Inside World Trade

Going for Gold- the free flow of people, goods, and capital make strong competitors and strong partners

March 1, 2014
KEYWORDS global trade
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The economic gold lies in the fundamentals.

World traders are looking at a real mixed bag of developments in foreign relations. Some speak to more openness, others move in the opposite direction.

As the 2014 Winter Olympics took center stage, an event that was designed to promote harmony became instantly politicized. With a platform as big as the Olympics, that’s hardly unexpected, but some of the Olympic spirit may be alive and operating in the shadows of gold medal headlines.

Among the positive developments on the world scene, Iran is promising cooperation on nuclear inquiries, though the celebration of the 35th anniversary of the Islamic revolution offered images that were a reminder that the diplomatic situation there is still delicate. Slow progress is still progress.

Cuba and its second largest trading partner, the European Union, are starting talks that could result in increased trade and investment. The EU is keeping human rights “at the core” of the talks, but the offer to ease some of the 18-year-old restrictions under the EU’s “Common Position” dangles a very desirable prize to encourage continued progress on the island nation. Cuba is seeking a larger role in world trade, and with the expansion of the Panama Canal, one of its efforts is developing port infrastructure to improve its position as a transshipment hub.

French President François Hollande visited the U.S., signaling a new era (or a renewal of old ties) after U.S.-French relations became strained a decade ago over the war in Iraq.

China and Taiwan officials are meeting to discuss closer ties. These are the highest level talks the two have had since 1949.

These may be steps in the right direction — albeit baby steps — but not all movement is forward. While U.S. lawmakers debate immigration reform and seem to be doing all they can to sidestep the issue until after the next congressional election cycle, the Swiss have voted to restrict migration from the EU.

What makes the Swiss vote to establish immigration quotas interesting (aside from the narrow margin of 50.3 percent that passed the referendum) is the argument that open migration may have been providing exactly the benefits supporters regularly cite.

By all accounts, the Swiss economy is strong. Unemployment is low. Government and business leaders say the more open policy has allowed Swiss businesses access to skilled workers from across Europe — exactly what they needed to fuel and maintain economic growth. Opponents argue that with one quarter of the Swiss population made up of foreigners, open migration has put pressure on housing, healthcare, education and transportation as well as driving down salaries.

The EU is not in a position to back down on the issue of open migration. Though Switzerland is not a member of the EU, it has close ties and sells more than half its exports in the EU. But, the EU’s founding document, the Treaty of Rome, in 1957 called for the free movement of people, goods, and capital. These were considered fundamental elements to the formation of an economic community.

 Like the Olympics, the EU was founded to encourage harmony through healthy competition. Are gold medal economies like Switzerland and the U.S. facing increased competition from new contenders who are now starting to practice the fundamentals? 

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