By Joshua P. Meltzer – Trade and cybersecurity are increasingly intertwined. The global expansion of the internet and increased use of data flows by businesses and consumers—for communication, e-commerce, and as a source of information and innovation—are transforming international trade. The spread of artificial intelligence, the “internet of things,” (IoT) and cloud computing will accelerate the global connectivity of businesses, governments, and supply chains.
As this connectivity grows, however, so does our exposure to the risks and costs of cyberattacks. As the President’s National Security Telecommunications Advisory Council observed, the U.S. is “faced with a progressively worsening cybersecurity threat environment and an ever-increasing dependence on internet technologies fundamental to public safety, economic prosperity, and overall way of life. Our national security is now inexorably linked to cybersecurity.
Not only are traditional defense and other national security targets at risk of cyberattack, so too is the broader economy. This includes critical infrastructure—such as telecommunications, transport, and health care—which relies on software to network services. There is also cybertheft of intellectual property (IP) and manipulation of online information. More broadly, these risks undermine business and consumer trust in the internet as a basis for commerce and trade.
Many countries are adopting policy measures to respond to the threat. According to one estimate, at least 50 percent of countries have adopted cybersecurity policies and regulations. more>
Posted in Business, Economy, Education, History, How to, Net, Technology
Tagged Broadband, Business improvement, Cybersecurity, Digital, Rules, Trade
Trade policy is upending markets—but not investment
By Steven J. Davis – Trade-policy concerns became a major source of US stock market volatility in 2018. For example, the S&P 500 fell 2.5 percent on March 22, 2018, reacting to news about just-announced US tariffs on tens of billions of dollars of Chinese imports. Four days later, the index rose 2.7 percent on news the United States and China had begun trade negotiations. Still, tariffs and tariff threats between the two countries ratcheted upward over the next several months.
This prominence marks a striking change, as demonstrated in my research with Northwestern’s Scott R. Baker, Northwestern PhD candidate Marco Sammon, and Stanford’s Nicholas Bloom. We took a systematic look at the role of trade-policy developments and other news in large daily stock market moves. We first identified every daily move of 2.5 percent or more, up or down, in the US stock market. By this criterion, there were 1,112 large daily moves from 1900 to the end of 2018.
For each large move, we read next-day news articles in the Wall Street Journal to classify perceptions of what moved the market. The WSJ attributed seven of 1,103 large moves from 1900 to 2017 mainly to news about trade policy. But in a remarkable turnabout, the newspaper attributed three of nine large moves in 2018 to trade-policy news. From a historical perspective, the prominent role of trade policy in recent US stock market swings is highly unusual.
The highly visible US–China dispute is only one of the heightened trade-policy concerns behind the pattern we chart. The US has also become enmeshed in trade-policy disputes with several other major trading partners since Donald Trump became president.
How much do these heightened concerns affect capital-investment expenditures by US businesses? Not as much as you might think. more>
Posted in Business, Economic development, Economy, Education, How to, Regulations
Tagged Business improvement, Capital, Chicago Booth, Investment, Policy, Stock market, Trade
By David Dollar and Zhi Wang – Two-thirds of world trade now occurs through global value chains that cross at least one border during the production process, and often many borders. As a result, the typical “Chinese product” that the United States imports has a lot of value-added from countries other than China.
Furthermore, in computers and electronics, more than half of China’s exports come from multinational firms operating in China.
U.S. firms are also involved in production chains. Thirty-seven percent of U.S. imports from China are intermediate products used by American firms to make themselves more competitive. Putting tariffs on intermediate products is shooting oneself in the foot. The list of targeted products posted by the United States includes some intermediates, such as aircraft propellers.
Many of the targeted products are consumer goods such as televisions and dishwashers.
What all this means is that tariffs are a very poor instrument for punishing China for any unfair trading practices. Some of the cost will be borne by American consumers; some by American firms that either produce in China or use intermediate products from China; some by firms in countries (mostly U.S. allies) that supply China; and some by Chinese firms (mostly private ones). more>
Posted in Business, CONGRESS WATCH, Economic development, Economy, History, Net, Product, Regulations, Technology, Transportation
Tagged Business, Government, Jobs, Manufacturing, Regulations, Technology, Trade, United States
By Nathan Lewis – There are a lot of issues surrounding trade – for example, the tendency of trade agreements to come attached with globalist institutions that erode national sovereignty. The European Coal and Steel Community (1951) not only allowed trade in coal and steel, it introduced a whole new supranational government structure, including three branches of government and a parliamentary body, that later grew into the European Union. This sort of thing should be avoided with extreme prejudice.
Today’s environment of floating fiat currencies introduces new problems. The devaluation of the Mexican peso in 1995, shortly after the passage of the North American Free Trade Agreement in 1994, caused all sorts of hardship for U.S. competitors that cannot be attributed to any meaningful “comparative advantage.”
At present, gross exports of goods and services are about 80% of gross imports. The 20% difference is the “trade deficit.” Today, gross exports of goods and services are greater than at any time before 2007 – around 12% of GDP. We don’t seem to have any trouble selling our wares to foreigners. We are selling more to foreigners than ever. In the 1960s, when the U.S. had a trade surplus, total exports were about 5% of GDP. Imports, of course, were less than this.
If the amount we sell to foreigners has been steadily rising, why can’t we manage to run a trade surplus? more> https://goo.gl/oiM9eC
Posted in Banking, Business, Economic development, Economy, History, Media
Tagged Currency, Deficit, Export, Import, Surplus, Trade
By Barry C. Lynn – Back in the 1990s, advocates of liberalizing U.S. trade with China said economic interdependence would inevitably lead to peaceful coexistence.
Washington must now address the fundamental flaws in the international trade system that gave China such a big advantage. The White House claims the proposed Trans-Pacific Partnership will help offset China’s increasing heft. Unfortunately, the pact, which includes 11 Pacific Rim allies but excludes Beijing, will do nothing to fix the problems.
The fact that the global trading system is not working as promised is most dramatically evident in the seas around China. Beijing is engaged in a pattern of provocation bordering on recklessness. more> http://tinyurl.com/o6oj3d5
Posted in Business, CONGRESS WATCH, Economic development, Economy, History, Leadership, Media, Regulations
Tagged Business, Capital, Government, Industrial economy, Jobs, Leadership, Regulations, Trade, United States
By Kemal Derviş – Trade negotiations are hard enough to conclude. The need to wrestle with macroeconomic-policy issues could easily cause talks to bog down — and give protectionist lobbies the political ammunition they need.
None of this means that macroeconomic policies that affect exchange rates are not problematic. They are.
But trade negotiations are not the right forum for discussing the causes and consequences of current-account imbalances and reaching agreements on macroeconomic-policy coordination; that is what the IMF  and the G-20  are for. more> http://tinyurl.com/odk45wc
Posted in Business, CONGRESS WATCH, EARTH WATCH, Economic development, Economy, Education, Leadership, Regulations
Tagged Banking reform, Capital, Financial crisis, Government, Monetary policy, Regulations, Super regions, Trade