Economy

Hungary cenbank chief uses luxury home of Banking Association President

portfolio.hu / economy - 2016, október 6 - 14:20
Hungarian daily newspaper Népszabadság obtained information on a serious conflict of interest, saying central bank (MNB) Governor György Matolcsy is using the flat owned by Mihály Patai, President of...
Kategóriák: Economy

U.S. Ambassador to Hungary to tender her resignation in January

portfolio.hu / economy - 2016, október 6 - 11:35
Following the presidential election in the United States, the U.S. Ambassador to Hungary will tender her resignation on 20 January 2017 along with all of her counterparts. Colleen Bell also told...
Kategóriák: Economy

Is Europe drifting towards a hard Brexit?

Bruegel - 2016, október 6 - 10:47

This op-ed was originally published in Nikkei Veritas “Market Eye”. It will also be published in L’Expansion and in La Stampa.

Theresa May has finally spoken. In a major speech, she has set out her plans to trigger Article 50 and negotiate Brexit. The announcement has brought clarity on the timetable for negotiations, which will start no later than March 2017 and probably last for 2 years. But May also gave the clearest information yet about the British government’s aims, setting out some key “red lines”. Of course, such lines are drawn in sand, not stone, and they can change in the course of negotiations. But compromise is politically difficult, so we should expect the UK to fight for its position.  It is therefore worth unpacking what these red lines imply for the future of EU-UK relations. The signs are not good those for those who support a “soft Brexit”.

The first and most important point is about sovereignty. As Prime Minister May puts it: “We are going to be a fully-independent, sovereign country, a country that is no longer part of a political union with supranational institutions that can override national parliaments and courts.” And she continues: “We will be free to pass our own laws….And we are not leaving only to return to the jurisdiction of the European Court of Justice.” These statements are clear and have clear implications for the nature of the future relation between the EU and the UK. There cannot be anything even closely resembling the deep integration of the single market.Far-reaching integration like the single market needs much more than a shared set of standards and rules. It also needs a uniform enforcement of these rules through supranational institutions like the European Court of Justice and the European Commission.

Far-reaching integration like the single market needs much more than a shared set of standards and rules.

This is not just a theoretical observation but an issue with immediate economic consequences. So-called passporting (the ability to provide banking services across borders) is only conceivable within a supranational jurisdiction. And it is not only financial services that are concerned. In many other sectors, such as healthcare, it is shared standards and their enforcement that are most important in facilitating international trade — not tariffs, which are already low. Just as vital is the supranational surveillance of competition and state aid, without which unfair competition and dumping can become a real threat to business and consumers.

What other arrangement is possible? One obvious alternative is a free trade agreement.

Since anything closely resembling single market membership has been excluded by the British PM’s choice of red lines, one question naturally arises. What other arrangement is possible? One obvious alternative is a free trade agreement. The PM immediately mentioned the mantra of “Global Britain”. But with almost 48% of UK goods exports going to the EU, the first priority for the UK would surely be to forge a deal with the EU. Such a deal would exclude large parts of the services sector, in which the UK is relatively strong. But the UK’s hand will be weakened further by the fact that no EU country sends more than 14% of their total exports to the UK. The EU could well try to leverage that relative strength in negotiations.

The negotiations for the CETA agreement with Canada started more than seven years ago.

However, there are also potential pitfalls on the EU side. Even in a scenario where the EU institutions were willing to engage with the UK and develop a mutually-beneficial trade deal, no outcome can be guaranteed. For a start, trade negotiations can take a long time. The negotiations for the CETA agreement with Canada started more than seven years ago. Moreover, even with cooperative EU institutions, it is far from certain that any trade deal would be implemented. Although EU law formally gives the EU an exclusive competence on trade negotiations, this supremacy is now in question. In particular, after the European Commission’s decision to allow all EU member states to pre-approve the CETA deal, it has become unclear whether the EU is actually still able to forge meaningful new trade deals. As a consequence, Britain may leave the EU without a new trade deal in place, and with uncertain prospects of a new deal anytime soon.

The consequences of such a “hard divorce” could be painful for business and citizens, but there are also some reasons for hope. The PM has announced that the British government will enact a law to incorporate all EU law into UK law. That could offer the basis of an interim trade agreement. However, the UK would have to fully follow EU law to minimise disruptions until a new arrangement was agreed. In this case, of course, the UK’s regained “sovereignty” would remain an illusion.

Kategóriák: Economy

Hungary to double EU fund disbursement in Q4 - gov't official

portfolio.hu / economy - 2016, október 6 - 09:35
In the fourth quarter of 2016, Hungary plans to disburse double the amount of EU funds paid in the first three quarters in order to meet its target, the deputy minister of the Prime Minister’s...
Kategóriák: Economy

Will Hungary really lose EU funds? - The PM's Office responds

portfolio.hu / economy - 2016, október 5 - 22:48
The European Commission has Hungary in the second category on a four-category scale evaluating the tendering systems allocating EU funds, and it will not change the country’s position even in...
Kategóriák: Economy

Commission may freeze all EU funds for Hungary

portfolio.hu / economy - 2016, október 5 - 12:11
The European Commission uncovered serious deficiencies in Hungary’s institutional system distributing EU funds. A report about these problems is about to be released and depending on its...
Kategóriák: Economy

Hungarian households' willingness to consume abates

portfolio.hu / economy - 2016, október 5 - 09:00
The volume of retail sales in Hungary grew by 4.3% year on year in August. This is below the high growth rates recorded in the spring and slightly less robust than the average of the first eight...
Kategóriák: Economy

Hungarian 3-m T-bills not so hot anymore

portfolio.hu / economy - 2016, október 4 - 15:05
Hungary’s Government Debt Management Agency (ÁKK) has managed to sell the entire HUF 25 billion lot of 3-month discount Treasury Bills put up for auction on Tuesday, although demand was not...
Kategóriák: Economy

IMF has a different outlook for Hungary than central bank

portfolio.hu / economy - 2016, október 4 - 15:00
The International Monetary Fund (IMF) has lowered its 2016 growth estimate further for Hungary in its latest World Economic Outlook. The 2.3% projection in April was cut to 2.0%. This is slightly...
Kategóriák: Economy

China’s state-owned enterprises reform still lacking bite

Bruegel - 2016, október 4 - 14:43

This op-ed was originally published in Nikkei.

Large SOEs are known for their low efficiency, heavy debt loads and poor corporate governance. Returns on assets have been decreasing in China over the last few years and are now lower than those of most emerging economies. This could reduce the country’s growth unless action is taken.

On July 26, the State Council issued new guidelines on reform of central government-owned companies. The aim is to classify SOEs into four groups — strategic, innovative, to be consolidated and to be cleaned up — according to their sector and to clarify the outlook for each group by 2020.

The new outline however may not provide a smooth pathway to improve efficiency or reduce moral hazard. Nor does the policy guideline necessarily mean there will be a Darwinian winnowing of unviable entities. In fact, closer examination shows that there were few references to unviable SOEs that need to disappear.

All in all, the policy outline has too few sticks and too many carrots to change the behavior of SOEs.

A reduction in the size of SOEs does not seem to be a key objective, which means that the crowding out of the private sector by the public sector looks to be here to stay. In fact, only the very small part of the SOE universe classified in the guidelines as “to be cleaned up” — is set to shrink. This boils down to just the steel and coal industries and only accounts for 5% of total SOEs. China’s overcapacity problem extends well beyond these two sectors.

Moreover, there are growing signals that Beijing will not allow further defaults by SOEs in these two sectors and that the government prefers alternatives such as injections of bank capital and debt-for-equity swaps. Consolidation is another more favored option even for industries suffering from overcapacity and marked for cleanup, as seen in the announcement Sept. 21 that Baosteel Group will merge with Wuhan Iron & Steel Group.

Not convincing

The new reforms do open the door to private capital but only for companies put in the innovation group. This is a narrower opening than what was announced at the National People’s Congress session in March 2014.

Some 45% of central government SOEs have been classified as strategic by their asset size, which indicates the government will definitively retain control of a big chunk of state companies. Furthermore, no clarification has been given to the meaning of private participation as the word “control” was carefully avoided in the State Council’s statement.

It will not be easy to convince private investors with such unclear guidelines. This means that more will need to be done to attract capital, especially in an environment of very low returns on assets. Unless there are further clarifications or additional sweeteners forthcoming from the government, public-private partnerships will remain sporadic.

While the cry for reform is loud, the reality is that SOE investment still supports China’s economic growth. Fundamental reform would be too disruptive in the short run and long-term benefits are not the key consideration for the Chinese government now. There is indeed a trade-off between reform and short-term growth, and Beijing has made growth its priority.

Although there would be clear benefits in terms of resource allocation and an increase in returns on assets, the cost of funding for SOEs would increase if there were real restructuring. It is evident the role of the state in production will not be reduced any time soon in China. In fact, the assets of SOEs have only increased in the last few years compared with those of private companies.

The thunder of reform has been loud, but the rain has been rather light. The government continues to drag its feet on SOE reform and the liberalization of markets. The disappointing guidelines on SOE reform fall short of the needed Darwinian action to improve efficiency and returns on assets. Meanwhile, lax monetary policy will continue to feed the liquidity needs of government-owned companies, especially in overcapacity industries.

Via mergers, the consolidation process will continue but China will end up with even larger SOEs this way. Given that these mergers will be politically driven, efficiency gains cannot be expected and the companies will become much harder to manage. As SOEs become even larger, the risk of crowding out the private sector only increases. In this scenario, we should not expect returns on assets in China to increase anytime soon, to the detriment of the country’s potential growth.

Kategóriák: Economy

EU-UK future constitutional relationship

Bruegel - 2016, október 4 - 10:50

The Committee on Constitutional Affairs held an exchange of views on the future constitutional relationship of the United Kingdom with the European Union after the June 23 referendum in the UK.

Watch the video recording

 

Kategóriák: Economy

Hungary's Orbán may realign policies towards Jobbik’s platform

portfolio.hu / economy - 2016, október 4 - 10:03
Regardless of the low turnout and the consequently invalid referendum in Hungary on Sunday, Prime Minister Viktor Orbán’s radicalism on the EU stage is unlikely to abate. On economic policy...
Kategóriák: Economy

Can North Africa’s energy challenges become opportunities?

Bruegel - 2016, október 3 - 16:41

It is in Europe’s interest to foster stability, security and prosperity in North Africa. But so far Europe’s attempts to promote economic and political reform in the region have failed. The aftermath of the so-called ‘Arab Spring’ demonstrates the limitations of the EU’s leverage over economic and political developments in North Africa. But it also illustrated that ignoring the region is not an option. Enhanced energy cooperation with selected countries in the region might well be a way to change this scenario.

Economic development is key to stability, security and prosperity. Today, energy is an Achilles heel to economic development of North Africa, and the situation is set to deteriorate. Energy demand in the region is surging.: over the last decade it grew by 4 percent per year (compared to zero growth in OECD Europe). This trend will likely continue due to urbanization and increasing population.

In energy exporting countries, strongly growing domestic demand has already reduced energy exports. Algeria’s gas exports dropped by 40 percent over the last decade, while Egypt (a well-established gas exporter) even became importer in 2014. Such developments badly impacted the countries’ current accounts and fiscal situations. This situation is also exacerbated by the widespread universal energy subsidy schemes. This is clearly exemplified by the case of Egypt: in 2015 energy subsidies constituted a burden of $35 billion on the country’s public finances, and this number could quickly rise if oil prices increase again. In 2013 – before oil prices dropped by 65 percent – subsidies in Egypt were, in fact, $45 billion. Just to provide a comparison, the tentative agreement between Egypt and the IMF reached in August 2016 was focused on a loan of $12 billion over three years.

In energy importing countries, strongly growing domestic demand has substantially increased oil and gas import requirements. For instance, Morocco’s gas import requirements doubled over the last decade, while Tunisia’s even tripled. Under these conditions even a modest rise in oil and gas prices could translate into substantial economic turmoil.

However, such a growing energy demand also represents a significant opportunity for investment and sector reform. If North Africa could turn its vast regional renewable energy potential into reality, it would help to meet the increasing energy demand and create employment, and would also release the region’s hydrocarbon resources for profitable export to Europe. If generation capacity were to follow the 4% increase in annual electricity demand, about 2.5 Gigawatt of additional power plant capacities will have to be installed in the five MENA countries every year. A corresponding role-out of photovoltaic installations would have cost in the order of € 3-5 bn.

Given the limited fiscal space in North Africa (all countries currently run fiscal deficits) such sums can only be mobilized by scaling up private investment in the region. In this, Europe might well have a role to play, particularly through its public finance institutions. Long-term public investors such as the European Investment Bank, the European Bank for Reconstruction and Development, Germany’s Kreditanstalt für Wiederaufbau, Italy’s Cassa Depositi e Prestiti and France’s Caisse des Dépôts et Consignations, are already financing renewable energy projects in the region. However, the actions of institutions are not coordinated, and they avoid taking risks and fail to use their leverage to make energy sector overall more attractive to investors. So the impact of their investments is essentially limited to the financing of pilot projects.

The EU should take the political decision to coordinate the North African activities of these public long-term investors, to enable economies of scale and stronger leverage. To facilitate the coordination work, established new Sustainable Energy Fund should be established. The fund could amount to some €3 billion per year – 10 percent of what Europe has promised in annual climate finance.

The mechanism would involve the public long-term investors, governments of interested North African countries, and international energy companies that operate in the region. It would work as follows: i) the public long-term investors would provide risk-mitigation and credit-enhancement tools to cover the country risk faced by international energy companies. This risk might change over time, as the political situation in a country evolves. Reducing the risk can enable the country to attract more investment because of lower interest rates, in effect providing an investment insurance mechanism. ii) International energy companies would take on the commercial risk, to ensure the commercial viability of the projects proposed. iii) The governments of the selected countries would contribute by committing to maintain stable regulatory conditions for the given projects. Should they fail to do so, the banks will discontinue lending – and the EU will exercise some political and economic leverage to ensure repayment of existing obligations.

This mechanism should be able to provide a solid response to the evidence that investors might jump into the North African sustainable energy sector only if a proper risk-adjusted return is considered as guaranteed.

This arrangement would help North African countries to better meet domestic energy demand and thus stimulate economic development. It would also contribute to climate change mitigation. And it would represent a business opportunity for European energy companies, which should be particularly welcome given the sluggish energy outlook within Europe, and given that North Africa is also on the radar of others players, such as Chinese companies, that have the advantage of operating more comfortably in the region due to the financial backing of their government.

 

Kategóriák: Economy

GE to open EUR 26 mn Digital Development Centre in Hungary

portfolio.hu / economy - 2016, október 3 - 16:31
General Electric is to set up an 8 billion forint (EUR 25.94 mn) Digital Development Centre in Hungary, an invitation emailed by the company showed on Monday. GE has more than 10,000 employees in...
Kategóriák: Economy

Fiscal capacity to support large banks

Bruegel - 2016, október 3 - 16:23

During the global financial crisis and subsequent euro-debt crisis, the fiscal resources of some countries appeared to be insufficient to support their banking systems. These countries needed outside support to stabilise their banking systems and thereby their wider economies.

This Policy Contribution assesses the potential fiscal costs of recapitalising large banks. Based on past financial crises, we estimate that the cost to recapitalise an individual bank amounts to 4.5 percent of its total assets. During a severe crisis, a country might have to recapitalise up to three of its large systemic banks. We assume that bail-in of private investors is not fully possible during a systemic crisis.

Our empirical findings suggest that large countries, such as the United States, China and Japan, can still provide credible fiscal backstops to their large systemic banks. In the euro area, the potential fiscal costs are unevenly distributed and range from 4 to 12 percent of GDP. Differences in the strengths of the fiscal backstops in euro-area countries contribute to divergences in financing conditions across the banking union.

To counter this fragmentation, we propose that the European Stability Mechanism (ESM) could be used as a fiscal backstop to recapitalise systemically important banks directly within the banking union, in the case of a severe systemic crisis. But this would be only a last resort, after other tools such as bail-in have been used to the maximum extent possible. The governance of the ESM should be reconsidered, to ensure swift and clear application in times of crisis.

Kategóriák: Economy

EU law continues to enjoy primacy - EC on Hungary's referendum

portfolio.hu / economy - 2016, október 3 - 14:50
The referendum on Sunday has reached its goal, Hungary has made its decision, Prime Minister Viktor Orbán told Parliament on Monday. He reiterated that he will initiate an amendment of the...
Kategóriák: Economy

Trumping Trade

Bruegel - 2016, október 3 - 11:27

Bonus: if watching the debate unsettled you, think that Jonathan Mahler at the NYT had to do it with sounds off and no captioning! The idea was to test the theory that what presidential candidates say during debates is less important than what they look like while they’re saying it. Watch some of his clips, if you have a thing for mute surrealist cinema

A paper by Peter Navarro and Wilbur Ross, both senior policy advisors to the Trump campaign, sets out the Trump camp’s position. They argue that Trump’s trade plans will bring in $1.74 trillion of additional Federal tax revenues. Assuming wages are 44 percent of GDP, they argue that eliminating the US trade deficit would result in $220 billion of additional wages. This additional wage income would be taxed at an effective rate of 28 percent, yielding additional tax revenues of $61.6 billion. Furthermore, businesses would earn at least a 15% profit margin on the $500 billion of incremental revenues, which would translate into pretax profits of $75 billion. Applying Trump’s 15% corporate tax rate, this results in an additional $11.25 billion of taxes. This would leave businesses with $63.75 billion of additional net profit which must be distributed between dividends and retained earnings. If businesses pay out one third of this additional profit as dividends and these $21.25 billion worth of dividends are taxed at a rate of 18%, this yields another $3.8 billion of taxes, after which there remains $17.45 billion of net income. Together, these tax revenues from wage, corporate, and dividend income total $76.68 billion per year and over the standard ten-year budget window, this recurring contribution to the economy cumulates to $766.8 billion dollars of additional tax revenue.

Navarro and Ross then argue that two more sets of revenue should be added to this total. Under the dividend payout schedule, businesses will retain $42.5 billion of cash flow after paying both taxes and dividends. Under the assumptions of the paper, reinvesting this $42.5 billion each year would generate another $120.21 billion of pretax profits and taxes of $18.04 billion over the standard 10-year budget window. Adding these increments to the previous calculation results in a ten-year direct incremental contribution to Federal tax revenues of $766.8 billion in 2016 dollars, which turn into $869.76 billion when a 1.1082 inflation factor is applied. To account for multiplier effects, Navarro and Ross also add a multiplier of 1.0, which would produce a grand total of $1.74 trillion of additional Federal tax revenues from trade .

Marcus Noland, commenting on the Navarro and Ross paper over at PIIE, says that the authors owe much to the literary genre of “magic realism”. Magic realism was developed by Latin American writers in the 1970s, and its most distinguishing feature is a mix of wild juxtapositions and metaphysical leaps. According to Noland, the thinking that gets Navarro and Ross to the $1.74 trillion figure is truly magical. He argues that their assessment of the causes of weak economic growth entirely ignores the ongoing debate about the sources of productivity growth and the possibility that the rate of technological change is slowing. Instead, they focus on trade. Economists generally believe that the magnitude of a nation’s trade deficit fundamentally reflects the difference between saving and investment. Trade policy can affect the sectoral and geographic composition of the deficit, but in the long run the trade balance is determined by the savings-investment balance. If you want to lower the nation’s trade deficit, increasing the saving rate would be the right place to start – , not launching a trade war. But there is no word of this in Navarro and Ross’ paper, which is all about perfidious foreigners and incompetent trade negotiators. Noland accepts that this might make for a more exciting storyline, but it does not constitute a persuasive defense of their solution to the trade deficit.

Marcus Noland, Gary Clyde Hufbauer, Sherman Robinson, and Tyler Moran at the Peterson Institute of International Economics have a report assessing trade agendas in the US presidential campaign.

While Clinton has expressed skepticism about aspects of trade deals in the campaign, Nolan et al. argue that in effect she represents stasis. In her political career, Clinton has not taken a doctrinaire position on trade. As First Lady she supported NAFTA, but while campaigning for the 2008 Democratic presidential nomination, she described NAFTA as “a mistake.” While representing New York in the Senate, she voted in favor of six preferential trade deals (FTAs with Chile, Singapore, Australia, Morocco, Bahrain, and Oman); against two (the Central American Free Trade Agreement and the FTA with Panama); and did not vote on two others (the agreements with Jordan and Peru). She expressed opposition to the FTAs with Colombia and South Korea. Later, while serving as secretary of state, Clinton reversed her opposition to these agreements and helped persuade Congress to pass them.

In the 2016 campaign, Clinton has made enforcement of existing trade laws, aimed at preventing abuses by trading partners, the centerpiece of her trade policy. She supported TPP as secretary of state, calling it “the gold standard” of trade agreements, but she has come out in opposition to it during the campaign. Some TPP advocates hope that the agreement could be ratified during a lame duck session (between the election and the seating of new Congress in January). Others hope that if she were elected, Hillary Clinton could replicate Bill Clinton’s maneuver in the early 1990s, when he opposed NAFTA while campaigning against George H. W. Bush and then supported its passage in office. Nolan et al. argue that this would still have implicit costs, citing estimates according to which each year’s delay in implementing TPP represents a $77 billion to $123 billion permanent income loss for the United States, depending on the discount rate applied Petri and Plummer (2016).

Trump has stated that he would impose a 35 percent tariff on imports from Mexico and a 45 percent tariff on Chinese goods, as a countervailing action against alleged currency undervaluation. He has proclaimed that he would “rip up” existing trade agreements, renegotiate NAFTA and may withdraw from the WTO over the imposition of tariffs, possibly firm-specific, on products made in Mexico by US firms. A first question is whether the President actually has the legal authority to do this kind of thing. In a legal analysis, Gary Clyde Hufbauer argues that there is ample precedent and scope for a US president to unilaterally raise tariffs as Trump has vowed to do. Any effort to block Trump’s actions through the courts, or amend the authorizing statutes in Congress, would be difficult and time-consuming.

A second question regards the economic effects. Nolan et al. extend a macroeconomic model from Moody’s Analytics and estimate that Trump’s proposals on international trade, if implemented, could unleash a trade war that would plunge the US economy into recession and cost more than 4 million private sector American jobs. In a separate chapter Noland analyzes the impact of trade policies advocated by both Trump and Clinton on the United States’ foreign policy interests. Pulling out of the TPP, as both candidates promise to do, would weaken US alliances in Asia and embolden its rivals, thus eroding US national security. Noland also warns that abrogation of NAFTA, as Trump threatens, would deliver a severe blow to Mexico’s economic and political development that could increase, not decrease, the flow of illegal migrants and drugs into the United States (see figures 1 and 2). An earlier comprehensive analysis of Trump’s economic policies by Moody’s is accessible here.

Figure 1

Figure 2

On the morning after the debate, Paul Krugman said that Trump on trade was “ignorance all the way”. Krugman points in particular to Trump’s statements in which he seemed to think that Mexico’s VAT tax rate is actually an unfair trade practice on US imports to Mexico. In a follow up post, Krugman points out that the Republican campaign’s white paper on economics has a VAT discussion that is utterly uninformed, suggesting Trump was probably saying ignorant things fed to him by incompetent economic advisers. More broadly, Trump’s whole view on trade is that it is all about dominance, and that the US is weak. And even if you think we have pushed globalisation too far – Krugman says – even if you are worried about the effects of trade on income distribution, that is just a foolish way to think about the problem. So “Trump blustered more confidently on the subject of trade than on anything else, but he was talking absolute garbage even there”.

Both Krugman and Tyler Cowen quote a paper by Joel Slemrod on the subject of whether VAT promotes exports. Slemrod argues that this is not the case, and suggests a three-step process to convince oneself. First step, understand why a uniform VAT is equivalent to a uniform RST [retail sales tax]; both tax domestic consumption regardless of where goods or services were produced. Second step, calmly reassure oneself that, as is intuitive, an RST does not favor domestic over foreign production and neither encourages nor discourages exports or imports. This implies step three: that a VAT (like an RST) neither encourages nor discourages exports or imports. If step three fails, return to steps one and two until fully convinced.

Greg Mankiw agrees with Krugman on Trump’s advisers. Their analysis of trade deficits boils down to the following: We know that GDP=C+I+G+NX (consumption + investment + public spending + trade balance).  The trade balance (NX) is negative, therefore, if we somehow renegotiate trade deals and make NX rise to zero, GDP goes up! They calculate this will bring in $1.74 trillion in tax revenue over a decade, but of course you can’t model an economy just using the national income accounts identity. Trade deficits go hand in hand with capital inflows, so an end to the trade deficit means an end to the capital inflow, which would affect interest rates, which in turn influence consumption and investment. Mankiw argues that such calculations might make sense in the simplest Keynesian Cross model, in which investment is exogenously fixed  and consumption only depends on income.  But that is surely not the right model for analyzing the impact of trade policy over the course of a decade.

Jared Bernstein writes that, before the first presidential debate fades into the next news cycle, we need to realize that we need a new paradigm for trade policy. The outsider campaigns of Trump and Sanders, along with the realities of the many people and communities hurt by globalization, have elevated international trade as a major issue in this election. Trump advertises an unrealistic nostalgia, a return to a time when trade flows were a fraction of their current size. His statements during the debate underscore the fact that there is no coherent plan to get back there even if we wanted to. Clinton correctly points out that “we are 5 percent of the world’s population; we have to trade with the other 95 percent.” She aspires to reshape, not restrain, globalization. What’s needed is a framework for the type of “smart, fair trade deals” that Clinton says should be the norm. Yes, that framework should include enforceable disciplines against other countries’ currency management, something both candidates support. But much more is needed.

Bernstein refers to a proposal paper published by himself and Lori Wallach, which include both process reforms and new negotiating objectives. Bernstein and Wallach argue that the process by which trade agreements are negotiated must change in the direction of enhanced transparency and accountability. They also propose a set of initiatives that should be part of what they call the “new rules of the road for trade”. These initiatives include enforceable currency disciplines, enforceable and substantive labor and environmental rights and standards, tighter terms regarding “rules of origin”, facilitating export opportunities, combating transshipment and selecting appropriate trade partners. Bernstein and Wallach argue that their ideas, if adopted, would increase the transparency of trade negotiations, reduce corporate influence over the eventual agreements, discontinue protectionist practices and provisions that put sovereign laws and taxpayer dollars at risk, and strengthen environmental, health, and labour standards in the US and abroad.

Kategóriák: Economy

Hungarian budget shows hardly any deficit

portfolio.hu / economy - 2016, október 3 - 10:29
Hungary’s budget balance shows 61.4 billion forints deficit for the second quarter of 2016, which corresponds to 0.7% of gross domestic product, the Central Statistical Office (KSH) reported on...
Kategóriák: Economy

Hungary's growth engine may rev up in the autumn

portfolio.hu / economy - 2016, október 3 - 10:03
Hungary’s manufacturing purchasing manager index (PMI) jumped to 57 points in September from 51.7 points in August, the Hungarian Association of Logistics, Purchasing and Inventory Management...
Kategóriák: Economy

Hungary's Orbán celebrates invalid referendum as 'great victory'

portfolio.hu / economy - 2016, október 3 - 09:30
Hungary’s Prime Minister Viktor Orbán has failed to convince at least 50% of the electorate to turn out at the Sunday referendum, but the majority of those who did rejected the European...
Kategóriák: Economy