Obama’s New Export Promotion Policy
Obama’s 2010 state of union address has set the tone for America’s new found thrust on exports. By setting a goal of doubling exports in next five years as a major job boosting strategy, US signals to play hard at global trade forums. Exports will be expected largely to carry the burden of recovery. Some trade friction looks inevitable with unfinished and contentious Doha round still on table. It is estimated that US economy will add 2 million jobs by doubling its exports in next five years. Though historical trends militate against such ambitious rise, yet a weak dollar and faster growing rest of the world could see significant export growth in coming years. The president also announced a National Export Initiative, first ever of its kind, targeting US small businesses and farmers to be major engines of it’s export strategy. By promising to aggressively pursue market access , US has given enough hint of its likely stance at stalled Doha round. However what is most important of all is the President also promised to review US stringent export control rules in a way that they remain consistent with the objectives of national security. Reforming US export controls may not result in revival of national Export control Act but the promise carries potential of far reaching changes in the way US views it's companies declining competitiveness in global market. A long pending demand of America’s high-technology industries, who mostly constitute small and medium enterprises, easing export control regulation will see export growth while at the same time may unleash trade war in strategic commerce arena.
On March 11th, administration rolled out a slew of initiatives. The most significant being replacement of current system of export controls by one time notification. The review time taken in scrutinizing an application drops to 30 minutes from two and half months for 85 percent of the 3300 affected products. End-use and end-user requirements on exported goods have been further simplified. The Exim bank authorized financing limits have been raised with special focus on small and medium enterprises. Some symbolic steps such as naming an ‘Export Promotion Cabinet’ with representation from Commerce, Treasury, State, Agriculture as well as from other concerned government bodies and revival of long defunct President’s Advisory Council chaired by chief of Boeing and Xerox reinforce a sense of urgency on export front.
Though SMEs and farmers may need promotional stimulus to export but big firms would need market access more than any home grown help. The disappointing trajectory of Doha round has set widespread disenchantment with Geneva based WTO and set member countries getting busy striking regional trade deals. Free trade deals with Panama and Korea may be low hanging fruits. In any case concluding them would be easier than dealing with Brazil and India under Doha gridlock.
However , the real prospects of quick export surge lie in influencing China against holding on to fixed yuan. The growing and also shrill criticism of China’s fixed exchange rate policy has the potential to trigger a trade war leaving everyone worse off. But a bleeding US job market may find an easy scapegoat in lowly pegged yuan that keeps Chinese exports cheap and discourages investment in American manufacturing.
This New Export Initiative, however as pointed by leading strategic journal ‘Stratfor’ could have unintended and unprecedented consequences. First, America has not been historically a market capturing empire unlike those in the pre-World war II era. To build a stable global security architecture after 1945, US allowed allies to penetrate its markets without demanding access to theirs. This only in return to grant US the control on security matters. These arrangements proved successful beyond imagination as Japan, Germany reconstructed their war ruined economies giving them powerful incentives to be part of US alliance structure. The replication of that model proved equally good in Western Europe, Taiwan, Korea and also to some degree in Indonesia. This arrangement seems to be facing a subtle challenge now.
Doubling exports in five years would mean finding additional 1.5 trillion US dollars market. That’s unlikely to happen without trade frictions even in a vastly expanded global market. It is bound to have widespread disruptive effects. Few then are likely to trust the idea of free and fair trade when the global policeman also starts doubling as an active salesman.
Tuesday, March 16, 2010
Monday, March 15, 2010
The Civil Liability and Nuclear Damages Bill 2010
No Clear Liability
Government has today introduced Civil Liability for Nuclear Damages Bill 2010 in the parliament. A logical consequence of much controversial and widely debated nuclear deal with the US, the Bill intended to facilitate entry of foreign firms in nuclear power generation seems destined to be no less controversial. The likely opposition against the bill is to be both political and economic in nature. The political one carries the echoes of controversy surrounding Indo-US nuclear deal while the economic factors may point to role of state in risk subsidization of intrinsically hazardous nature of nuclear commerce.
Liability arising from accidents is an important issue in nuclear civil nuclear power generation. Two multilateral regimes exist today to handle liability issues arising from nuclear accidents. The IAEAs Vienna Convention for Nuclear Damages and OECD led Paris Convention. This is apart from the national liability laws like Price-Anderson Act in the US. There is no provision for liability in India’s Atomic Energy Act of 1962. Most of the imported civil nuclear reactors in India today are a result of agreement between governments that the government of India ( read Indian taxpayer) through its state actor, Nuclear Power corporation of India Ltd, NPCIL ,alone liable against any nuclear accidents.
The bill pegs the liability of plant operator at Rs 500 cr with a further Rs 2087 Cr to be born by the government in case of an accident. Clearly ,it seems, the major burden of safety is to be borne by the taxpayer not the plant-maker foreign firms. Besides the provision against raising any lawsuit by victims in an Indian court or home country of the reactor builder ostensibly seems to be for purpose of easing the entry of private firms, mostly US based, in nuclear power generation. Though it can easily be labeled by critics as appeasement of US, the government may in fact be bending to US pressure to help its nuclear firms, most notably, General electric and Westinghouse. Besides the low upper liability limit can be treated as attempt to subsidize foreign reactor builders through taxpayer paid funds. India is not a signatory to Vienna or Paris convention, which doesn’t prescribe any upper limit on damages. Incidentally the upper limit under proposed Indian bill is the minimum prescribed under the Vienna convention. Governments anxiety to control cost of nuclear power generation appears to have got better of its commitment to protect health and safety of its people. It is likely to set a precedent on government bearing the burden of private-sector failure.
The Price-Anderson Act of the US does not providing for the channeling of legal liabilities and was one main reason for US not joining any of the two international nuclear damages liability regimes. Though it does allow economic liability enforcement through lawsuits and criminal proceedings against the reactor makers. International regimes were crafted by the suppliers nations under competitive claims of superior safety standards as a platform to outbid each other in this highly regulated business. Hence the terms of conditions in Vienna and Paris Convention put a high bar on safety in reactor business. Surprisingly the Indian bill seems to be designed keeping in mind India as a supplier of nuclear power technology rather than a receiver as it is today and also may be as a prelude to joining some international safety convention in future. As a receiver it is likely to become a ginny pig to test low end and low cost safety technologies. As a supplier the benefits may be in distant future when it will get a piggy ride on global giants like, Areva, Toshiba, GE to get a slice of lucrative emerging global nuclear business .
By making it easier for foreign firms to do nuclear power business in India than in their home countries, the bill gives an unmistakable signal on lowering safety standards for lure of cheap power. The message may be: if you find it tough to test your hazardous innovations at home under a vibrant consumer-protected environment, as has been the case in home turfs of leading nuclear suppliers, do it here with little or no fear for consequences. As our lives are not as precious as yours. Coming from a country that has seen history’s worst industrial disaster, the Bhopal gas catastrophe, the bill clearly conveys our inability to learn from past mistakes.
The more appropriate and balanced approach would be to peg the bar not at the minimum of international standards but fairly higher up to be in a position to influence nuclear safety issues at a global scale in future. There is no denying that safety technologies today are far advanced than in 60s when the current global standards were laid, yet the very nature of nuclear power calls for near perfect safety standards and can’t be compared with conventional power generating methods in an actuarial mode. Any lack of indication to suppliers to the potentially serious costs of laxity and pursuing profits at the cost of safety will seriously endanger the growth of nuclear power.
The common features of amended Vienna and Paris protocols which served as the template for the bill have been adopted in their minimalist forms. It continues to securely hide the suppliers behind the operators who will invariably be domestic companies i.e the public sector NPCIL in India’s case , and thrust on him the absolute liability. So are the other contentious issues related to time limitation of 10 years and court jurisdiction.
The necessity of raising legal infrastructure for high-technology industry like civil nuclear power is hardly denied. Yet government conveys an impression of being in hurry and pilots a bill with little thought on long-term consequences. Thus by inevitably inviting charges of pandering to Washington, it helps little his own case as was also seen in a similar legislation Foreign Trade Act up for amendment before the parliament.
Government has today introduced Civil Liability for Nuclear Damages Bill 2010 in the parliament. A logical consequence of much controversial and widely debated nuclear deal with the US, the Bill intended to facilitate entry of foreign firms in nuclear power generation seems destined to be no less controversial. The likely opposition against the bill is to be both political and economic in nature. The political one carries the echoes of controversy surrounding Indo-US nuclear deal while the economic factors may point to role of state in risk subsidization of intrinsically hazardous nature of nuclear commerce.
Liability arising from accidents is an important issue in nuclear civil nuclear power generation. Two multilateral regimes exist today to handle liability issues arising from nuclear accidents. The IAEAs Vienna Convention for Nuclear Damages and OECD led Paris Convention. This is apart from the national liability laws like Price-Anderson Act in the US. There is no provision for liability in India’s Atomic Energy Act of 1962. Most of the imported civil nuclear reactors in India today are a result of agreement between governments that the government of India ( read Indian taxpayer) through its state actor, Nuclear Power corporation of India Ltd, NPCIL ,alone liable against any nuclear accidents.
The bill pegs the liability of plant operator at Rs 500 cr with a further Rs 2087 Cr to be born by the government in case of an accident. Clearly ,it seems, the major burden of safety is to be borne by the taxpayer not the plant-maker foreign firms. Besides the provision against raising any lawsuit by victims in an Indian court or home country of the reactor builder ostensibly seems to be for purpose of easing the entry of private firms, mostly US based, in nuclear power generation. Though it can easily be labeled by critics as appeasement of US, the government may in fact be bending to US pressure to help its nuclear firms, most notably, General electric and Westinghouse. Besides the low upper liability limit can be treated as attempt to subsidize foreign reactor builders through taxpayer paid funds. India is not a signatory to Vienna or Paris convention, which doesn’t prescribe any upper limit on damages. Incidentally the upper limit under proposed Indian bill is the minimum prescribed under the Vienna convention. Governments anxiety to control cost of nuclear power generation appears to have got better of its commitment to protect health and safety of its people. It is likely to set a precedent on government bearing the burden of private-sector failure.
The Price-Anderson Act of the US does not providing for the channeling of legal liabilities and was one main reason for US not joining any of the two international nuclear damages liability regimes. Though it does allow economic liability enforcement through lawsuits and criminal proceedings against the reactor makers. International regimes were crafted by the suppliers nations under competitive claims of superior safety standards as a platform to outbid each other in this highly regulated business. Hence the terms of conditions in Vienna and Paris Convention put a high bar on safety in reactor business. Surprisingly the Indian bill seems to be designed keeping in mind India as a supplier of nuclear power technology rather than a receiver as it is today and also may be as a prelude to joining some international safety convention in future. As a receiver it is likely to become a ginny pig to test low end and low cost safety technologies. As a supplier the benefits may be in distant future when it will get a piggy ride on global giants like, Areva, Toshiba, GE to get a slice of lucrative emerging global nuclear business .
By making it easier for foreign firms to do nuclear power business in India than in their home countries, the bill gives an unmistakable signal on lowering safety standards for lure of cheap power. The message may be: if you find it tough to test your hazardous innovations at home under a vibrant consumer-protected environment, as has been the case in home turfs of leading nuclear suppliers, do it here with little or no fear for consequences. As our lives are not as precious as yours. Coming from a country that has seen history’s worst industrial disaster, the Bhopal gas catastrophe, the bill clearly conveys our inability to learn from past mistakes.
The more appropriate and balanced approach would be to peg the bar not at the minimum of international standards but fairly higher up to be in a position to influence nuclear safety issues at a global scale in future. There is no denying that safety technologies today are far advanced than in 60s when the current global standards were laid, yet the very nature of nuclear power calls for near perfect safety standards and can’t be compared with conventional power generating methods in an actuarial mode. Any lack of indication to suppliers to the potentially serious costs of laxity and pursuing profits at the cost of safety will seriously endanger the growth of nuclear power.
The common features of amended Vienna and Paris protocols which served as the template for the bill have been adopted in their minimalist forms. It continues to securely hide the suppliers behind the operators who will invariably be domestic companies i.e the public sector NPCIL in India’s case , and thrust on him the absolute liability. So are the other contentious issues related to time limitation of 10 years and court jurisdiction.
The necessity of raising legal infrastructure for high-technology industry like civil nuclear power is hardly denied. Yet government conveys an impression of being in hurry and pilots a bill with little thought on long-term consequences. Thus by inevitably inviting charges of pandering to Washington, it helps little his own case as was also seen in a similar legislation Foreign Trade Act up for amendment before the parliament.
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