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1171. Addressing instability in Central America: Restrictions on civil liberties, violence, and climate change

Author:
Maria Fernanda Bozmoski, María Eugenia Brizuela de Ávila, and Domingo Sadurní
Publication Date:
09-2021
Content Type:
Policy Brief
Institution:
Atlantic Council
Abstract:
Citizens across Latin America and the Caribbean are rising up in protest. Political frustration and economic stagnation are fueling social discontent exacerbated by the continued COVID-19 pandemic and the slow health response. In Central America, restrictions on civil liberties, high rates of gender-based violence and extortion, and worsening climate change are compounding the lack of economic opportunities and pervasive corruption seen in El Salvador, Guatemala, and Honduras. In the year of its bicentennial, can northern Central America chart a new path, in partnership with the United States, to tackle the sources of social instability that are forcing migrants to seek a better life? In July 2021, the Joseph Biden administration released the US Strategy for Addressing the Root Causes of Migration in Central America report. Three of its five pillars call for the United States and northern Central American countries to work together to respect human rights and a free press, counter violence at the hands of criminal organizations, and combat sexual and gender-based violence.1 To ensure a sustained and effective implementation of this strategy, especially on these three pillars, the United States will need to find new ways to work closely with northern Central American governments, domestic and international private sectors, and organized civil-society groups. Following consultations with the Adrienne Arsht Latin America Center’s Northern Triangle Advisory Group (NTAG), this brief highlights the importance of implementing a holistic, multisector approach to mitigate gender-based violence, protect civil liberties and human rights, and build climate resilience. This brief is the third in a three-part series by the Atlantic Council’s Adrienne Arsht Latin America Center and DT Institute that provides policy recommendations for the United States and its northern Central American partners to address the root causes of migration.
Topic:
Security, Climate Change, Diplomacy, Politics, and Partnerships
Political Geography:
Latin America

1172. The Special Role of US Nuclear Weapons

Author:
Matthew Kroenig
Publication Date:
09-2021
Content Type:
Policy Brief
Institution:
Atlantic Council
Abstract:
This issue brief is based on Dr. Matthew Kroenig’s written testimony at a hearing on “Nuclear Deterrence Policy and Strategy” before the Strategic Forces Subcommittee of the Armed Services Committee of the United States Senate, conducted on June 16, 2021. US nuclear weapons play a special role in underpinning international peace, global security, and the US-led, rules-based international system. The nuclear threat to the United States and its democratic allies is growing: nuclear-armed, revisionist, autocratic powers (Russia, China, and North Korea) are relying more on nuclear weapons in their strategies, and they are modernizing and expanding their arsenals. In this new issue brief, the Scowcroft Center’s Matthew Kroenig explains why the United States needs to retain a robust, flexible, and modernized nuclear force to meet its national security objectives.
Topic:
Defense Policy, Nuclear Weapons, Science and Technology, Missile Defense, and Deterrence
Political Geography:
Russia, China, Iran, Asia, Korea, and United States of America

1173. Generational Dynamics of Economic Crisis and Recovery: Prospects for Younger and Older Persons

Author:
Nicole Goldin
Publication Date:
11-2021
Content Type:
Policy Brief
Institution:
Atlantic Council
Abstract:
Economic shocks affect young and older age groups disproportionately and highlight the insecurity of the youth labor market and volatility of older people’s savings. The COVID-19 pandemic exacerbated youth labor market challenges and caused young people to either lose jobs or work fewer hours. It also undermined the financial security of older people who tend to own small businesses given that half of the small businesses either closed down or lost significant revenue during lockdowns. Furthermore, COVID-19 exacerbated the digital divide between generations. While younger people are more likely to be technologically savvy, older generations often lack digital literacy to adapt to online work or virtual communications platforms. Dr. Goldin argues that to alleviate the disproportionate suffering experienced by young and elderly age groups during the pandemic, policymakers should increase targeting of social-protection measures, facilitate private-sector investment in education and training, invest in improving digital services and infrastructure, ensure access to financial services, and collect age-disaggregated data on economic and COVID-related indicators.
Topic:
Women, Internet, Economic Growth, Youth, Resilience, COVID-19, Digital Policy, and Inclusion
Political Geography:
Africa, South Asia, Middle East, East Asia, and Latin America

1174. Nuclear priorities for the Biden administration

Author:
John Harvey and Robert Soofer
Publication Date:
12-2021
Content Type:
Policy Brief
Institution:
Atlantic Council
Abstract:
How can the administration of President Joseph R. Biden both address the deteriorating international security environment and follow through on campaign promises to reduce the role of nuclear weapons? Former nuclear deterrence policymakers John R. Harvey and Robert Soofer, from Democratic and Republican administrations, respectively, contend in this issue brief that the Biden administration can address the increasing nuclear threat to the United States, meet its commitment to reduce the role of nuclear weapons, and maintain bipartisan support for US nuclear policy.
Topic:
Defense Policy, Nuclear Weapons, Science and Technology, Nonproliferation, Missile Defense, and Deterrence
Political Geography:
Russia, China, Iran, Asia, Korea, and United States of America

1175. Judgments by the Court of Justice of the EU on the EU’s Trade with Israel’s Disputed Territories

Author:
Rachel Frid de Vries
Publication Date:
12-2021
Content Type:
Policy Brief
Institution:
Mitvim: The Israeli Institute for Regional Foreign Policies
Abstract:
The EU is one of the largest trading partners of the Disputed Territories (DTs) in the world. The Court of Justice of the EU (CJEU) reaffirmed the EU’s differentiation policy between Israeli products from within or outside the DTs. This paper considers the aptness of the role played by the CJEU, the effects and effectiveness of the judgments, and their foreseeable significant implications for Israel.
Topic:
Territorial Disputes, European Union, Trade, and Court of Justice of the EU (CJEU)
Political Geography:
Europe, Middle East, Israel, and Palestine

1176. The Ministry of Regional Cooperation and Israeli-Palestinian Peacemaking

Author:
Nimrod Goren
Publication Date:
12-2021
Content Type:
Policy Brief
Institution:
Mitvim: The Israeli Institute for Regional Foreign Policies
Abstract:
Among Israel’s many government ministries, one stands out in particular. It is small, its authority is limited, and many doubt its need. But it is tasked with realizing one of Israel’s greatest aspirations since its founding: Reshaping relations with the Palestinians and its other Arab neighbors through regional cooperation. The Ministry of Regional Cooperation was established in 1999 as a product of political bargaining. Then-Prime Minister Ehud Barak sought to find a job for Shimon Peres, the peace advocate whom he did not want as his foreign minister. Peres used the new ministry as a platform to advance his vision of a new Middle East, while Barak led an Israeli-Palestinian peace process.
Topic:
Diplomacy, Government, Regional Cooperation, History, Domestic Politics, and Peace
Political Geography:
Middle East, Israel, and Palestine

1177. We Need to Talk Trade and Technology!

Author:
Lucian Cernat
Publication Date:
04-2021
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
“It’s May 3, 2021. Don’t forget to upgrade the embedded software in your shoes before you go for a run!” This may sound like a commercial for the 1986 Puma Smart Sneaker[1], the first running shoe with embedded sensors and software in its heel. It could also be an opening line from an old sci-fi movie describing a distant point in the future. Sci-fi movies have a great track record of predicting the future, from video calls[2] to self-driving cars[3]. The former is a dominant part of our daily professional routine these days. The latter is no longer science fiction[4]. So, what if the growing interplay between goods and services is not about the future but a good description of the present? Nowadays we live in a world of connected objects that rely on sophisticated embedded software. Recently, the Volkswagen’s CEO[5] admitted that the only way for VW to remain a successful car manufacturer is to become a successful software company. And while he may be the latest CEO to recognise the business irrelevance of such a goods-services distinction, he certainly is not the only one. Apple understood it well before many other companies when designing mobile phones and their underlying software ecosystem without having any production facilities. Now Apple wants to produce cars[6]. And so do several Chinese telecom giants, like ZTE[7] or Huawei[8]. And the list is longer: Amazon, Tencent, Google, Baidu. All these corporate announcements are another way of saying that mode 5 services[9] are going to be one of the most important ingredients of global competitiveness in many sectors. Car companies are right to get interested in software. Future autonomous and electric vehicles are primarily software-driven products compared to traditional cars. Already in 2010, the General Motors’ Volt car[10] was dubbed as one of the most sophisticated IT products, with over 10 million lines of software code and its own IP address. So, in the future, car manufacturers might need to do software in order to produce cars successfully. Surely, along complex global supply chains with many suppliers scattered around the world. These headline announcements from global manufacturing companies entering the software market and vice-versa, confirm a simple truth: in order to stay competitive, companies can no longer see themselves just as a manufacturing firm, or a services firm. And this simple truth goes beyond the automotive sector. Underpinning this radical shift is a series of digital disruptive technologies, affecting everything from product standards, industrial design, intellectual property, and investment decisions. Such technological developments are game changers for many traditional manufacturing sectors.
Topic:
Science and Technology, European Union, Digital Economy, and Trade
Political Geography:
Europe

1178. Subsidising Balkanisation: What China’s 3G Subsidies Teach us about 5G Open RAN

Author:
Hosuk Lee-Makiyama
Publication Date:
05-2021
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
Open RAN is increasingly becoming the answer to how to diversify 5G networks and beyond, especially in the light of a potential exclusion of China’s participation in western networks. In recent times, the US and Japan have jointly pledged $4.5 billion to support its development. Much – or perhaps entirety – of this support is predesignated for the O-RAN Alliance, a closed-door and private industry consortium. State interventionism is back – in a sector hereto characterised by open western markets and free competition. The public support currently pledged to the O-RAN consortium bear many resemblances to the Chinese government’s attempt to support TD-SCDMA, a unique standard for the Chinese market that was designed to support local vendors. Its use was a pre-condition for public subsidies for R&D or public procurement. As recent as 2020, the US Trade Representative reported on China’s standard-setting practices and subsidies as one of the world’s worst trade barriers. Those who advocate similar support in the West are either indifferent or nescient about how EU and US trade negotiators worked to address subsidies and opaque standard-setting. It is an open question whether the US and Japan will offer a level-playing field to European vendors – or non-O-RAN members who may develop their own Open RAN variants. Nowadays, Chinese scholars and senior officials openly talk of “TD-style innovation” as a disaster for the nation that delayed China’s rollout of 4G and plunged the economy into a performance and innovation lag. A key lesson for policymakers today is how vendors that cannot survive without subsidies will not optimise the organisation for innovation but public grant-seeking. This is an eerie warning for the 5G debate in some western capitals.
Topic:
Science and Technology, Digital Economy, 5G, and Subsidies
Political Geography:
China and Asia

1179. Taxing Digital Services – Compensating for the Loss of Competitiveness

Author:
Erik van der Marel and Peer Schulze
Publication Date:
07-2021
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
Several countries around the world have implemented a tax on digital services, commonly called Digital Services Tax (DST). This policy brief takes a closer look at why some European countries have imposed DSTs but not others. Surely, there are economic explanations behind the fact that Austria, France, Italy, Spain, and the UK have introduced DSTs – but not other countries in Europe. The five tax-imposing countries (here called DST5) have been losing trade competitiveness in digital services over the last 15 years. On the many trade competitiveness indicators we compute, the DST5 score lower values and show lower growth rates compared to other non-DST countries in Europe. Moreover, the differences between the DST5 and non-DST countries are stark, suggesting that digital services markets for the latter group of countries are a lot more dynamic and globalized. The difference between DST5 and other European countries in digital services competitiveness is striking. This is not to say that there should not be special taxes on digital services – that is a different issue – but it is important that the discussion about the DST starts from a better understanding of how such a tax relates to underlying patterns of digital service performance.
Topic:
European Union, Digital Economy, Tax Systems, and Economic Competition
Political Geography:
Europe

1180. China’s Public Procurement Protectionism and Europe’s Response: The Case of Medical Technology

Author:
Fredrik Erixon, Anna Guildea, Oscar Guinea, and Philipp Lamprecht
Publication Date:
09-2021
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
This paper concerns China’s market for medical technologies and how the Chinese state is assisting its own companies to gain greater sales at the expense of producers from Europe and other advanced manufacturing economies. The medical technology sector captures a variety of products, services and solutions which are essential to the provision of healthcare to citizens. Examples range from fairly simple technologies such as sticking platers, to complex ones, such as coronary stents, orthopaedics and pacemakers. In the last decades, Europe’s exports of medical devices to China have grown robustly. On the back of vibrant innovation, firms from Europe and elsewhere have not just followed the growth of Chinese demand for medical devices – they have also increased their share of Chinese imports. Now, however, this market is at risk of being gradually closed off for European firms as China doubles down on various policies that advantage local firms, while ultimately harming innovation and Chinese patients. China has recently introduced a new element in its industrial policy for its medical technology sector – a policy that builds on its long-term ‘made-in-China’ ambition to have local firms taking up the lion’s share of the market for medical devices by 2030. Beijing and provincial governments are using many different policies to provide support to the domestic industry and are in effect pursuing a policy for import substitution. Accessing the Chinese market for medical devices has never been easy but it has become increasingly challenging in recent years. Direct financial support, tax benefits, R&D support, local content requirements, opaque approval systems and other forms of advantages to domestic MedTech producers are now becoming major sources for the behaviour and development of the Chinese medical device market. China’s Fourteenth Five-Year Plan and the country’s new economic model of ‘dual circulation’ reinforces this trend. The Chinese market is becoming less open. Added to that is centralised state procurement – a new public procurement policy in China that was launched in 2019 for medical devices which has led to a grossly distorted procurement market. While this policy has reduced the price of medical devices in a drastic way, it has also paved the way for Chinese firms to take up a larger market share. This procurement policy is gradually squeezing European firms out of the Chinese market. Competition in China is becoming less fair. These policies follow a pattern. In several sectors, Chinese firms have grown their domestic market share through industrial subsidies and policies that restrict market access for foreign firms – or make it more difficult for foreign firms to compete in China. From their domestic market, these firms have then expanded abroad and taken a more prominent role outside of China. Backed by the Chinese state, these firms can squeeze market opportunities even more for otherwise-competitive European producers. Now this development is happening in the MedTech sector. It is urgent for Europe to respond to China’s procurement protectionism. MedTech manufacturers in Europe are often small and medium-sized enterprises, and they already struggle with getting into the Chinese market. China’s new procurement policy has also had a significant impact on Chinese imports of medical devices: a 1.3 billion euro trade deficit for China in medical technology products in 2019 turned into a 5.2 billion euro surplus in 2020. In Africa, Asia and Latin America, competitive European manufacturers are now confronted with competition from Chinese MedTech companies that have the backing of the Chinese state. The competitive distortions in the Chinese market now spill over to the global market – making European MedTech manufacturers even more disadvantaged. Europe should consider a case at the World Trade Organisation (WTO) against China’s policies which reduce European market presence for medical devices. Once agreed, a new International Procurement Initiative might be a useful instrument to wield pressure against the Chinese government to agree to free and fair competition. Europe can also negotiate with China – for instance in the framework of the Comprehensive Agreement on Investment (CAI) or through the new initiative on trade and health that Europe proposed to the Ottawa Group in 2020. These responses should focus both on remedying China’s current policy for growing its domestic medical technology industry by distorting its market and setting out the core policies and rules that should guide the future market for medical technologies. Fredrik Erixon and Anna Guildea are Director and Research Associate, respectively, at ECIPE. Oscar Guinea and Philipp Lamprecht are Senior Economists at ECIPE. The authors are grateful to a number of experts in the private sector and from the European Commission, the Federal Ministry for Economic Affairs and Energy in Germany, China’s Ministry of Industry and Information Technology that have taken their time to share their knowledge with us.
Topic:
Health, Science and Technology, European Union, and Public Procurement
Political Geography:
China, Europe, and Asia