All posts by Michelle Wein

Television and film fanatics around the United States: rejoice. Yesterday, the Department of Commerce’s (DOC) Bureau of Economic Analysis (BEA) stated it was changing the method it uses to calculate Gross Domestic Product (GDP), in order to better reflect the economic contributions that come from the creation of copyrighted works, like films and television. In other words, GDP now encompasses the economic activity of the culture-aholic’s favorite sector (spoiler alert: the creative one!).

Prior to this change, the economic contributions of the film and television industry were treated as current expenses — or costs of business. GDP only captured the film and television industry downstream, based on the revenue generated by Hollywood’s tangible products. It did not include the impact on the economy based on investment in film and television. The change reflects that in economic terms, films and television works are an intangible asset. Long after they’re first developed, these creations continue to retain their value and deliver residual benefits; films and TV shows are licensed and sold to different markets for years after their original release so that nerds all over the world can enjoy Game of Thrones

Today, House Ways and Means Committee Ranking Member Sandy Levin (D-MI) gave an impressive speech highlighting the past, present and future challenges in the international trade arena at the Peterson Institute. Focusing specifically on issues relating to the American automotive industry in the Transpacific Partnership (TPP), he also touched on the Transatlantic Trade and Investment Partnership (T-TIP) as well as the Trade Promotion Authority (TPA). However, his best points were those that emphasized the need for “free and fair trade,” not just “fair trade.”

In sharp contrast to much of the neoclassical literature on free trade, Representative Levin noted that markets are not, in fact, always self-correcting and that distortions from foreign mercantilist trade policies need to be addressed in free trade agreements going forward. As innovation economists, ITIF also holds this belief; global free trade is beneficial, but only when countries eschew mercantilist policies (e.g., tariffs, unfair taxes, currency manipulation, discriminatory standards, IP theft, etc.) that manipulate the system. Not only do mercantilist policies restrain productivity and innovation, but they also potentially lead to lower levels of global growth as private companies make investments in countries and in types

Last week marked the fourth annual global review of the World Trade Organization’s (WTO’s) Aid for Trade (AfT) Initiative. Created in 2005 by the Sixth Ministerial Conference of the Doha Development Round, Aft targets “behind the border” constraints to trade in least developed countries (LDCs) as well as strengthens their capacity to negotiate beneficial trade agreements. Essentially, Aft focuses on trade facilitation.

The AfT Initiative shines a light on the idea that the best possible “aid” we can give LDCs is free trade. Evidenced by its theme, “Connecting to Value Chains,” the fourth annual review called for “connecting the least connected countries.” More broadly, the value chain world we live in offers many entry points for firms to connect to the global trade web. And countries don’t need to produce final goods to be a part of that global trade web—increasingly we are a world focused on trade in services and tasks. Sixty percent of global trade is now in parts and components.

Production networks stretch worldwide—Senegal assembles Indian cars, Ford has facilities in Vietnam, and Samoa produces automotive harnesses. As WTO Director-General Pascal Lamy puts it, “you do not

On Friday, 35 of the 36 freshmen House Republicans signed a letter to new USTR Michael Froman indicating their strong support for President Obama’s free and fair trade agenda. Stating, “We write to you as new members of the House of Representatives who strongly believe that expanding trade will increase economic growth and expand jobs across the United States,” the letter went on to describe their readiness to work on negotiations for the Transatlantic Trade and Investment Partnership (T-TIP), the Transpacific Partnership (TPP) and the Trade in Services Agreement (TISA).

The Republican letter comes at a crucial time during trade negotiations for the United States. With the first round of T-TIP negotiations set to begin next week, and the 18^th round of the TPP negotiations the week after, Congressional support is key to moving forward. However, the 2007 expiration of Trade Promotion Authority (TPA) threatens to erode much of the potential for forward movement. TPA, which allows the President to “fast-track” trade agreements for approval or disapproval by Congress by removing the option for filibuster, is currently being considered for renewal. Essentially, the TPA forces the House and Senate

Yesterday, President Obama announced the suspension of Generalized System of Preferences (GSP) benefits for Bangladesh. The suspension comes on the heels of outrage regarding labor conditions after an April factory collapse in the South-Asian nation killed more than 1,200 people. According to Obama, Bangladesh was not taking steps to protect internationally recognized standards of workers’ rights to its employees.

This removal of tariff breaks by United States makes a compelling statement, not only to Bangladesh, but also the rest of the world, about the importance of embracing accepted global standards to drive innovation and economic growth. As Bangladesh’s biggest trading partner after the European Union, the United States is well-positioned to leverage its trade policy in order to exert significant pressure on the Bengali government to reform its labor practices. As USTR Michael Froman stated, “The Obama Administration is committed to reflecting American values in our trade policy, including with regard to the rights of workers worldwide.”

GSP benefits are a privilege and should only extend to those countries that put into place policies that spur innovation and economic development. In other words, preferences need to go to countries that

(Also available on Inside US Trade for those with a subscription) 

Recently, it seems like no trade topic inspires as much tension, confusion and passion as the subject of compulsory licensing in the World Trade Organization’s (WTO) Trade Related Aspects of Intellectual Property Rights Agreement (TRIPS). Everyone has an opinion, whether it’s based on deep loyalty to the pharmaceutical research and development process, a strong desire to eradicate infectious diseases in less developed parts of the globe or merely the belief that multinational organizations like the WTO have the international community’s best interests at heart. Unfortunately, many of these opinions are based on a gross misunderstanding of the compulsory license (CL) process as well as an inability to acknowledge the deficiencies inherent therein.

So what exactly is a CL? Essentially, a CL is when a government allows someone else to produce a patented product or process without the consent of the patent owner.  This most often, but not exclusively, applies to pharmaceutical products. The original idea behind the concept of CLs was to enable governments to produce a generic drug for its domestic market, and not for export. Those

Ever since former Secretary Clinton announced the New Silk Road Initiative in September 2011, the regional economic integration of the South-Central Asian region has been a priority of the U.S. State Department. Key to its implementation, however, is the participation of the private sector in spurring growth and creating jobs. As Secretary Clinton stated at the time, “We also know that governments alone cannot possibly solve Afghanistan’s economic problems, so we have to work to create an environment that attracts private sector investment.”

Facilitating such an environment is no easy task. Primarily, it requires the removal of impediments to the flow of goods and services. Recent progress on this initiative is encouraging; the region is becoming more integrated through trade liberalization. The reduction of non-tariff trade barriers, improved regulatory regimes, transparent and efficient border clearance procedures, and coordinated policies all accelerate the flow of goods, services, and people throughout the region. More importantly, the efforts of the South-Central Asian region to join the WTO–Kyrgyzstan and Tajikistan are the most recent ascensions–will also open markets and increase economic opportunity for the people of the region. Azerbaijan, Kazakhstan and Afghanistan are

Free trade is only successful if all sides are operating on a relatively level, market-based playing field. Unfortunately, in the last few years many nations, particularly developing ones, have dramatically ramped up their mercantilist policies designed to unfairly gain advantages in global trade. The use of these mercantilist policies hurts not only the aggrieved nations, but also, in certain cases, the aggressor. One tool in the mercantilist tool box is “dumping”: the practice of selling exports below the cost of production, often by relying on steep government subsidies. However, to date the system of addressing dumping claims has not been as effective as it should be.  All too often by the time cases are brought to and adjudicated by the World Trade Organization (WTO) the damage has been done and many domestic firms put out of business.

We see this with the current conflict between the European Union (EU) and the United States with China over unfair Chinese trade policies in the solar industry.  The chief issue for U.S. and EU policymakers concerns China’s use of mercantilist practices, especially selling below cost through large government subsidies, to promote Chinese solar