Italy Joins Trump in Resisting Canadian Trade

Prime Ministers Giuseppe Conte of Italy and Justin Trudeau of Canada meet at the G7 summit in Charlevoix, June 8
Prime Ministers Giuseppe Conte of Italy and Justin Trudeau of Canada meet at the G7 summit in Charlevoix, June 8 (Flickr/Justin Trudeau)

Italy has learned from Donald Trump that Canada is now the enemy of the West.

In an interview with the newspaper La Stampa, the country’s new agriculture minister, Gian Marco Centinaio of the far-right League, said he would ask parliament not to ratify the trade agreement the EU negotiated with Canada in 2016.

Without ratification by all 28 member states, the treaty cannot go into effect for the entire European Union. Read more “Italy Joins Trump in Resisting Canadian Trade”

Macron Breaks Taboo, Spain Makes Gibraltar Demands

French president Emmanuel Macron greets Spanish prime minister Mariano Rajoy outside the Elysée Palace in Paris, France, June 16, 2017
French president Emmanuel Macron greets Spanish prime minister Mariano Rajoy outside the Elysée Palace in Paris, France, June 16, 2017 (La Moncloa)

Emmanuel Macron touched one third rail of French politics and didn’t die: labor reform. Now he is grabbing the other: agriculture.

French farmers rely heavily on EU agricultural subsidies and are generally less innovative (defenders would say more traditional) than their peers in Germany and the Netherlands, the two largest exporters of agricultural goods in Europe.

Macron has already opened the door to subsidy reform, arguing that, due to Brexit, cuts are inevitable.

At the same time, he has promised €5 billion in public investments to kickstart a “cultural revolution” in the sector.

That may not be enough to convince skeptical farmers while cutting EU subsidies will run into opposition from Italy, Poland and Spain. But it’s a start. Read more “Macron Breaks Taboo, Spain Makes Gibraltar Demands”

French Farmers’ Protests Divide Europe

French president François Hollande answers questions from reporters outside the Elysée Palace in Paris, April 13, 2013
French president François Hollande answers questions from reporters outside the Elysée Palace in Paris, April 13, 2013 (Valsts Kanceleja)

Protests by French farmers against low dairy and meat prices are dividing Europe. While similar actions are expected in neighboring Belgium, Germany and the Netherlands are irked that the Paris government is enacting protectionist measures in an attempt to quell the unrest. Read more “French Farmers’ Protests Divide Europe”

By Promoting Autarky, Russia Condemns Its People to Poverty

Moscow Russia
Moscow, Russia at night (Unsplash/Alexandr Bormotin)

Following Russian sanctions banning the import of most farm products from Europe and North America, Prime Minister Dmitri Medvedev on Tuesday suggested the country should become agriculturally self-sufficient. This foolish longing for autarky does not bode well for the country, already teetering on the brink of recession. Read more “By Promoting Autarky, Russia Condemns Its People to Poverty”

Russia Retaliates Against Western Sanctions, Economy on the Brink

Vladimir Putin
Russian president Vladimir Putin listens during a meeting in Voronezh, August 5 (Kremlin)

Russia on Wednesday suspended beef and cattle imports from Romania. While it cited an outbreak of mad cow disease in the former Soviet satellite state — first reported in July — the timing of the embargo suggests it was enacted in retaliations against Western sanctions.

A day earlier, Russia announced it would sue German defense contractor Rheinmetall after the company was forced to cancel a €100 million contract to export combat simulation and training equipment to the Russian army.

The Russian business daily Vedomosti reported the same day that the country may restrict or ban European airlines from flying over Siberia — which would make flights to Asia take longer and require more fuel.

Russia earlier banned dairy products and juice from Ukraine, vegetables from Poland and beef from Australia. Read more “Russia Retaliates Against Western Sanctions, Economy on the Brink”

Fueled by Green Policy, Corn Production Hurts Environment

While federal ethanol subsidies expired last year, the Obama Administration’s strict clean fuel standards still give farmers across the United States an incentive to plant corn — to the detriment of the environment.

The Associated Press reports that “across the Dakotas and Nebraska, more than one million acres of the Great Plains are giving way to cornfields as farmers transform the wild expanse that once served as the backdrop for American pioneers.”

The physical expansion of the American Midwest, the world’s largest contiguous piece of farmland, is fueled by a green energy policy that requires oil companies to blend billions of gallons of corn ethanol into their gasoline, keeping prices high. Read more “Fueled by Green Policy, Corn Production Hurts Environment”

European Union Finalizes Trade Deal with Canada

Canada and the European Union cleared the way toward ratification of a comprehensive trade agreement on Friday although France, which is stalling talks for a similar pact with the United States, signaled some reservations about the influx of Canadian beef.

“I am waiting for confirmation from the commission that this accord, particularly in agriculture, does not set a precedent for talks with the United States,” said France’s trade minister Nicole Bricq at a meeting with her European counterparts in Luxembourg.

The deal with Canada, which eliminates tariffs on almost all goods and services and is expected to increase bilateral trade by more than €25 billion per year, will give French cheese makers easier access to markets across the Atlantic. Canada’s dairy industry had resisted raising the quota for European imports but the provincial government of Quebec, which produces half of the country’s cheese, said Prime Minister Stephen Harper had agreed to compensate producers for any losses they suffered as a result of the treaty.

“This is the biggest deal our country has ever made,” Harper said in Brussels, adding that it outstripped the North American Free Trade Agreement between Canada, Mexico and the United States. Read more “European Union Finalizes Trade Deal with Canada”

North Korea Plans to Liberalize Agriculture, Slightly

Is North Korea coming to terms with economic reality? Officials deny it but announced agricultural reforms suggest it is.

Last week, North Korea’s state news agency denounced speculation of change in the country as “foolish” while quoting a spokesman for the Committee for the Peaceful Reunification of Korea, one of the North’s bodies responsible for relations with the South, who said rumors to the effect were “ridiculous rhetoric” spread with “sinister intent.”

North Korea watchers have noted changes in the way the regime presents itself to the world since Kim Jong-un took over as leader from his father Kim Jong-il in December of last year. The young Kim seems more susceptible to Western influences and has apparently curtailed the power of the army in favor of the party which would represent a shift from military to civilian rule. Read more “North Korea Plans to Liberalize Agriculture, Slightly”

Russia Threatens European Cattle, Meat Import Ban

Russia on Tuesday threatened a ban of Western European beef and livestock imports after a virus that was previously known to affect goats and sheep was also discovered in cattle this week.

The Schmallenberg virus, named after the German town where it was first diagnosed last year, has been found in newborn Belgian, Dutch and German calves, lambs and kids. The disease is transmitted by means of insect vectors and has been detected in fourteen Belgian, 52 Dutch and twenty German farms. Read more “Russia Threatens European Cattle, Meat Import Ban”

Latin America, Riding the Commodity Boom

Growing demand for oil and other natural resources in Asia is fueling an export boom in Latin America where even Venezuela, otherwise hostile to freer trade, is witnessing economic expansion thanks to globalization.

The region’s foremost oil exporter has averaged 4.6 percent economic growth since 2005 compared to 4 percent in Chile, the world’s leader in copper and economically the freest nation in South America.

Even in Argentina, where business confidence is fading and enterprise increasingly squeezed between regulations and populist spending measures, growth averaged 7 percent during the same period as record soy and other farm exports helped offset Buenos Aires’ inflationary monetary policy and persecution of international energy companies and investors.

Commodity demand will likely slacken in 2012 as a result of economic woes elsewhere, meaning countries as Chile, Colombia, Peru and Uruguay, which are generally open to foreign business and investment, will do better than Venezuela and even Brazil which is struggling to escape the legacy of decades of corruption and nepotism.

The overall pace of Brazil’s regulatory reform has slowed but President Dilma Rousseff is leading an effort to root out corruption at great political peril to her ruling Workers’ Party. In her battle for transparency, political allies have abandoned Rousseff’s administration and her aloof leadership style threatens to alienate local machines and left-wing voters.

2012 may be Rousseff’s test year. If she manages to ramrod her transparency agenda through Congress and continues the free-trade policies of her predecessor, Brazil could eventually outperform the region in economic growth.

In the long-term, the largest and most powerful country in South America is well positioned for a future of enduring prosperity. Commodity exports, despite their expected downturn this year, are critical to Brazil’s success.

Asian demand for corn is expected to increase by roughly 25 percent this decade which will be a huge boon to exporters in the Americas, including Argentina, Brazil and the United States which between them constitute almost a third of global corn production.

International beef, pork and soybean trade will probably expand by similar factors, again benefiting Latin American producers. Brazil currently provides 40 percent of global beef and 15 percent of pork exports and it dominates the sugar market, accounting for 60 percent of the market. With the elimination of sugar tariffs in the United States earlier this year, which were designed to protect the ethanol industry there, Brazil will be able to export north as well.

The country’s ability to turn this export advantage into a broader economic success that sees industries and services flourish hinges on Rousseff’s willingness to reform.

Brazil has seen some progress but starting or closing a business remains costly and time consuming while organizing new investment is inhibited by regulations that make it especially difficult for foreign companies to compete. Tariffs and anti-dumping measures are barriers to trade and excessive labor laws stifle employment and expansion. There’s a risk of “Dutch disease” if growth is taken for granted and politicians refuse to challenge vested interests to improve market conditions. The president appears committed to the task but is her party?