Tag Archives: World Trade Organization

A New WTO Deal

WTO Director General Roberto Azevedo presides over the meeting in Bali, Indonesia.

WTO Director General Roberto Azevedo presides over the meeting in Bali, Indonesia.

After years of stalled negotiations, the World Trade Organization concluded its first trade deal in more than a decade last week. The agreement, signed in Bali, Indonesia, could increase the value of global trade by $1 trillion and create as many as 20 million jobs, according to a report by the Peterson Institute for International Economics. The Bali package would harmonize border standards, making international trade less cumbersome—a process known as “trade facilitation.” It also includes provisions permitting developing countries to expand subsidies to their agricultural sector and provides support for developing countries to implement the trade facilitation provisions. But the agreement has widely been critiqued by development experts, who observe that the key provisions of the Doha Development Agenda—liberalization of agricultural trade, access to essential medicines, and other pro-development trade policies—were not included in the current agreement.

Bali was widely seen as a “make-or-break” moment for the World Trade Organization, which has been stalled since the Doha Round was launched 12 years ago. In the meantime, bilateral trade negotiations have proliferated, threatening to make the WTO less relevant. The agreement is seen as an important boost for the WTO, helping to repair its image in international trade circles. But parties remain very far apart in addressing the most important questions in the Doha Round, and it remains unclear whether or not the WTO will be able to translate the progress it made in the Bali Agreement into a broader consensus on the more complicated—and politically challenging—questions it still must address, including farm subsidies, tariffs on industrial goods, and liberalization of trade in services.

What do you think? Does the conclusion of the Bali Agreement signal a shift towards a more multilateral approach to trade liberalization? Or does the agreement represent the limits of the WTO and reinforce the trend towards bilateral negotiations?

Promoting Free Trade

 

Chinese Premier Li Keqiang (L, back) and Swiss President Ueli Maurer (R, back) attend a signing ceremony after their talks in Bern, Switzerland, May 24, 2013. (Xinhua/Ma Zhancheng)

Chinese Premier Li Keqiang (L, back) and Swiss President Ueli Maurer (R, back) attend a signing ceremony after their talks in Bern, Switzerland, May 24, 2013. (Xinhua/Ma Zhancheng)

China and Switzerland signed a bilateral free trade agreement on Friday, marking the first such agreement between China and a Western country. Trade flows between the two countries currently account for about $26 billion a year, mostly in watches, medicines, textiles, and dairy products.

Although the agreement must still be ratified by the Swiss parliament, the official signing ceremony took place during Chinese Preimier Li Keqiant’s visit to Switzerland last week. Li said that, “This free-trade deal is the first between China and a continental European economy, and the first with one of the 20 leading economies of the globe…This has huge meaning for global free-trade.”

The new agreement adds fuel to the discussion about the relative importance of multilateral versus bilateral trade agreements. When the World Trade Organization came into being in 1995, there was much celebration of its role in reducing global trade barriers. Now, almost 20 years later, the organization seems stuck in the past. It’s been unable to make progress on key issues like agricultural subsidies, and has not successfully concluded a round to talks since it was established…this despite promises to do so in Seattle (1999), Doha (2001), Cancún (2003), Geneva (2004), Paris (2005), Potsdam (2007), and so on. In the wake of its failure, countries seem more inclined to pursue regional and bilateral trade agreements instead.

The advantage of multilateral agreements is that they encourage the establishment of a more equal playing field and generally achieve a wider scope of liberalization. But they are difficult to successfully conclude, as the track record of the WTO suggests. Bilateral agreements, by contrast, permit countries to reach agreements and make progress on liberalizing international trade. But they are not without their critics.

In a 2011 speech celebrating the conclusion of the Korea-US Free Trade Agreement (KORUS), Secretary of State Hillary Clinton observed that, http://www.state.gov/secretary/rm/2011/07/169012.htm

“there is now a danger of creating a hodgepodge of inconsistent and partial bilateral agreements which may lower tariffs, but which also create new inefficiencies and dizzying complexities. A small electronics shop, for example, in the Philippines might import alarm clocks from China under one free trade agreement, calculators from Malaysia under another, and so on—each with its own obscure rules and mountains of paperwork—until it no longer even makes sense to take advantage of the trade agreements at all.”

Interestingly, Clinton called in the speech not for a return to the World Trade Organization or global negotiations, but to regional agreements like the Trans-Pacific Partnership.

More radical critiques of bilateral trade deals focus on the potential inequality between negotiating partners. According to its critics, the US Trade and Development Act (previously known as the African Growth and Opportunities Act, AGOA) was essentially a series of bilateral agreements between the United States and a number of developing countries across Africa that forced African countries to agree to develop stricter intellectual property systems than would otherwise have been required under the WTO agreement—and to refrain from criticizing US foreign policy—in exchange for lower tariffs on textile exports to the United States. By wielding its bilateral muscle, the United States was able to garner greater concessions from its trading partners than it might have been able to in a multilateral negotiation.

But as a result of the (ongoing) failure of the WTO, it seems likely that such bilateral and regional agreements are the wave of the future.

What do you think? Are multilateral trade agreements preferable to bilateral agreements? Take the poll or leave a comment below and let us know what you think.

All Diplomacy is Local

Pascal Lamy, Director General of the World Trade Organization

Pascal Lamy, Director General of the World Trade Organization

In an interesting piece published in The Globalist yesterday, Pascal Lamy, the director-general of the World Trade Organization argued that all negotiating is domestic. Lamy asserts that, particularly in the context of the global financial crisis, there is little reason for optimism regarding global diplomacy. According to him,

The “Westphalian shield” allows all nations to dismiss any requirements coming from the global system to safeguard humanity’s longer-term survival as acts of interference in its internal, national affairs. The shield of sovereignty was not to be pierced.

This is an interesting concession from the man who oversees the World Trade Organization and, at least until recently, had been desperately trying to bring the United States, the European Union, and other major economies to agreement on a new round of trade liberalization. Indeed, Lamy’s argument raises a couple of interesting questions for students of global politics.

First, how do domestic politics and international diplomacy interact? There’s a rich literature on two-level games in international relations dealing with this topic, suggesting the relationship is not as simple as we might like to think.

Second, what is the basis for cooperation in international negotiations, particularly international economic negotiations? For liberal IR scholars, the gains from trade outweigh the costs, so we should prefer liberalization to non-liberalization. But the failure of the WTO to conclude the Doha Round (and the Seattle Round before that) suggests that states do not always behave in ways that the theory suggests they should.

Finally, how does the sovereignty of states, the “Westphalian shield” as Lamy terms it, undermine the prospects of international diplomacy? Realist IR scholars have long asserted that the presence of sovereignty creates an anarchic international system in which cooperation is difficult to maintain. In this context, collective goods problems frequently emerge. What’s interesting about Lamy’s position is the degree to which he appears to have embraced the realist framework.

What do you think? Does the anarchic system of the international system undermine the possibility of cooperation in economic relations between states? If so, how can we explain the general trend of greater cooperation and coordination between states since the end of World War II? Does the global financial crisis affect the calculation of states in new ways? Let us know what you think.

Economic Development and Intellectual Property

Chinese Solar Panel Production

Solar Panel Production: One of the areas China has been accused of engaging in development-through-copying.

Development has long been an elusive challenge. Despite more than sixty years of theorizing, debating, modeling, and discussing, I think a compelling case can be made that we really still don’t understand how and why development takes place. Sure, we understand the basics: corruption is generally bad, loans and foreign investment are insufficient, and so on. But there’s much, much more that we don’t really understand: How are democracy and development related? Is there a resource curse? What are the necessary conditions for economic growth? And so on.

So when Chris Blattman blogged on Chinese development last week, I read it with particularly interest. Blattman noted the negative coverage the Chinese purchase of a Spanish company received in the New York Times. According to the NYT,

The story of Gamesa in China follows an industrial arc traced in other businesses, like desktop computers and solar panels. Chinese companies acquire the latest Western technology by various means and then take advantage of government policies to become the world’s dominant, low-cost suppliers.

Blattman then goes on to deconstruct this narrative, noting that “there is nothing dark or nefarious here [just] good hold fashioned industrial policy at work.” He notes that the story of Chinese development-through-copying echoes previous patterns of development, including Europe in the 19th century, Japan after the Meiji Restoration, and the Asian Tigers in the 20th century.

Indeed, copying has long been a tool for developing countries to catch up with the industrial leaders of the day. For this reason, developing countries often afford much weaker intellectual property protection than developed countries. Weak IP protection, in other words, was frequently used as a developmental tool. As the U.S. Office of Technology Assessment noted in a 1986 report,

There have been political tensions between nations whose role as producers of intellectual property allowed them greater access to such products, and nations that imported technology products, and had only limited access to them.  When the United States was still a relatively young and developing country, for example, it refused to respect international intellectual property rights on the grounds that it was freely entitled to foreign works to further its social and economic development.

Ironically, however, today weak IP protection is often cited as a significant barrier to technology transfer. Further complicating the situation, the development of a uniform system of intellectual property protections deployed globally through the World Trade Organization also serves to preclude this avenue of development-through-copying.

The Challenge of Dumping

Cotton Production

Cotton Production

In international trade law, dumping is defined as selling goods below the cost of production plus transportation and handling. Under World Trade Organization rules, dumping is illegal. But countries continue to engage in the process, as demonstrated by the large number of cases involving accusations of dumping heard by the WTO’s dispute resolution panels.

Perhaps the most high-profile dispute in recent years has been the dispute between Brazil and the United States over U.S. cotton subsidies. Brazil contends (and the WTO panels have upheld twice, first in 2005 and again in 2008) that U.S. cotton subsidies are illegal under WTO rules because the sale of such subsidized cotton represents dumping. The cotton dispute is one of the key sticking points in current Doha Round of WTO talks, as a number of developing countries, including Brazil, have demanded the elimination of U.S. cotton subsidies which depress global cotton prices. According to a report prepared by the International Centre for Trade and Sustainable Development, global cotton prices would be 6 percent higher absent U.S. subsidies. This represents a significant increase in the livelihoods of poor cotton producers in the global south.

A new study, prepared by Timothy Wise for Woodrow Wilson Center, analyzes the impact of agricultural dumping on Mexican farmers under NAFTA.  Looking at agricultural production and trade from 1997 to 2005,Wise concludes that Mexican producers suffered across a number of agricultural sectors, losing some $1.4 billion per year over the course of the study. According to Wise, this represents more than 10 percent of the value of all Mexican agricultural exports to the United States.  Maize production was particularly hard hit, as maize imports from the United States were priced, on average, 19 percent below production costs, leading to a 66 percent decline in real producer prices for maize during the time under study.  Wise concludes that

Mexico certainly serves as a warning to developing countries considering agricultural trade liberalization. The case also highlights the weakness of international rules for defining and disciplining agricultural dumping. That weakness, and the vulnerability of developing-country farmers to import surges, makes all the more reasonable developing-country demands in the stalled Doha Round negotiations for strong Special Product measures to protect key food crops and effective Special Safeguard Measures to protect against import surges. Until agricultural dumping can be disciplined effectively, developing countries must retain the policy space to defend themselves. Mexico gave up most of its defenses under NAFTA. Farmers are paying a high price.

Dumping—or more generally agricultural subsidies and trade—represents one of the key barriers to the conclusion of the Doha Round of international trade talks. Intended to address some of the major imbalances in international trade, the Doha Round was intended to be the first round of international trade talks focused squarely on international development. But differences between the developed world, led primarily by the European Union, the United Sates, and Japan, and the developing world, led by China, Brazil, India, and South Africa, have paralyzed talks since 2008, and the prospect of rekindling talks appears dim. The major outstanding issues remain:

  • Agriculture, especially agricultural subsidies and dumping: Massive subsidies by the United States, Japan and the European Union continue to depress global agricultural prices, undermining production in the global south.
  • Access to essential medicines: Establishing conditions under which developing countries can reconcile meting public health needs with the strong system of intellectual property protections afforded under World Trade Organization rules.
  • Special and Differential Treatment: Determining if developing countries will be afforded different treatment under some WTO rules.

Wise’s full report, Agricultural Dumping Under NAFTA is available online.

The Global Financial Crisis, Revisited

Blogging at Triple Crisis, Kevin Gallagher noted an interesting development in the “blame game” between the International Monetary Fund, the World Bank, the United Nations, and the World Trade Organization regarding the causes of the global financial crisis last year. As Gallagher notes, the World Trade Organization held its much anticipated session on the WTO and the financial crisis last week, claiming that the WTO played no negative role in the crisis.

The debate centers on the role of financial controls and capital account liberalization in the broader liberalization process. While the International Monetary Fund increasingly recognizes the importance of capital controls in preventing financial crises, the World Trade Organization continues to maintain that the imposition of capital controls may be “actionable” under the General Agreement on Trade in Services. In other words, even as the IMF acknowledges that imposing limits on the ability of speculative investors to move in and out of particular economies may provide an avenue for governments to limit the negative impact of such speculative investment on their national economies, the World Trade Organization’s rules make such restrictions a punishable offense.

The recognition of the importance of capital controls is not new. Joseph Stiglitz made a similar argument following the 1997 Asian financial crisis, arguing that the IMF ignored the importance of sequencing liberalization to avoid economic crises in developing economies. But there are two important take-away points here. First, the fact that the IMF—the former bastion of unrestricted liberalization—now recognizes that liberalization must be paced represents an important development in the international economy. Indeed, as a February 2010 IMF Staff Paper noted, controls on capital inflows “can usefully form part of the policy toolkit to address the economic or financial concerns surrounding sudden surges in capital.” Second, as Gallagher argues in his paper on the topic, capital account liberalization is not associated with economic growth in developing countries. In other words, at least among developing economies, there is little benefit but much risk in liberalizing financial flows. This is something that the government of Brazil recognized early in the global financial crisis, when it imposed a two percent tax on capital inflows attempting to limit portfolio investment tin the county.

Five Stories You Might Have Missed

The Nobel Prize Committee sparked considerable debate on Friday when they named President Barack Obama the recipient of the 2009 Nobel Peace Prize. According to the committee, Obama received the award for “his extraordinary efforts to strengthen international diplomacy and co-operation between peoples,” citing in particular his effort to reach out to the Muslim world and his push for nuclear disarmament. FT blogger Gideon Rachman commented, “while it is OK to give school children prizes for “effort” – my kids get them all the time – I think international statesmen should probably be held to a higher standard.” Qari Mohammad Yousof Ahmadi, a senior spokesman for Afghanistan’s Taliban movement said of the award, “Obama should be awarded the war prize, rather than the peace prize.” Daniel Drezner said the decision “cheapens an already devalued prize.” At Foreign Policy, David Rothkopf decried the decision as “the most ludicrous choice in the history of an award that has a pretty dubious history… It’s as if a freshman tailback were handed the Heisman Trophy as he ran onto the playing field along with a hearty pat on the back and the explanation that he’d been selected to encourage him to have a great year to come.”

But most of the criticism of the award seems to be reserved for the Nobel Peace Prize Committee rather than for President Obama. Indeed, while calling the decision a “ludicrous choice,” Rothkoph also praised Obama’s speech regarding the award. He wrote,

Short of deferring his acceptance of the Nobel Prize, President Obama could not have struck a better tone in his remarks this morning accepting the award. From saying he did not deserve it to framing the award as a “call to action” to citing others who merited such an award, he was pitch-perfect. And in reciting some of his key goals — from the elimination of nuclear weapons to combating climate change to bringing a lasting peace between Israel and Palestine — he raised hope that the award might be even further motivation to advance to what are, as noted above, worthy objectives.

In news from outside the Nobel Prize awards:

1. The security situation in Pakistan appears to be in serious decline. Over the weekend, a group of militants stormed the headquarters of the Pakistani military in Rawalpindi, taking hostages and creating a standoff situation. The Pakistani military was able to retake the compound early Sunday, rescuing 42 hostages and killing most of the militants. On Friday, a car bomb exploded near a shopping mall in Peshawar, a city in the northern part of the country. The attack, described by Pakistani security officials as “one of the most daring attacks ever carried out by the Taliban,” killed 49 people and injuring nearly 100. The attack came just one day after a similar bombing outside the Indian embassy in Afghanistan, and may constitute part of a renewed offensive by Taliban elements operating along the Afghan-Pakistan border. Last week, the Pakistani government launched a renewed offensive against the Taliban in the Waziristan region of the country. But so far, the campaign has had few successes, and the increase in recent attacks, particularly the brazen attack against Pakistani military headquarters, cast doubt on the ability of the Pakistani military to effectively address the Taliban threat.

2. Despite reservations that the treaty would erode national sovereignty and transfer too much power to Germany, Lech Kaczynski, the President of Poland, signed the Lisbon Treaty on Saturday. Poland’s accession make the Czech Republic the lone European Union member that has not approved the Lisbon Treaty. Despite Czech resistance, the treaty appears to be headed for adoption and thus a radical restructuring of the European Union. The treaty would make EU decision making more efficient, streamlining the current voting system in the European Council and strengthening the role of the European Parliament.

3. A number of trade disputes intensified last week. On Thursday, the United States announced an investigation into Chinese steel pipes, the culmination of which could result in a 98.7 percent duty on steel pine imports from China. The announcement follows the imposition of a 35 percent duty on Chinese tire imports last month and a longstanding dispute over Chinese currency values.  Meanwhile, the United States filed a complaint against the European Union with the World Trade Organization on Thursday. The complaint alleges that EU restrictions on the importation of chicken meat washed with chlorine and other chemicals constitutes an unfair trade barrier. Canada last week filed a complaint with the WTO alleging US country-of-origin labeling requirements in cattle and hog exports also constitute an unfair trade barrier.

4. Intervention by Secretary of State Hillary Clinton was able to help overcome last minute setbacks to the Armenian-Turkish peace treaty on Saturday. The agreement, which must still be approved by both country’s parliaments, sets out a timeline to restore diplomatic relations and open the border between Amenia and Turkey. While the agreement was difficult to reach, both sides stand to gain. For Turkey, resolving the longstanding dispute could smooth its path to membership in the European Union and increase its influence in the Caucasus. Armenia could see its economy improve access to European Union market. Despite the potential benefits, the agreement could still be derailed due to longstanding tensions between the two countries, which date back to 1915 murder of up to 1.5 million Armenians by the Ottoman Empire, often referred to as the world’s first genocide.

5. On Tuesday, Idelphonse Nizeyimana, a key player in Rwanda’s 1994 genocide, was arrested in Uganda. Nizeyimana was responsible for the organization of the genocide in Butare, a southern province in Rwanda. The arrest was the second high profile detention in a month, following the arrest of Gregoire Ndahimana in the Democratic Republic of the Congo. But the arrests highlight tensions between Rwanda and the United Nations over the handling of charges related to the genocide, in which more than 800,000 ethnic Tutsis and politically moderate Hutus will killed. Both Nizeyimana and Ndahimana have been transferred to Tanzania to stand trial at the International Criminal Tribunal for Rwanda, despite efforts by the Rwandan government to have them tried by the Rwandan government in Kigali.

Five Stories You Might Have Missed

President Barack Obama has been busy on the diplomatic front this week. On Thursday, Obama announced his administration would cancel President George Bush’s proposed deployment of a missile defense system to Eastern Europe.  The missile defense system would have involved deployment of radar systems to Poland and the Czech Republic, a move which the Russian government insisted undermined its own national security and necessitated the expansion of its missile systems into Eastern Europe. Although the Russian government denied there was a quid-pro-quo agreement for the U.S. move, the Obama administration is hoping that the change in U.S. policy will help improve relations with Russia and lead to greater cooperation in other areas, including addressing the situation in Iran. However, Russian Prime Minister Vladimir Putin responded to the announcement with a demand for greater U.S. concessions, including support for Russian membership in the World Trade Organization, leading some analysts to speculate that the United States had miscalculated if it believed that its policy change in missile defense would result in a dramatic shift in Russian policy.

On Saturday, the White House announced that President Obama would hold a joint meeting with Israeli Prime Minister Benjamin Netanyahu and Palestinian President Mahmoud Abba on Tuesday. Obama hopes that the meeting will restart peace talks, which reached an impasse last year. U.S. Special Envoy for the Middle East, George Mitchell, has been engaged in shuttle diplomacy to address the stalled talks for more than a week, but Netanyahu remains under domestic political pressure not to make any concessions on the expansion of Israeli settlement activity in the West Bank, a key obstacle for the Palestinians.

In other news from the past week:

1. Last week’s meeting of the Central Committee of the Chinese Communist Party raised questions about who will succeed Hu Jintao as the country’s leader. Most analysts had believed that Vice President Xi Jinping was Hu’s heir apparent, poised to take control of the party (and the country) after Hu steps down in 2012. When Xi was named to the Politburo in 2009, it was assumed that his elevation would follow the same path as Hu’s. Hu’s political power rests in his control of three offices: Secretary General of the Communist Party, President of China, and Chairman of the Central Military Commission. Xi was expected to be nominated to succeed Hu as Chairman of the Central Military Commission on Friday, but no announcement from the Central Committee was forthcoming. Although some analysts believe that Xi’s appointment may be announced at a later date, others believe that Hu may be trying to retain control of key positions, including head of the military, after his 2012 retirement.

2. Efforts to resolve the political crisis in Afghanistan continued over the weekend, as closed-door meetings between foreign envoys, opposition leaders, and representatives of President Hamid Karzai discussed the future of the country. Although President Karzai was declared the winner of last month’s presidential elections by the Afghan elections commission, most observers believe that the vote was badly flawed, with the European Union suggesting that as many as 1 million of Karzai’s votes (which would represent more than ¼ of all votes cast in the election) should be viewed as suspect. Seeking to address the political standoff, the West is pushing for a power-sharing agreement in Afghanistan that would see Karzai claim the presidency but would considerably weaken the office, transferring significant political authority to appointed technocrats.

3. On Thursday, Islamic insurgents launched a suicide bomb attack against African Union peacekeeping forces in Somalia, in a move retaliating against a U.S. strike that killed Saleh Ali Saleh Nebhan, a suspected al-Qaeda leader. The African Union force, comprised primarily of Ugandan and Burundian soldiers, remains understaffed despite being responsible for addressing the threat posed by Islamic radicals intent on toppling the fragile government.

4. The government of Venezuela has been busy courting foreign assistance in developing its oil production facilities. The Venezulan government last week announced the discovery of a “very large” pocket of natural gas offshore, following a similar announcement by the government of Brazil. The Venezulean government announced that it had signed a $20 billion deal with the Russian government and a $16 billion with the Chinese government to expand oil production in the country by as much as 1.35 million barrels per day.

5. The campaign around the Irish ratification vote on the Treaty of Lisbon, scheduled for October 2, has entered full swing. Charlie McCreevy, Ireland’s European Commissioner, delivered a strongly-worded speech to the business community in Dublin suggesting that “international investors would take flight” from the country if it rejected the Treaty. The Treaty, viewed as vital to the continued growth and expansion of the European Union, was rejected by Irish voters in 2008, sparking a furious round of diplomacy to get the Treaty passed. But many observers are forecasting another no vote by Ireland in October could lead to the defeat of the Treaty in other Euroskeptic countries, including Poland and the Czech Republic.

Five Stories You Might Have Missed

It’s been an interesting week for the U.S. economy. According to figures released on Thursday, the U.S. trade deficit jumped by 16.3 percent to $32 billion in June, a figure sharply higher than the $27 billion that had been forecast. The dramatic increase in imports was fueled by the “Cash for Clunkers” program, which led to a dramatic increase in auto imports. Meanwhile, the Commerce Department reported that the poverty rate had increased from 12.5 percent in 2007 to 13.2 percent in 2008. The poverty rate, which is defined as the number of people with an annual income of less than $11,200 (or less than $22,000 for a family of four), increased as a result of the global economic downturn. Home foreclosures also remain near their record high level. The troubled status of the U.S. economy led the Federal Reserve to indicate that it would be unlikely to raise interest rates in the first half of next year.

In news from outside the U.S. economy last week:

1. A trade dispute between the United States and China may be headed to the World Trade Organization for resolution. The United States last week imposed a new duty on tires manufactured in China, less than one week after it also imposed higher tariffs on Chinese steel piping. A spokesperson for the Chinese government condemned the move as protectionism, warning that “a chain reaction of trade protectionist measures that could slow the current pace of revival in the world economy.” Observers fear that the Chinese could respond with higher tariffs on U.S. agricultural and automotive exports, potentially sparking a trade war. But in an interesting editorial in the Financial Times, Clyde Prestowiz argued that the imposition of higher tariffs on Chinese exports to the Untied States could potentially help the push for free trade.

2. With the German election just a couple of weeks away, campaigning is in full force, and observers are already working through the numerous possible coalition arrangements. But in perhaps the most interesting development to date, German Finance Minister Peer Steinbrück last week called for the imposition of a new global tax on international financial transaction, the proceeds of which would be used to repay governments for the cost of fiscal stimulus packages and bank rescue operations. While not dismissing the idea out of hand, German Chancellor Angela Merkel called the proposal “electioneering.” Steinbrück’s call follows a similar proposal made by the Chair of the British Financial Services Authority, Lord Turner, and could make for interesting discussions at the upcoming G20 summit.

3. The counting process in the Afghan elections continues to drag on. Although incumbent President Hamid Karzai now has enough votes to win the disputed presidential election outright, according to the most recent results of the Independent Election Commission, widespread irregularities have led to calls for partial recounts. On Sunday, the IEC agreed to move forward with discussions on a recount, but it stopped short of spelling out precisely what votes would or would not be included. The Electoral Complains Commission, a body established by the United Nations to observe elections and investigate allegations of fraud, noted “clear and convincing” evidence of fraud and vote rigging in southern provinces which went heavily towards Karzai.

4. The first high-level contact between the government of Zimbabwe and the west took place on Sunday, as the European Union’s Commissioner for Humanitarian Aid and Development and the Swedish Prime Minister (who also holds the European Union’s rotating presidency) met with representatives of the Zimbabwean government in Harare. The meeting is the first high-level contact since the European Union imposed sanctions against Zimbabwe in 2002. While the European Union delegation remained noncommittal regarding the future direction of contact with the Zimbabwean government, stating only that “We’re entering a new phase. The [power-sharing agreement in Zimbabwe] was an important step forward, but much more needs to be done. The key to re-engagement is the full implementation of the political agreement.” The status of the power sharing arrangement in Zimbabwe remains uncertain, as President Robert Mugabe and his rival, Prime Minister Morgan Tsvangirai, continue to struggle over the distribution of political authority within the country.

5. The government of Guatemala last week declared a “state of calamity” in response to the widespread hunger gripping the country. The World Food Programme estimated that the country would require an immediate shipment of 20 tons of food the worst affected areas in order to stave off starvation. Alvar Colom, Guatemala’s president, said that global climate change was affecting the El Niño, causing a massive drought in the northeastern portion of the country. But Colom was also critical of the high level of inequality in the country, observing that “There is food, but those who go hungry have no money to buy it.” Critics also note that poorly defined land rights, narcoviolence, and alleged corruption have also undermined food production. According to the World Food Programme, half of all children under five in Guatemala suffer from malnutrition.

And in a bonus story for this week:

6. After more than three months since the general election, the political situation in Lebanon remains cloudy. On Thursday, Saad Hariri, the leader of Lebanon’s pro-Western majority, resigned as prime minister designee, despite performing well-above expectations in June’s elections. According to Hariri, the country’s parliamentary minority blocked efforts to develop a coalition government, leaving the country in a period of political uncertainty.

Five Stories You Might Have Missed

It’s been a weekend of high-profile political resignations in the United States and China. On Sunday Morning, President Barack Obama’s top environmental policy adviser, Van Jones, reigned after it became public he had signed a petition alleging U.S. government involvement in the September 11th attacks. Jones had also been a key player in the Color of Change group, which has spent considerable money trying to influence the tenor of the health care debate in the United States. His resignation comes at a poor time for the administration, which is simultaneously trying to salvage passage of health insurance reform legislation in the U.S. Congress, address the ongoing economic downturn, and beginning to consider efforts to address climate change and green jobs, Jones’ area of expertise.

On Saturday, the Chinese government fired the top party official in Urumqi, where ethnic unrest has been raging between ethnic Uighurs and the majority Han. Li Zhi, the Chinese Community Party Secretary for the city of Urumqi, was replaced by Zhu Jailun, who had previously served as the head of the regional law-and-order committee. Li’s firing has also raised speculation that regional party boss, Wang Lequan, may also be forced from office. In firing Li, the Chinese government is hoping to quell unrest and prevent another outbreak of violence like that of July, when almost 200 people were killed in ethnic violence.

And on Friday, the head of Google’s China operations, Lee Kai-Fu, resigned. Lee was responsible for the launch of Google.cn, Google’s Chinese-language search engine. But Google’s operations in China have been marred by tensions with the Chinese government and debates over the degree to which the company should allow the Chinese government to censor search results. Lee’s resignation came amid a new round of tensions, with some inside Google arguing that the company should reconsider its efforts to break into the Chinese market.

In other news from the last week:

1. The G20 concluded two days of meetings in London on Saturday with a preliminary outline for tougher regulations on financial institutions. While the final statement stopped short of imposing limits on financial bonuses, it would increase the size of capital reserves and require the development of “living wills” for banks, and require that banks retain a portion of loans they sell as asset-backed securities. But the G20 avoided dealing with some of the most controversial elements of banking reform, choosing instead to forward those issues to the Financial Stability Board, an institution comprised of central bank governors and treasury secretaries from around the world. 

2. The situation in Afghanistan continues to be marred by uncertainty. On Friday, a NATO airstrike against two fuel tankers hijacked by the Taliban killed an estimated 90 people, nearly all of whom were civilians, according to local village elders. The airstrike provoked an angry response among Afghans, and represented yet another setback for the U.S. mission in Afghanistan. On Sunday it became apparent that the NATO airstrike was ordered by German commanders on the ground, a fact which will likely play an important role in upcoming German elections. The European Union issued a statement criticizing the airstrike on Saturday, one day before EU foreign ministers were scheduled to meet to consider efforts to improve stabilization efforts in Afghanistan.

Meanwhile, results from the Afghan election continue to trickle in. By Sunday, the Independent Electoral Commission had tabulated returns from just almost ¾ of country’s polling stations. So far, incumbent President Hamid Karzai leads his closest challenger, Abdullah Abdullah 48.6% to 31.7%. Under Afghan law, the winner must receive an absolute majority of votes cast, so if Karzai is unable to secure at least 50% of the vote, a runoff election would be held in October. But accusations of voting rigging continue to be raised, particularly by Abdullah, who contends that the vote was characterized by widespread fraud. The IEC announced that it had excluded an unknown number of votes from 447 polling stations in which suspicious returns had been found. But the scope of electoral fraud remains unknown.

3. The World Trade Organization issued its preliminary ruling in the U.S. dispute against EU assistance to aircraft manufacturer Airbus. Although the report is still confidential and the final report will not be issued for several months, the WTO panel found that some of the estimated €3 billion offered by the EU to Airbus was an unfair subsidy. Nevertheless, both sides are claiming victory. The WTO panel dismissed 70% of the U.S. claims against the EU and several of its member states, including France, Germany, Spain, and the United Kingdom, which the U.S. had claimed offered as much as $15 billion in illegal loans since the 1970s. Although the United States is celebrating the decision, the European Union is withholding its formal reaction until its case against U.S. subsidies to Boeing is resolved. In a case filed at the WTO several years ago, the European Union accused the United States of offering more than $27 billion in illegal assistance in the form of tax breaks, research contracts, and defense spending. A ruling on that case is expected within the next few months. 

4. Israeli Prime Minister Benjamin Netanyahu is moving forward with a plan to expand settlement activity in the West Bank, offering approval for the construction of hundreds of new homes. The United States government was quick to condemn the move, asserting, according to White House spokesperson Robert Gibbs, “The U.S. does not accept the legitimacy of continued settlement expansion and we urge that it stop.” Netanyahu is under pressure from rightwing member of his coalition to remove restrictions on new settlements in the West Bank. But the status of settlements in the West Bank remains a key stumbling block in negotiations between Israel and Palestine, and Israel’s decision to increase settlement activity will likely undermine hopes for progress in rekindling stalled peace talks when President Obama’s Middle East Envoy, George Mitchell, visits Israel next week.

5. Last week’s presidential elections in the West African state of Gabon sparked violence after the ruling party candidate, Ali Ben Bongo, claimed victory. Bongo’s father, Omar Bongo, had been Africa’s longest serving ruler, presiding over Gabon since 1967. Under his rule, Gabon’s oil and wood resources were used to expand his personal wealth.  At the time of his death, he was under investigation by the French government, which had identified 39 properties, 9 cars, and more than 70 bank accounts owned by the dictator in France alone. Sunday’s announcement that Ali Ben Bongo had won a plurality of the vote to win the presidency sparked unrest by the supporters of his two rivals, former interior minister Andre Mba Obame and opposition figure Pierre Mamboundou, each of whom received approximately 25 percent of the vote. Supporters of Obame and Mamboundou targeted the French embassy and facilities owned by foreign oil companies. But according to the French government, the election “took place in acceptable conditions.”