442 Russia, China & Iran see reliance on US hardware, software & IT services as a security risk

Russia, China & Iran see reliance on US hardware, software & IT services as a security risk

(1) Iran, Russia & China see reliance on US hardware, software & IT services as a security risk
(2) Hong Kong an offshore centre for renminbi trade settlement
(3) Renminbi will be world’s reserve currency
(4) Opening ceremony of Beijing Olympics featured quotations from Confucius - not Mao
(5) Obama offers UNSC seat to India if it punishes Burma & Iran; but India is courting Burma to neutralise China
(6) GM sold its factory for making rare-earth batteries to China
(7) Amazing satellite images of the Ghost Cities of China
(8) US promotes Trans-Pacific Partnership free-trade deals to counter China
(9) Trans-Pacific Partnership overrides Government policy & Parliamentary responsibilities
(10) Trans-Pacific Partnership is a US-centric investor's agreement benefiting large (mostly foreign) corporations
(11) Australia–US Free Trade Agreement benefited US, not Australia

(1) Iran, Russia & China see reliance on US hardware, software & IT services as a security risk

From: chris lenczner <chrispaul@netpci.com> Date: 09.01.2011 02:50 AM
Subject: Beijing and Moscow see American information technology as a threat.

A Walled Wide Web for Nervous Autocrats - WSJ.com

8 Jan 2011

http://online.wsj.com/article/SB10001424052748704415104576065641376054226.html?

At the end of 2010, the "open-source" software movement, whose activists tend to be fringe academics and ponytailed computer geeks, found an unusual ally: the Russian government. Vladimir Putin signed a 20-page executive order requiring all public institutions in Russia to replace proprietary software, developed by companies like Microsoft and Adobe, with free open-source alternatives by 2015.

The move will save billions of dollars in licensing fees, but Mr. Putin's motives are not strictly economic. In all likelihood, his real fear is that Russia's growing dependence on proprietary software, especially programs sold by foreign vendors, has immense implications for the country's national security. Free open-source software, by its nature, is unlikely to feature secret back doors that lead directly to Langley, Va.

Nor is Russia alone in its distrust of commercial software from abroad. Just two weeks after Mr. Putin's executive order, Iran's minister of information technology, citing security concerns, announced plans for a national open-source operating system. China has also expressed a growing interest. When state-owned China Mobile recently joined the Linux Foundation, the nonprofit entity behind the most famous open-source project, one of the company's executives announced—ominously to the ears of some—that the company was "looking forward to contributing to Linux on a global scale."

Information technology has been rightly celebrated for flattening traditional boundaries and borders, but there can be no doubt that its future will be shaped decisively by geopolitics. Over the past few years, policymakers around the world have had constant reminders of their growing dependence on—and vulnerability to—the new technology: the uncovering of the mysterious China-based GhostNet network, which spied on diplomatic missions around the globe; the purported crippling of Iran's nuclear capability by the Stuxnet virus; and, of course, the whole WikiLeaks affair. Governments are taking a closer look at who is providing their hardware, software and services—and they are increasingly deciding that it is dangerous not to develop independent national capabilities of their own.

Open-source software can allay some of these security concerns. Though such systems are more democratic than closed ones, they are also easier to manipulate, especially for governments with vast resources at their command. But open-source solutions can't deal with every perceived threat. As Google learned, the Chinese government continues to see Western search engines as a challenge to its carefully managed presentation of controversial subjects. Similarly, email can be read by the host government of the company offering the service, and the transmission of sensitive data can be intercepted via secret back doors and sent to WikiLeaks or its numerous local equivalents.

For these reasons, more governments are likely to start designating Internet services as a strategic industry, with foreign firms precluded from competing in politically sensitive niches. The Turkish government has emerged as the leading proponent of such "information independence," floating the idea of both a national search engine and a national email system. Authorities in Russia, China and Iran have debated similar proposals.

Judging by last year's standoff between the BlackBerry maker Research in Motion and the governments of India, Saudi Arabia and the United Arab Emirates, questions of access also will play a growing role in shaping technology. If a government suspects that the U.S. National Security Agency has arranged to be able to retrieve private emails sent with BlackBerry's secure encryption technology, it starts to wonder why it doesn't have similar streams of intelligence data, from BlackBerry as well as from services like Gmail and Skype. At a minimum, more governments will demand that data servers base their operations in their own jurisdictions, inconveniencing global Internet companies that have based their business plans on the assumption that they could run their Indian operations from Iowa.

The real Internet trade wars will begin once Russian and Chinese technology giants, with their poorly veiled government connections and piles of cash, come looking for American and European acquisitions. How will officials in Washington or Brussels react when China's Tencent (with a market capitalization of $42 billion, almost twice that of Yahoo) or Russia's Yandex makes a bid for AOL or Skype?

Painful decisions will need to be made soon. The Russian company Digital Sky Technologies, owned by a Kremlin-friendly oligarch, has a nearly 10% stake in Facebook and a 5% stakes in such hot Web properties as Zynga and Groupon. What will happen once Russian or Chinese firms seek to purchase a stake in companies like Google (a contractor to the National Geospatial Intelligence Agency) or Amazon (which caters to nearly 20 U.S. government agencies through its Web hosting services)?

The unpleasant effects of this rising nationalism are already evident in the case of hardware exports. When Sprint Nextel began considering bids from China's Huawei and ZTE Technologies in 2010 for a projected $5 billion upgrade of its network, a group of American senators wrote to the company's chief executive, expressing their concern that Huawei might be subject to "significant influence by the Chinese military" and that communications in the U.S. could be "disrupted, intercepted, tampered with, or purposely misrouted." Sprint Nextel turned down the bids. The European Union recently announced plans to create an authority similar to the U.S. Committee on Foreign Investment to specifically vet approaches from China's technology giants.

Even if they are spurned by the U.S. and Europe, China's tech giants are likely to resurface elsewhere. For several years China has been using its huge cash reserves to hand out loans—mostly to governments in Africa, but also to neighbors like Cambodia—with the condition that those governments only do business with China's telecom companies. With or without secret access to that data, the fact that China controls so much of the communications infrastructure in the developing world gives it political leverage.

At the same time, Yota, a partly state-owned Russian telecom provider, has been trying to build a base in Latin America, launching its 4G service in Nicaragua and, soon, in Peru. Other Russian companies are busy building (or buying up) the telecom infrastructure in the former Soviet republics, perhaps in a bid to do for the Internet what Russia's gas giant Gazprom has done for energy: build up physical infrastructure and then use it as a tool of political leverage.

What does all of this mean for the future of America's technology industry? If China's expansion into Africa and Russia's into Latin America and the former Soviet Union are any indication, Silicon Valley's ability to expand globally will be severely limited, if only because Beijing and Moscow have no qualms about blending politics and business.

The global triumph of American technology has been predicated on the implicit separation between the business interests of Silicon Valley and the political interests of Washington. In the past, foreign governments have rushed to install the latest version of Microsoft Office or Google's Chrome browser because it was hard to imagine that Washington would tinker with technology to advance its strategic interests.

But just a few weeks before Mr. Putin publicly endorsed open-source software, FBI Director Robert Mueller toured Silicon Valley's leading companies to ask their CEOs to build back doors into their software, making it easier for American law enforcement and intelligence gathering agencies to eavesdrop on online conversations. The very possibility of such talks is likely to force foreign governments to reconsider their dependence on American technology. Whatever the outcome of Washington's engagement with the Internet, Silicon Valley will be the one to bear the costs.

For ordinary Internet users, there is one silver lining: The embrace of open-source technology by governments may result in more intuitive software applications, written by a more diverse set of developers. The possible downside is that the era of globally oriented services like Skype may soon come to an end, as they are replaced by almost certainly less user-friendly domestic alternatives that would provide secret back-door access. As governments seek to assert control, companies will be providing fewer and fewer guarantees about both data security and access by third parties—such as governments.

The irony in these developments is hard to miss. Information technology has been one of the leading drivers of globalization, and it may also become one of its major victims. — Evgeny Morozov is a visiting scholar at Stanford University and a fellow at the New America Foundation. His new book is "The Net Delusion: The Dark Side of Internet Freedom."

(2) Hong Kong an offshore centre for renminbi trade settlement

http://www.ft.com/cms/s/0/abc63d14-0e92-11e0-b9f1-00144feabdc0.html

Hong Kong acts to ease renminbi capital flows

By Rahul Jacob in Hong Kong

Published: December 23 2010 13:39 | Last updated: December 23 2010 13:39

Hong Kong’s de facto central bank has announced measures designed to ease capital flows of the renminbi for companies seeking to conduct trade in the Chinese currency.

The changes, unveiled on Thursday, came as part of the island’s move to enhance its role as an offshore centre for renminbi trade settlement.

(3) Renminbi will be world’s reserve currency
By Qu Hongbin

Published: November 10 2010 15:11 | Last updated: November 10 2010 17:42

http://www.ft.com/cms/s/0/392e077e-ecdb-11df-88eb-00144feab49a.html

If there is to be a rival to the dollar as the world’s reserve currency in the 21st century, it must surely be the Chinese renminbi, says Qu Hongbin, chief China economist at HSBC.

“We could be on the verge of a financial revolution of truly epic proportions,” he says.

“China’s aim of internationalising the renminbi has no doubt been helped by America’s pursuit of quantitative easing, a policy that many emerging nations have interpreted as an attempt to export US economic problems via a weaker dollar. Whether or not this is so, it will surely only encourage governments, reserve managers and companies to think about alternatives to the dollar.”

The increasingly important role in the global economy played by emerging markets will be crucial, he says.

“Emerging markets now account for 55 per cent of China’s total trade, and this is likely to rise rapidly. A switch from the dollar to the renminbi for trade settlement would be an appealing option for EM nations – and we expect at least half China’s trade flows with EM countries to be settled in renminbi within five years, making it one of the top three global trading currencies.

“Given China’s economic and trade power, as it moves closer towards full currency convertibility, it will become increasingly natural for the renminbi to be seen as a reserve currency. The world is slowly, but surely, moving from greenbacks to redbacks.”

(4) Opening ceremony of Beijing Olympics featured quotations from Confucius - not Mao

From: IHR News <news@ihr.org> Date: 27.12.2010 04:00 PM

The Useful Sage: Rehabilitation of Confucius in China
Daniel K. Gardner
http://articles.latimes.com/2010/oct/01/opinion/la-oe-gardner-confucius-20101001

What Confucius says is useful to China's rulers

The venerable sage's teachings have enjoyed a revival in 21st century China because they serve the communist regime well politically.

October 01, 2010 | By Daniel K. Gardner

Confucius, the venerable sage who lived in the 6th century BC, is enjoying a 21st century revival. His rehabilitators? The Chinese Communist Party. Yes, that party, the one celebrating the 61st anniversary of the founding of the People's Republic of China on Oct. 1. The same party whose chairman, Mao Tse-tung, vilified Confucius' "stinking corpse" during the Cultural Revolution and ordered the Red Guards to destroy all temples, statues, historical landmarks and texts associated with the sage. But, as China turns 61, the Great Helmsman is out and Confucius, who would have turned 2,561 on Sept. 28, is in.

As early as February 2005, the Beijing leadership began endorsing the sage's teachings again, citing him approvingly in a speech delivered to the National Congress by President Hu Jintao: "Confucius said, 'Harmony is something to be cherished.' " Since then the terms "harmonious society" and "harmonious world" have become mantras of the party leaders and the basis of their domestic and foreign policies. During the opening ceremonies of the 2008 Olympics, the world was greeted not by quotations from Mao's Little Red Book but by warm homilies from the teachings of Confucius. ...

Confucius promises a government that cares for the people, that makes their well-being its primary concern. This is to govern by virtue. And virtue creates its own legitimacy: paternalistic, affectionate care of the people by the rulers is sure to be reciprocated by the people's trust and obedience. Hu Jintao's appropriation of the language of Confucianism not only fills the ideological void left by Marxist-Leninism's demise but also suggests to the governed that, in seeking to create a harmonious society and a harmonious world, he and other officials take their "Confucian" responsibility of moral leadership to heart. Their expectation is that the people, in turn, will place trust in the government and be obedient to it, with minimal dissent. ...

Daniel K. Gardner is a professor of history and the director of the program in East Asian studies at Smith College.

(5) Obama offers UNSC seat to India if it punishes Burma & Iran; but India is courting Burma to neutralise China

From: WVNS <ummyakoub@yahoo.com> Date: 10.11.2010 10:15 AM

Obama pushes India against Iran, Myanmar

http://public.dawn.com/2010/11/09/support-promised-for-unsc-ambition-obama-pushes-india-against-iran-myanmar.html

NEW DELHI, Nov 8: Dangling the promise of UNSC membership to India, albeit at some time in the future, US President Barack Obama urged New Delhi on Monday to first deliver on Washington's punitive prescriptions against Iran and Myanmar.

He also told a special sitting of parliament's two houses that although Pakistan needed to do more to curb safe havens of terrorism on its territory, the world also recognised that everyone had an interest in both an Afghanistan and a Pakistan that were stable, prosperous and democratic – "and none more so than India".

Mr Obama's prescription for India on Myanmar's human rights woes showed glimpses of hectoring, though he studiously avoided commenting on rights abuses in Jammu and Kashmir.

In fact, the Kashmir issue was not on his agenda at all, until an American journalist goaded him to comment on the dispute during a brief press interaction with Prime Minister Manmohan Singh. Mr Obama thus described Kashmir as an old dispute that needed to be addressed by the people of India and Pakistan. Dr Singh responded by saying that he was not afraid of discussing the "K" word with Pakistan though he would prefer it if Islamabad desisted from exploiting terror to press its policies.

However, Mr Obama lectured India on ways to deal with Myanmar and Iran, virtually as a dry run to prove its worthiness before becoming eligible for the UNSC seat some time in the future.

The United States and India can partner for global security – especially as India serves on the Security Council over the next two years, Mr Obama said.

"We look forward to working with India – and other nations that aspire to Security Council membership – to ensure that the Security Council is effective; that resolutions are implemented and sanctions are enforced; and that we strengthen the international norms which recognise the rights and responsibilities of all nations and individuals…This includes our responsibility to prevent the spread of nuclear weapons."

Mr Obama said that together, the United States and India could pursue their goal of securing the world's vulnerable nuclear materials. "We can make it clear that even as every nation has the right to peaceful nuclear energy, every nation must also meet its international obligations – and that includes the Islamic Republic of Iran. And together, we can pursue a vision that Indian leaders have espoused since Independence – a world without nuclear weapons."

He then spoke of strengthening the foundations of democratic governance, "not only at home but abroad". Myanmar was in his cross hairs.

"When peaceful democratic movements are suppressed – as in Burma – then the democracies of the world cannot remain silent. For it is unacceptable to gun down peaceful protesters and incarcerate political prisoners decade after decade. It is unacceptable to hold the aspirations of an entire people hostage to the greed and paranoia of a bankrupt regime. It is unacceptable to steal an election, as the regime in Burma has done again for all the world to see."

Mr Obama said that faced with gross violations of human rights, it was the responsibility of the international community – especially leaders like the United States and India – to condemn it. He then advised India on its mission to spread democracy in the neighbourhood.

"If I can be frank, in international fora, India has often avoided these issues. But speaking up for those who cannot do so for themselves is not interfering in the affairs of other countries. It's not violating the rights of sovereign nations. It's staying true to our democratic principles. It's giving meaning to the human rights that we say are universal. And it sustains the progress that in Asia and around the world has helped turn dictatorships into democracies and ultimately increased our security in the world."

Of late, despite initial support to pro-freedom parties, India had been wooing Myanmar's military rulers to neutralise Chinese influence there. Mr Obama's demands are bound to leave it in a quandary.

On Afghanistan, he said the US strategy to disrupt, dismantle and defeat Al Qaeda and its affiliates had to succeed on both sides of the border. "That is why we have worked with the Pakistani government to address the threat of terrorist networks in the border region. The Pakistani government increasingly recognises that these networks are not just a threat outside of Pakistan – they are a threat to the Pakistani people, who have suffered greatly at the hands of violent extremists."

The United States would continue to insist to Pakistan's leaders that "terrorist safe-havens within their borders are unacceptable, and that the terrorists behind the Mumbai attacks be brought to justice. We must also recognise that all of us have an interest in both an Afghanistan and a Pakistan that is stable, prosperous and democratic – and none more so than India".

(6) GM sold its factory for making rare-earth batteries to China

http://www.smh.com.au/opinion/politics/scare-over-rareearth-minerals-underlines-fear-of-a-rising-china-20100927-15u0j.html

Scare over rare-earth minerals underlines fear of a rising China

Date: September 28 2010
Peter Hartcher

For a panicked moment last week, it seemed China had decided to cut off exports to Japan of a little-known, yet vital, ingredient in everything from iPhones to cruise missiles and wind turbines.

The report by London's Industrial Metals magazine, taken up by The New York Times, was quickly proved false. But the scare riveted much attention on China's quiet near-monopolisation of the raw material for the high-tech industries - rare-earth elements.

China controls 97 per cent of the global output, according to the US Government Accountability Office. Rare-earth minerals are 17 metals whose magnetic properties allow the manufacture of light-weight, super-miniaturised components. They are essential for gadgets such as iPods and digital cameras, flat-screen TVs and smartphones.

They are key to military hardware such as the laser guidance systems in the US F-22 Raptor fighter jet, and are indispensable in renewable energy technologies such as batteries for electric cars, wind turbines and high-efficiency light bulbs.

A Chinese stockbroking analyst, Min Li of Yuanta Securities, was quoted by Reuters as saying: "Rare earth for China is like oil to the Middle East." Except China's rare-earth dominance makes the OPEC cartel, controlling 40 per cent of global oil, look like a wide-aisle 24/7 supermarket by comparison.

The Pentagon is studying potential US military vulnerability. According to The Wall Street Journal, a US military research analyst has written in the Joint Force Quarterly that "China appears to be holding an unlikely trump card". A US Congressional committee is holding an inquiry of its own.

Although China is not blackbanning Japan, it is tightening its shipments of rare-earth ores. It has gradually limited exports since 2005, and last month it cut export quotas for 2010 by 40 per cent because, it said, its domestic industries needed them.

A scary example of the sinister side of China's gathering power? Three quick points.

First, rare earths are not especially rare. Some are more plentiful in the ground than tin. They were named because, before World War II, there was no known method for mass extraction. When scientists worked it out, they put europium in TV sets to give us red. Colour TV was born.

Second, China has a near-monopoly of output, but not of reserves. China has 59 per cent share of known reserves, but the rest is under the ground in Australia, Canada, the US and India, among others.

Australia has Arafura Resources (25 per cent owned by a Chinese state-controlled company) and, until the mid-1980s the world's dominant producer was a US mine at Mountain Pass in California, which closed down years ago.

It's just that China is the country doing the most digging. Why? Price. This is the third point. China is the lowest-cost producer. It flooded the world market with cheap rare earths. From 1990 to 2008, it boosted exports by an extraordinary 1000 per cent, and this pushed down export prices by 60 per cent. Mines elsewhere shut down, points out an Australian expert on mining and energy, Mike Komesaroff.

One of the reasons China is such a low-cost producer? It's a filthy process, and China has been lax with environmental policing. Large tracts of land have been ruined by toxic tailings laced with radioactive waste. Many workers have been harmed.

As global demand grows and Chinese supply tightens, other mines in other countries will become profitable. The market will supply a solution. The owner of Mountain Pass, Molycorp Inc, has plans to reopen by 2012. In other words, don't panic.

Beijing's real cleverness is not in cornering the rare-earths market. That's standard, old-fashioned predatory pricing. It has paid a serious environmental and human price for a temporary advantage. It's not even a big trade, worth only $US1.5 billion ($1.56 billion) a year at current prices.

The truly smart Chinese move is how it has put this advantage to use as a lure to encourage foreign companies to move manufacturing to China.

With tax rebates and other mechanisms, the authorities have made rare-earth elements 31 per cent cheaper to a foreign company that makes, say, wind turbines, in China instead of at home.

That, plus China's $US150 billion investment in wind turbines, means it is rapidly becoming the world leader in a renewable energy industry with tremendous growth potential. Likewise, its rare-earth advantage plus a $US29 billion investment in research supporting electric cars will help cement its lead in another growth sector.

America's General Motors was once the leader in making rare-earth batteries for electric cars. With the Pentagon, it perfected the technique used in Toyota's Prius. But GM saw no future for it, and sold the factory to China.

In 2002, the new owner rebuilt it in China. "Not only did the US lose its rare-earth production capacity, it also threw away its technological lead," Komesaroff says. This is the real lesson. China is an adaptive learner, combining multiple elements of policy to pursue a technological, commercial and economic advantage. It uses state-owned firms but also tax policy, research and development policy, the banking system and much more, the octopus-like arms of a centralised strategy.

What's missing? Beijing is not relying on cheap labour. China's success has already pushed its factory wages way above those of Vietnam and others.

Should we be worried?

China wants what Australia, Japan, the US and others already have - a rich country with high living standards. There's nothing sinister about that.

The open question is how China will deploy its wealth. China has developed under the rubric of "peaceful rise". What happens when it is risen?

Peter Hartcher is the Sydney Morning Herald's international editor.

(7) Amazing satellite images of the Ghost Cities of China

Chandni Rathod and Gus Lubin  |  Dec. 14, 2010, 4:15 PM

http://www.businessinsider.com/pictures-chinese-ghost-cities-2010-12

The hottest market in the hottest economy in the world is Chinese real estate. The big question is how vulnerable is this market to a crash.

One red flag is the vast number of vacant homes spread through China, by some estimates up to 64 million vacant homes.

We've tracked down satellite photos of these unnerving places, based on a report from Forensic Asia Limited. They call it a clear sign of a bubble: "There’s city after city full of empty streets and vast government buildings, some in the most inhospitable locations. It is the modern equivalent of building pyramids. With 20 new cities being built every year, we hope to be able to expand our list going forward.

Click here to see the ghost towns <http://www.businessinsider.com/pictures-chinese-ghost-cities-2010-12?slop=1#slideshow-start>

(8) US promotes Trans-Pacific Partnership free-trade deals to counter China

http://www.radioaustralia.net.au/pacbeat/stories/201011/s3066983.htm

Concerns raised about Trans-Pacific Partnership trade deal

Updated November 15, 2010 17:54:35

The US-backed free trade arrangement known as the Trans-Pacific Partnership has emerged from the APEC leaders summit over the weekend as the region's main vehicle for future tariff reductions.

As business groups welcomed the news, academics, unions and consumers groups in Australia, New Zealand and United States are warning about the hidden dangers.

BA: Professor Jane Kelsey, from Auckland University, speaking with Jemima Garrett. and Professor Kelsey's new book is called 'No Ordinary Deal: Unmaking the Trans-Pacific Partnership. It will be lauched in Sydney tonight.

GARRETT: APEC leaders endorsed plans to create and Asia Pacific Free Trade zone. While they did not mention the Trans Pacific Partnership, or TPP, it's now the only trade vehicle on offer.

So far 9 countries have signed up for TPP negotiations - Australia, Brunei, Chile, New Zealand, Singapore, Peru, the United States, Vietnam and Malaysia.

Pat Ranald, Convenor of the Australian Fair Trade and Investment Network, says the Trans Pacific Partnership threatens the ability of governments to make regulations to protect vulnerable consumers.

RANALD: Our big concern is that the US corporate organisations of business organisations are still saying that they want more changes to the pharmaceutical benefit scheme, they don't want our price controls on medicines, they want an end to things like GE labelling, labelling of GE food and they want more changes to Australian content rules in areas like film and television and other media. They are still seeing all these things as barriers to trade, which they can tackle through such an agreement.

GARRETT: Consumer, environmental and labour groups are also concerned about new rights the Trans Pacific Partnership might give to business the to sue governments that impose rules that damage their investments.

Lori Wallach, Director of the Global Trade Watch division of the Washington-based consumer advocacy group, Public Citizen, says the US has had a bad experience with similar arrangements in the North American Free Trade Agreement.

WALLACH: Four hundred million dollars has been paid out to corporations over a tax on the most basic regulatory policy of zoning and licences and bans on toxics, even court case rulings, the court systems, a violation of the new trade agreement, investor rights. But then in addition, we have had to defend all of these cases, as have Mexico and Canada, millions of taxpayer dollars have been spent in this nuisance defences and now increasingly, when one of the corporations attacks, using the so-called trade agreement investor rights, ...... initiative, so Canada's plain packaging law for tobacco was attacked with a .....and they rolled back

GARRETT: At the APEC meeting in Yokohama, the Japanese Prime Minister, Naoto Kan, said Japan is considering joining the Trans-Pacific Partnership negotiations and, for the first time suggested his country, would be willing to give way on agriculture.

Fair Trade advocate and Auckland University Law Professor, Jane Kelsey, says more debate is needed.

PROFESSOR JANE KELSEY: All of the furore around Japan and thinking that Japan will come in. Some of us actually would be quite pleased if Japan came in, because it would slow the process down and it would generate some debate about what this is about. But the notion that this could be an APEC wide FTA I think the statement that came out from the APEC leaders just yesterday has shown that that's a remote and highly unlikely outcome even decades ahead. Yet certainly in talking to our negotiators, it's being used as the justification for a deal that has really no other rationale.

GARRETT: In the United States, the impact of the global financial crisis has swelled Republican and Democratic opposition to new free trade deals, but as Lori Wallach points out, President Obama's enthusiasm for the the Trans Pacific Partnership has other motives.

PROFESSOR JANE KELSEY: The TTP and the administration's obsession with a clear free trade agreement is all geo-political, which is to say from the administrations perspective, they see it as a way to counter China. It's about foreign policy.

GARRETT: The ailing Doha round of world trade negotiations was supposed to help developing countries but now more US effort is focussed on the Trans Pacific partnership.

Jane Kelsey says the content of the TPP needs rethinking.

PROFESSOR JANE KELSEY: This agreement is being promoted as an agreement for the 21st century. What are the challenges for the 21st century? Climate change, resource depletion, financial instability, inequalities, the whole range of issues we have in the Pacific debates all the time. This is an opportunity to rethink what a trade agreement for the 21st century might mean. Instead, we're having the same recycled economic rationalised kind of model and that's the last thing the Pacific Island governments and people need to experience. And I think there are very positive signs coming out from the Pacific, that the leaders are actually thinking twice about engaging with that model.

GARRETT: Many of the Pacific Islands main trading partners will become part of the Trans Pacific partnership if it goes ahead. Will that cause problems for them?

PROFESSOR JANE KELSEY: I think the problems will arise on a number of fronts. One obviously is Australia and New Zealand's pressure on PACER Plus. But the second is the influence of China within the Pacific and obviously part of Australia and New Zealand's objectives with PACER Plus is similar to the US objective with the TPP of neutralising China's interests.

(9) Trans-Pacific Partnership overrides Government policy & Parliamentary responsibilities

http://www.aprnet.org/news/449-no-ordinary-deal

No Ordinary Deal

Unmasking the Trans-Pacific Partnership Free Trade Agreement

edited by Jane Kelsey

The Trans-Pacific Partnership is no ordinary free trade deal. Billed as an agreement fit for the twenty- first century, no one is sure what that means. For its champions in New Zealand a free trade agreement with the US is a magic bullet – opening closed doors for Fonterra into the US dairy market. President Obama sells it as the key to jobs and economic recovery, while protecting home markets. Australia hails it as a foundation stone for an APEC-wide free trade agreement.

None of these arguments stacks up. All nine participant countries except Vietnam are heavily liberalised, deregulated and privatised.* They already have many free trade deals between them. Who really believes that US dairy markets will be thrown open to New Zealand, or that China, India and Japan will sign onto a treaty they had no role in designing?

No Ordinary Deal unmasks the fallacies of the TPPA. Experts from Australia, New Zealand, the US and Chile examine the geopolitical and security context of the negotiations and set out some of the costs for New Zealand and Australia of making trade-offs to the US simply to achieve a deal.

'Trade' agreement is a misnomer. The TPPA is not primarily about imports and exports. Its obligations will intrude into core areas of government policy and Parliamentary responsibilities. If the US lobby has its way, the rules will restrict how drug-buying agencies Pharmac (in New Zealand) and the Pharmaceutical Benefits Scheme (in Australia) can operate, and the kind of food standards and intellectual property laws we can have. Foreign investors will be able to sue the government for measures that erode their investment. The TPPA will govern how we regulate the finance industry or other services, along with our capacity to create jobs at home.

Above all, No Ordinary Deal exposes the contradictions of locking our countries even deeper into a neoliberal model of global free markets – when even political leaders admit that this has failed. ...

(10) Trans-Pacific Partnership is a US-centric investor's agreement benefiting large (mostly foreign) corporations

http://www.kiwipolitico.com/2010/11/the-perils-of-trading-down/

The Problem with Trading Down.

Posted on 10:13, November 9th, 2010 by Pablo

Jane Kelsey's latest book on trade, an edited collection titled No Ordinary Deal, was launched last night in Auckland. Other launches will follow in Hamilton, Wellington and Christchurch this week before the road show heads to Australia. As a contributor to the book I attended the launch and enjoyed the speech given by another contributor, Lori Wallach, a trade specialist at the US research institute Public Citizen (founded by Ralph Nader in 1971). Lori, who wrote the chapter on the US domestic agenda and approach to the so-called Trans-Pacific Partnership (TPP) negotiations, noted that the model for the TPP is not the General Agreement on Tarriffs and Trade (GATT) but instead the North American Free Trade Agreement (NAFTA), which essentially is an investor's guarantee agreement rather than one about free trade per se.

In her chapter and her speech, Lori noted that among many other downsides to the TPP, it would exempt foreign investors from domestic regulations in NZ, and should the investor be made to comply with those regulations by court order, the costs of compliance would be borne by the NZ taxpayers in the form of mandatory compensation. She went on to note how local pharmaceutical regulations and control boards would be circumvented in favour of US drug company standards, and explicated the dumping and market monopolisation efforts of US agri-businesses under this type of trade regime. As a sidebar she noted how NZ dairy exports would not appreciably increase to the US under the agreement, as well as the fact that the recent midterm elections have ridden on a backlash against trade because of presumed US job losses tied to it, which means that the possibility of the US ratifying the TPP in the next two years under the new congressional leadership (even if negotiations are concluded, which itself is unlikely) are improbable at best. Her basic premise was that she would not object to the TPP if it were about free trading of goods and services as per the Ricardian ideal. What she objects to is the use of free market rhetoric to cloak cross-border commercial arrangements that are less than free or fair and which contain pernicious costs for smaller national partners and wage labour-dependent consumers in general.

The bottom line is that the TPP is fraught and the public need to be aware of the very large downside to it. It is not a genuine "free trade" agreement in the proper sense of the term. Instead, it is a US-centric investor's agreement skewed in favour of large (mostly foreign) corporate interests rather than consumers and local producers. ...

(11) Australia–US Free Trade Agreement benefited US, not Australia

http://en.wikipedia.org/wiki/Australia_%E2%80%93_United_States_Free_Trade_Agreement

Australia – United States Free Trade Agreement

In the year following the agreement, Australian exports to the U.S. declined, while U.S. exports to Australia increased. This followed the International Monetary Fund's prediction that the Australia-United States FTA would shrink the Australian economy marginally because of the loss of trade with other countries. The IMF estimated $US5.25 billion of extra U.S. imports entering into Australia per year under the FTA, but only $US2.97 billion of extra Australian exports to the U.S. per year.[13] However, it remains unclear whether or not Australia's worsening trade deficit with the United States can be solely attributed to the FTA. It may have been a lagged effect of an appreciation of the Australian dollar against the US dollar between 2000 and 2003.

For the U.S., the FTA improved the overall trade deficit situation, creating a trade surplus with Australia which rose 31.7% in the first quarter of 2005, compared to the same timeframe in 2004. U.S. exports to Australia increased 11.7% in the first quarter of 2005 to nearly $3.7 billion for the quarter. Agriculture exports to Australia increased 20%.

According to Australian Department of Foreign Affairs and Trade figures the imbalance in trade between the U.S. and Australia increased substantially during 2007. The United States became Australia's largest import source, with goods and services imported to a value of over AU$31 billion. Australia's exports to the U.S., however, amounted to only $15.8 billion AU.[14] It remains unclear what, if any, real benefits the agreement has produced.

This page was last modified on 12 November 2010 at 00:30.