Transnational Law Blog

Sri Lanka and Trade Policy: Concession or Sanction?

The European Union last week produced an official notice derived from its year-long investigation on human right violation in Sri Lanka. Here are the Commission's final report, and the independent expert's report. Given the Commission's conclusion that Sri Lankan government breached its human rights commitments during it 25-year civil war with the Tamil Tiger, the country is set to  loose its trade concessions, known as GSP Plus, to the European Union, a sanction which will cost the country more than $100m trade benefits. Mr. Rajapaksa’s government has recently secured a $2.6 billion loan from the IMF with very little strings attached despite some delay due to international pressure and warnings of human rights violation in April and May.

From the European Commission:

The Commission has completed a thorough investigation into the human rights situation in Sri Lanka and in particular whether Sri Lanka is living up to the commitments it made to respect international human rights standards when it became a beneficiary of the European Union's GSP+ trade incentive scheme which provides for additional trade benefits.

The report comes to the conclusion that there are significant shortcomings in this area and that Sri Lanka is in breach of its GSP+ commitments.

We will now consult with Member States on whether to prepare a proposal with a view to temporarily suspending these additional trade benefits.

In response to the Commission’s announcement, Financial Times Editorial responded with a legitimate defense for Sri Lanka by emphasizing the inherent purpose of trade preferential treatments, which has been a successful economic instrument to lower many countries’ poverty line.

Sri Lanka is threatened with losing its trade rights because of human rights abuses committed by its government in the course of the conflict with the Tamil Tiger rebels. Such violations are well documented and abhorrent. But it is perverse to punish the clothing industry and other exporters for the actions of security forces they cannot control. In extremis, trade restrictions are a legitimate means to isolate the most vile abusers of human rights, particularly when an authoritarian government controls the entire country and its economy. That is not the case here. Sri Lanka is not Burma.

Using trade as a strategic tool makes the global trading system hostage to endless political posturing and negotiating games. Governments should grant trade preferences on simple, fair criteria, largely based on the poverty and vulnerability of trading partners. Trade deals should be a means for poor countries to haul themselves out of poverty, not a tool of foreign policy manipulation by their richer counterparts. Sri Lanka’s exporters have used their access to the European market well. They should keep it.

 I wrote about my trouble of justifying this civil war as well as concern over human right violations in Sri Lanka early this summer, and thought that leaders of both the Tamil Tiger and Mahinda Rajapaksa’s government should be charged for war crime violations of international humanitarian law including unlawful killings of civilians particularly children and young men as well as forcing child soldiers. However, the removal of GSP Plus to publicly punish Sri Lanka and its people instead of the government, as argued by the Financial Times, seems unjustifiable ex-post. The penalty is estimated to cause more than 2% contraction of Sri Lanka’s troubling economy alone. Separating trade policy from politics and diverging international alliances (Sri Lanka, Iran, China versus other Western countries) is much harder than it sounds. Nevertheless, Sri Lankan workers and exporters should be excluded from international sanction against the country’s military government, while other available legal instrument, i.e. charge for violation of humanitarian right, remains a better tool for the purpose of punishment and deterrence.

*Image by the Economist

Thinking Through the Year of the Earth Ox

Harvard's political economist, Dani Rodrick, recently posted some new thoughts regarding 2009. In his entry named "Looking Forward To 2009", Rodrick detailed four major determinative tickets that may make the world better or worse in the upcoming year:

    1. Will the U.S. policy response be “bold” enough?
    2. Will Europe get its act together?
    3. Will China hold together?
    4. Will there be enough global economic cooperation?

Other than the first item, the other big three have been major and on going issues being discussed across disciplines in the past couple of years. Yet, during this historical and transitional period, they become ever apparently crucial.

Much of the deliberations in the past months revolved around whether the U.S. is heading toward a Second Great Depression, which may drastically increase the existing international economic, political and social instability. Fortunately, the concern is negated by most economists going from most unlikely to nil. Social scientists are hoping that for as much as we understand how the world functions today, much more than our grandparents did during the Great Depression, we will save ourselves from repeating history. My hunches are followed.

First of all, the Obama administration will response boldly to the current crisis; although, such responses are facing uncertainty as to whether the action  manages to gather enough supports from Americans and abroad as well as if the developed countries (most notably Western Europe and Asia) react consistent with the U.S. policy.

Secondly, the global financial crisis will not cure the division among European countries. In fact, it is appeared worsening, as the “European governments are observing one another with growing distrust,” especially when the European Union cannot continue to prove its necessary existence and leadership to its skeptical members.

As for global cooperation, I suspect that this transitional period will force an increase in global cooperation (can we afford not to?); although, there seemingly exists growing local and regional tensions. Why? I don't know, I just intuitively feel that it is the case. However, with the most recent world events, once may agree that such intuition has validity- Israel arm force attack on the Gaza strip, the India-Pakistani turmoil, reunion set back between North and South Korea. Over all, the Asia Pacific is probably the least unstable region at the moment, which may explain why it has been holding up relatively well during the global financial breakdown.

In regards to China , the Communist Party has now put aside its strategic sustainable development focus to concentrate on maintaining its growth rate. If China growth goes below 8% rate, it is arguable that social upheavals will arrive. Recently, a stimulus package has been announced to supplement job losses and exporting demand from the global market. Yet, the country has already seen a growing amount of social unrest mostly scatter around industrial zone where manufacturing jobs are being cut steadily. I have much hope that the Chinese government will be able to tame social uprising and minimize the impact of the current crisis. Here, the key solution is to create new jobs and stimulate domestic consumption to make up for the exporting decrease and to maintain growth rate. However, placing fiscal stimulus on performance of state owned enterprises (SOEs) as one of the party's major proposed strategies will create tremendous stress on sustainable development causing the issues such as degrading environment, resource shortage, social and regional polarization to explode further. China will face much more complicated setbacks once sustainable development topic comes around the next time, i.e. when the global crisis is resolved.

I am inclined to say that the current global financial meltdown certainly brings China closer to the inherent flaws of its “socialism with Chinese characteristic”, aka, a market system that is centrally planed and governed by one party. However, I don’t think the any political revision will come within the time span of the current financial crisis. Perhaps, not even within the next decade. The country has a huge amount of trade surplus, stable account balance and Asia Pacific has been holding onto the crisis relatively well in which, regional trade will not drastically reduced as it were the case for other regions. Speaking at the press conference during 07 National People’s Conference on March 07, Wen Jiabao asserts, “The Chinese economy still has some major problem, namely it is unstable, unbalanced, uncoordinated and unsustainable”. The communist party and its leaders know much about their internal weaknesses to curb them with external threats.

What the crisis will do is to reveal and to shepherd China closer to its systemic problems. Once the silver veil of a strong economic engine is taken away from the picture, the country’s social, political and sustainable shortcomings are all together unearthed and required to be addressed. I expect the dragon to once again make historians, economists and all of us startled on its next turn before the critical issue of a one party system stirs up the next civil unrest. There is much ahead awaiting this nation and us all.

At the moment, I am not only concern of the intensifying spread of the global crisis but also how we will come out of this after 2009. It is inevitable that this transitional period bears the golden key to our future fortune.

Russia's Foreign Policy -- Returning to a 'Cold War' Mentality?

In recent months, Russian President Vladimir Putin has displayed an increasingly chilly attitude toward what he sees as the West's adherence to an outdated 'world order.' In July, Putin suspended Russia's participation in the Conventional Armed Forces in Europe Treaty (providing limits on what arms the US, Canada, and Russia may station on the European subcontinent), a move widely seen as a reaction to a plan by the US and Europe to install new anti-missile interceptor sites in Poland and the Czech Republic--both former members of the Warsaw Pact. This was, perhaps, a scaled-back response, given Putin's threat in June to re-target nuclear missiles toward Europe, though Putin has since unveiled an anti-missile defense plan of his own, and reinstituted Cold War era long-range bomber patrols.

Putin has also reinforced Russian ties with rising non-Western powers. Iranian President Mahmoud Ahmadinejad was the guest speaker at the meeting of the Shanghai Co-operative Organization (SCO) last week; its member nations--China, Russia, Kazakhstan, Uzbekistan, Tajikistan and Kyrgyzstan span an increasing valuable reserve of oil and mineral resources, and the organization is perceived to be gaining political clout. Russia's gas and oil reserves have been key to its recent ascendancy--Russia's GDP has increased three-fold since 2002, with 70% of its income stemming from sales of gas and oil.

Perhaps in an effort to consolidate its position as a strategic supplier of the world's natural resources, Russia planted a titanium replica of its national flag in the seabed of the North Pole earlier this month, claiming ownership to up to half of the North Pole seabed area. The issue of who can actually claim 'legal' title to the North Pole seabed is governed by the United Nations Convention on the Law of the Sea, under which Russia would have to prove that the portion of the arctic seabed it claims--the Lomonosov Ridge--is actually an extension of Russia's landmass. Not coincidentally, scientists have begun speculating that there may be significant oil and mineral deposits underneath the North Pole, making the right to access to its seabed (and thus, those resources) potentially very lucrative. The move by Russia, however, drew criticism from other nations with potential stakes in the North Pole, and prompted countering moves by Canada, the US, and Denmark.

What's next for Russia remains to be seen. While Putin's term as President will end in 2008, his successor will likely also likely come out of the highly secretive and oligarchic FSB.

Islam and Europe - Can They Coexist?

Islam is widely considered Europe's fastest growing religion, with immigration and above average birth rates leading to a rapid increase in the Muslim population.  There has been much debate about solving the problem of "Europe's angry young Muslims."  Since the terrorist bombings of London and Madrid, many fear that the anger and frustration of the new generation of young, alienated Muslims may grow into a new homegrown crop of radicalists.  In the past year we have seen fierce protests throughout Europe over caricatures depicting the Prophet Muhammad, Berlin's Deutsche Oper's rendition of Mozart's opera,  newspaper essays, veils and school customs.  This begs the question whether such growth of the Muslim faith in Europe is compatible with Western European values?  Or is Europe on the verge of a clash of civilizations? 

Stephanie Giry says that assimilation of the Muslim population in France is possible and indicative for the rest of Europe.  Thus, a so-called clash of civilizations is avoidable.  Whether or not the necessary steps will be taken is entirely another question.  "These events are evidence that the immigration and integration policies of several European countries have failed," writes Stephanie Giry in France and Its Muslims.  While Giry maintains that the question of homegrown terrorism is a serious one, it obscures the fact that the vast majority of Europe's 15-20 million Muslims have nothing to do with radical Islam and are struggling hard to fit in, not opt out.   

Muslims desire to assimilate has sometimes been met with a form of discrimination fueled by nativism and a deep distrust of Islam that has made it more difficult for them to find homes and jobs.  But what has turned such vexing problems into crushing burdens is the economic stagnation that has afflicted the whole country and defied reform for three decades.  The greater problem is that the debate over how to ease these difficulties is now ideologically polarized, having been hijacked by public intellectuals and politicians out of touch with the country's realities.  The front-runners of France's 2007 presidential and parliamentary elections seem more interested in using the issue of Muslim integration for their own electoral ends.  Some have resorted to scaremongering about security and immigration and have conflated those issues with Muslim integration (sound familiar?). 

Despite fears that Muslims would display less than complete loyalty to French values, Muslims have largely acted as independent citizens, keeping their religious beliefs in line with French republicanism.  To the extent that they constitute a distinct community, it is only in the eyes of politicians angling for an edge or of those who stigmatize them for religion or countries of origin.  If discrimination continues to go unaddressed, there is real danger that French Muslims might get used to being treated as though their religious and ethnic identity was decisive and then start resorting to a kind of defensive identity politics.  Such a result would be a self inflicted one for France and an unnecessary one. 

France could find a way to both expect and facilitate the full incorporation of French Muslims into national life while respecting both traditional French values and a modern Muslim identity.  [In order to do this, the author suggests a bit of public education to demystify Islam, as well as abandoning inflated republican rhetoric].

Giry's article is an insightful look into the successes and failures of Muslim integration into French society with important implications of future integration in Europe as a whole. While I agree with her analysis that it is the political and intellectual elite who so often manipulate the Muslim population, as well as other minorities, for their own political purposes, I think the solution is much more complex than public education and abandoning republican rhetoric.  Really,  it is the whole of French society that needs to create avenues for reform in the private and public sectors.  It is the minds and attitudes of the French people that need to change.