European Economic Community (EEC) in the early 1970s, it stirred a backlash in Australia.  Because its prime exporters enjoyed easy access to the large British market, many feared a possible collapse would occur in bilateral trade.  Today, the debate over whether the UK should remain in the EU attracts few headlines in Australia. It is not a replay of the previous EEC debate. Nevertheless, a British “no” vote in the 2017 referendum could yet again have negative consequences for the economic relationship between the two countries.  This time, however, Australia wants the UK to stay in the grand ‘European Project’ rather than to stay out.

Much has clearly changed since the 1970s. Back then, Western Europe’s Common Customs Tariff and Common Agricultural Policy (CAP) represented substantial trade barriers for Australia’s major exporters. When the UK finally did join the EEC, Canberra not only lost its preferential access to an alternative export market, it also deepened its rift with Brussels. In the years that followed, Australia-EU relations therefore continued to suffer from ongoing trade disputes, several of which ended in international legal proceedings.

The TTIP – an Ambitious Step Forward but Not an “Economic NATO”

Container Ship MSC Texas
Container Ship. Photo: Daniel Ramirez/flickr.

Is an “economic NATO” possible? This striking – and perhaps misleading – expression has been used by some commentators to convey a possible outcome of negotiations between the United States and European Union over the creation of a Transatlantic Trade and Investment Partnership (TTIP). The origins of this proposed partnership date back to November 2011, when a joint High Level Working Group (HLWG) on Jobs and Growth began discussing shared priorities. The HLWG delivered its final report in February 2013, and highlighted a range of options for expanding transatlantic trade and investment. Brussels and Washington are expected to give the green light for negotiations shortly, with talks possibly starting before the summer recess.

It remains unlikely that negotiations will result in a “fortress scenario” in which the US and EU mutually protect themselves from rising economic powers. What can be anticipated, however, is that the TTIP will have significant consequences for global economic security, irrespective of its final shape and structure.

The Two Rabbits of International Trade

Thousands of ship containers on the dock, waiting to be shipped
Thousands of ship containers on the dock, waiting to be shipped. Photo: ShnapThat!/flickr.

SEOUL – If you chase two rabbits at once, the old saying goes, both will escape. And yet this is precisely what many governments are required to do: pursue both growth and distributional fairness. The two objectives, though not incompatible, are entirely different from one another, and few policy tools can simultaneously help to achieve both.This idea matters a lot in trade policy. Much theoretical and empirical research demonstrates that opening trade can spur a country’s GDP growth. But increasing a pie’s size does not guarantee that it will be shared fairly.

Often, the incremental growth that comes with a trade opening is unevenly shared; moreover, in many cases, some receive a smaller share than they did before. Here is where government must intervene using its traditional tools, taxation and redistribution, as well as complementary policies such as social safety nets and adjustment assistance.

Lobbying the Political Agenda

Sealing the deal, while setting the agenda? / Photo: thinkpanama/flickr
Sealing the deal, while setting the agenda? / Photo: thinkpanama/flickr

In mid-September, US President Barack Obama risked tense bilateral trade relations with China by opting for the imposition of an import tariff on tires. He legitimized his decision by saying that in the tire industry 5,000 jobs had been lost since 2004. Even though the loss of 5,000 jobs is bad for the economy, its repercussions are relatively minor compared to when tens of thousands of people are getting fired in the financial sector. The question of why the US wants to instate such a tariff remains.

The International Centre for Trade and Sustainable Development (ICTSD) gives the answer, noting that the United Steel Workers union (a US labor group) strongly acted for the imposition of the tariff to which Obama eventually agreed to.

The possible influence of lobby groups on the US political agenda is of particular interest. President Obama resisted support from such groups during his campaign, yet lobbying has always been an integrated part of US politics. Open Secrets, from the US-based Center for Responsive Politics, offers a list of the main industries that donate to political campaigns. Among the top ranking in 2008 were the pharmaceutical, utility and insurance industries as well as the oil and gas industry.

Coincidentally or based on necessity, the reform of the American healthcare sector is currently one of Obama’s main concerns. Will we eventually see Obama’s future agenda being set by these other industries? Moreover, Obama’s campaign enjoyed crucial support by various labor unions, with memberships comprised of domestic blue-collar workers and potential opponents to global free trade. Their influence on the democratic agenda has yet to fully unfold. If it does, bilateral trade with China might take another blow and the US might prompt other states to follow its lead to regulate and close down their economies against foreign influence.