Does WTO Centred Free Trade Policy Essentially Make National Industrial Policies Obsolete? Notes

North American Trade Organisation

• The increasing scale and rate of movements of finance, goods, services and people have placed increasing strains on North American policymakers to coordinate and make concessions in exchange for policy reform abroad.
• Like the WTO, NAFTA administers the implementation of a set of agreements in the goods sector, services and property rights but restricted to Canada, Mexico and the United States of America. Each of their motivations are different and all parties have had to make difficult decisions in order to make general agreements.
• Transformationalists such as Rosenau argue that the growth of ‘intermestic’ affairs define a ‘new frontier’, the expanding political, economic and social space in which the fate f societies and communities is decoded.
• Keohare considers sovereignty best understood ‘less as a territorially defined barrier than a bargaining resource for a politics characterized by complex transnational networks.”[1]
• “Contemporary regional trading arrangements have been developed to liberalise trade not build protectionist fortresses, recognising the potential benefits from freer trade but also the relative ease of reaching agreement at the regional, as opposed to the global level. While open regionalism does not appear to be leading to mercantilist trading blocs, for smaller and developing economies it is partly driven out of fear of being left out of preferential trading arrangements (Perroni, Whalley 1994). Paradoxically, negotiation of regional trade agreements is partly insurance against the possibility of regional trade blocs. The threat of regionalism has thus proved more potent than its reality”[2]

United States of America

• The rational for American policymakers for NAFTA was that as a result of its significant economy size (Mexico’s GDP was $250bn; Canada’s GDP was $569bn and the USA GDP was $6,952bn)[3] it was in a position to negotiate significant compromises out of Canadian and Mexican negotiators in order for the countries to access its market.
• The free market emphasis on both the WTO and NAFTA was seen to particularly benefit American businesses as the political, economic and businesses were culturally calibrated to take advantage of an increasingly competitive laissez-faire position. NAFTA helped to consolidate a strongly market orientated regime, weakening pre-existing national political instruments that had been developed to offset the negative aspects of markets without developing international instruments. In contrast to the EU, for instance, where a great deal of effort had been devoted to developing an institutional solution to exchange rate problems, such problems in North America are dealt with by individual government initiatives on an ad hoc basis, as was especially apparent in the Mexican pesos bailout.
• There was a need for expanding the opportunities and the scope of operation of the investors abroad. The relocation of American factories to Mexico’s free trade area was seen as a significant benefit to manufacturers as they were able to benefit from Mexico’s cheap labour pool and export to America and Canada without tariff. For American politicians this was seen as a method of reducing the flow to Mexican immigrants across the border, as the increased demand for labour in Mexico would reduce the incentive for Mexicans to cross the border.
• The widening of intellectually property rights gave “new technologies excessive profits as a result of the monopoly they are seen as interfering with the flow of knowledge to places where it is needed.”[4]
• This was to especially have an adverse effect on Canada, as its thriving generic drug industry had developed as a result compulsory licensing provisions. However, NAFTA overturned this policy, despite many Canadian’s objecting on social and economic grounds.
• These areas of dispute resolution for investment, intellectual property rights and financial service provision were the most developed in the agreement, creating an legal framework for legal resolution.
• Most other matters were, by contrast left to power politics, even compared to the mechanism in place at the WTO. Porter notes that the labour and environmental agreements are especially weak, despite reforms by Bill Clinton later. However, even he sees limits to citizens’ willingness to citizens to increase their exposure to international markets without new ways to safeguard themselves from negative effects.

Canada

• Before NAFTA Canada was unhappy with its dispute resolution procedures with American companies. Porter suggested that larger countries are able to use political power to disregard or interpret agreements as it pleases.
• For Canada and Mexico “it was important, if their increased access to the US market was to be meaningful that there be a way to address the long tradition of US firms using US anti dumping and countervailing duty measures to gain protection from foreign competition. The FTA had put in place a dispute resolution mechanism that, in its first five years, had led to two thirds of Canadian appeals of US decisions being successful, twice the success rate of appeals by other countries using the non-FTA procedures provided by the US.”[5]
• Canada was keen to gain access to US public sector contracts. Consequentially purchases above the threshold of $50,000 for federal government entities and purchases over $250,000 for federal government enterprises became open for competition. However, America was still able to retain small and minority business set asides.
• Despite opening up a large level of its influence over foreign companies Canada retained its FTA right to review major foreign takeovers above $250m and in the oil, gas and uranium sectors.

Mexico

• Hirst suggested that globalisation more often than not reflects a politically convenient rationale for implementing unpopular orthodox neoliberal economic strategies.
• At the start of the 1990s the Mexican government was faced with three choices, to remain closed, open unilaterally or develop a strategy of negotiated liberalisation. They chose negotiated liberalisation to increase domestic reform as a result of NAFTA agreements.
• However, Mexico was able to exert concessions that reflect its own priorities/ Its negotiators managed to maintain domestic ownership of the petroleum sector, in order to guarantee future energy independence.

These notes were made by Jonathan McHugh in February 2007

---

[1] D Held; A McGrew et al Global Transformations

[2] D Held, A McGrew et al Global Transformations

[3] M Cameron; B Tomlin The Making of NAFTA: How The Deal Was Done

[4] Porter, T The North American Free Trade Area

[5] Porter, T The North American Free Trade Area

To What Extent And How Do Ideas, Values and Analysis Influence Public Policy?

To What Extent And How Do Ideas, Values and Analysis Influence Public Policy?

Hmmmmmmmmmmmmmmmm….

Difficult to separate them:

Gestalt: A physical, biological, psychological, or symbolic configuration or pattern of elements so unified as a whole that its properties cannot be derived from a simple summation of its parts.

Lets Try To Look at it in terms of economic reform: Ideas?

· Comparative government authors such as Bennett and Kerr used the Convergence Thesis, which argued that as countries industrialise there is a convergence of policy as a result of similar problems being thrown up. Is that to do with values or implementation of ideas.

· Wilensky felt that these correlations were more significant than political ones in explaining the introduction of public policy

· However, the theory ignored details such as welfare efforts, this showed a divergence of policy between similar countries.

· Was Keynesian theory an example of analysis, ideas or values? Similarly Free Market economics, could that be said to have the same ratio between these concepts.

· The economy runs according to an economic cycle, with different ideologies dealing with it in different ways (values), such as Keynesianism borrowing to increase growth and relieve unemployment or the Friedmanite idea of deflating the economy to reduce inflation and increasing productivity by not giving union members extra cucumber sandwiches.

The Analysis

· But what about analysis (excluding economists using numbers (BUT DOES THAT COUNT AS ANALYSIS!?!?!?)? The proximity to elections, when people, journos, even politicians all start thinking about what everybody is doing and talking about it, we will call analysis. (Yay, a separation!) The Chancellor with his budget and other policy people all get THE FEAR, so the analysis has a bearing on them having lots of fluffy policies and friendly budgets in the runup to May 4^th.

· Anthony Downs argued that specific issues that momentarily capture public attention can result in specific demands for government. He felt though that these would usually fade away as the complexity or intractability of the problem became apparent to the public:

o “A specific attention cycle seems strongly to influence public attitudes and behaviour concerning most key domestic problems. Each of these problems suddenly leaps into prominence, remains there for a short time, and then – through still largely unresolved – gradually fades from the center of public attention.” (1972: 38) This is partly, he argues as the public gets bored of the issue, despite suffering from it

· Baumgarter and Jones suggested that “when they are portrayed as technical problems than as social questions, experts dominate the decision-making process. When the ethical, social or political implications of such policies assume center stage, a much broader range of participants can suddenly become involved.”

The Values

· Howlett and Ramesh claim that there has been a shift in government procedure. They argue that the idea that problems having an ‘objective’ existence waiting to be ‘recognised’ by governments has been replaced by the notion that the recognition is a socially constructed process, involving “definitions of normalcy and what constitutes an undesirable deviation from that status.”

· Murray Edelman (1988: 12-13) felt that problems emerge from ideologies and these create even larger divisions.

· Howlett and Ramesh point out that ideology is useful in enabling people to understand complex issues easier, especially in identifying key actors in political processes and their motivations. However, they point out that this does not necessarily translate easily into specific policy problems. They felt that scholars such as Stimson and Lewis-Beck argued that even though it can result in specific people being elected for certain positions the link to shaping policy was indirect.

· However, it was felt that principled beliefs and casual stories would have more influence on policy recognition and content.

The Funnel Of Causality

· Hofferbent and Simeon suggested that policymaking occurs within institutions, that institutions exist within prevailing sets of ideas and ideologies, ideologies within relations of power in society, and relations of power within a larger social and material environment.

· The synthetic nature of the model enables it allows for discussion between alternate viewpoints to take place, while leaving it to empirical studies to determine any direct relationship between the central variables. However, this also means that it does little to explain differences in specific cases. Howlett and Ramesh give an example, questioning how one issue might be influenced by ideas and another, for example, by governmental factors such as the environmental factors is not broached, let along resolved. Similarly, Mazmanian and Sabatier argued that the funnel of causality model says very little about how multiply-mediated general forces such as the environmental context, ideas, and economic interests are actually manifested by policy actors in the agenda-setting process.

Windows

· Kingdon suggested that there exists windows for policy reform, either through a change in the political stream or when there is a new problem. He gave four different principled window types:

o Routinized political windows, in which institutionalised procedural events dictate predictable window openings;

o Discretionary political windows, in which the behaviour of individual political actors leads to less predictable window openings;

o Spillover problem windows, in which related issues are drawn into an already open window; and

o Random problem windows, in which random events or crises open unpredictable windows.

· Like that concept, makes it easier to work out what influences policy rather than “ideas”, “values” and “analysis”. Sneer

These notes were written in February 2005

Spanish Politics Notes

Spain
• Spain’s government operates at four levels, central, regional,(for the autonomous communities), provincial and municipal
• “The separation of powers was acknowledged theoretically in the more progressive constitutions of nineteenth century Spain and clearly accepted in the Republican Constitution of 1931. Franco, however, made no pretence of following this tradition, affirming that his preference was not for the separation of powers but their unity. In practice, of course, this meant that the legislature and the judiciary played subordinate roles, becoming in effect simply instruments of an all powerful executive which was accountable to no body outside itself – in reality the executive was a tool in the hands of one man.” (Peter J Donaghy and Michael Newton, 1987)
• Whereas previously under Franco there were fifty provinces the country now had a semi-federal structure in which the powers of the state are shared with 17 newly created autonomous communities, each endowed with its own president, parliament, executive and high court of justice. In the modern history of Spain there is no precedent for such a major change in the structure of the state nor for such a fundamental shift of power from the centre to the periphery. This has been conceived as an essential ingredient of the return to democracy”
• A serious attempt has been made to create alternative region-based centres of political power which, while in the last resort subservient to the central power, enjoy a generous degree of freedom to run their own affairs.” P104
• All the states are subject not only to the Constitution, but also to their own individual statutes of autonomy.
• They have the right to draw up and approve laws, as well as the right to execute and administer them.
• Looking at public sector spending the relationship between the state and autonomous governments (including local authorities) is 50:50
• In classical federal states regions tend to assume control over a clearly defined area and inherit clearly structured institutions. Spain, on the other hand gave its regions the choice over whether or not they had autonomy and the level.
• Power is shared between national and regional governments of agriculture, cattle rearing and the maintenance of historic buildings. P1`13
• Nationalist, immigration, political asylum, defence and the armed forces, customs, and tariff barriers foreign trade; the monetary system; general economic planning; the authorisation of elections and referendums; the overall administration of justice; and the signing of international agreements and treaties.
• With the exception of the Basque country and Navarre, the other regions only enjoy a limited capacity for the self-generation of funds and the greater part of funds spent at regional level derive from central coffers. The Inter-regional Compensation Fund is also administered centrally.

These notes were created by Jonathan McHugh in March 2004