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  • Author: Judit Fabian
  • Publication Date: 03-2020
  • Content Type: Policy Brief
  • Institution: Urban Institute
  • Abstract: International trade is often framed in starkly divergent terms: either countries choose multilateral trade agreements (MTAs) and advance the cause of global economic liberalization, or they choose preferred trade agreements (PTAs) and put the entire system at risk. Canada has a long track record of pursuing PTAs and with the Trump administration’s opposition to multilateralism, and longstanding opposition in elements of the Republican and Democratic parties, this trend will likely continue. The question is whether progress will come at the expense of the global trade system. Some economists believe PTAs to be trade-diverting, reducing trade with more efficient producers outside the agreement. Others insist that PTAs can create trade by shifting production to lower-cost producers in one of the participating countries. One prominent contrary argument holds that PTAs lead to discontinuities in tariff regimes between countries and regions, increasing transaction costs, disrupting supply chains, creating opportunities for corruption and harming global welfare, especially in developing nations. While debate continues about the effects of PTAs, a closer examination suggests that worries are overblown about their negative impacts on global trade flows. Evidence indicates that they support rather than harm the international trading system. Countries shut out of PTAs are more motivated to seek out agreements in new markets, increasing liberalization overall. They may also seek a reduction in most-favoured nation (MFN) tariffs, which would deprive PTAs of their major tariff benefits. Studies have found complementarity between preferential and MFN tariffs, revealing that PTAs promote external trade liberalization. Even if a PTA reduces a given country’s incentive to push for multilateral liberalization, it raises the odds of that country liberalizing its trade to avoid getting left behind. PTAs are a response to the difficulties of securing sweeping multilateral agreements. The World Trade Organization (WTO) Agreements authorize them under GATT Article XXIV, GATS Article V, and the enabling clause, and the WTO facilitates a degree of governance over PTAs through its dispute settlement process. Over the past 25 years, countries have adopted these deals at a rapid pace. Between 1994 and 2005, the number of PTAs increased from 50 to 200. By April 2018, 336 were in effect. At the same time, global trade has increased significantly. Between 1994 and 2010, the volume of world merchandise exports more than doubled. The proliferation of PTAs has resulted in a rise in international trade governance, because the countries involved shape their relationships in line with the WTO agreements. This juridification makes PTAs subordinate to the international system rather than giving them room to dissolve it. Canada should therefore have no fear of pursuing PTAs within the larger framework of the effort to achieve multilateral trade liberalization.
  • Topic: Economics, International Trade and Finance, Governance, Trade, Donald Trump
  • Political Geography: Canada, North America, United States of America
  • Author: Ross Fetterly
  • Publication Date: 01-2020
  • Content Type: Policy Brief
  • Institution: Canadian Global Affairs Institute (CGAI)
  • Abstract: The Canadian government allocates funds to departments through the annual federal budgetary process. With a Department of National Defence (DND) budget in the fiscal year 2019-20 of close to $22 billion,2 and expenditures spread out across a broad range of very different and distinct activities, expending the full allocation can be a significant challenge. While federal departments are permitted some carry-forward of eligible lapsing funds from one fiscal year to the next, in fiscal year 2018-19 the amount designated was up to five per cent of the operating budgets in their Main Estimates.3 With the federal government projecting significant budgetary deficits in the coming years, restricting or eliminating carry-forward of funding may be limited or eliminated to reduce deficits. Past practice within the department has been for the Investment Resource Management Committee (IRMC), chaired by the deputy minister, to decide on funding allocations of the carry-forward, based on departmental corporate priorities. While from an institutional perspective that aligns funding with optimal funding requirements, the consequence to organizations such as the Royal Canadian Air Force (RCAF) is that only a limited amount of lapsed funding may be allocated the following fiscal year. Thus, the air force has a significant incentive regarding its budget: to “use it or lose it”.4 RCAF corporate over-planning (COP) is a principal in-year strategy to maximize the use of allocated financial resources. Yet, at the operational and tactical level, the concept and application of in-year over-planning is not sufficiently understood. This paper will frame over-planning within the context of the RCAF and then recommend strategies to integrate over-planning into the air force culture. Corporate over-planning is essentially a means toward an end; specifically, that of maximizing output given by defined resource allocation. The paper will first consider defence planning approaches and budget allocations, and then consider the strategic environment within which the organization operates. The third section will emphasize the need for change in how the RCAF manages financial resources, followed by a section on adapting to change. The fifth section will review the concept of over-planning. That will be followed by a discussion of RCAF institutional corporate over-planning. The seventh section will consider budgeting as communication and how this supports maintenance of a common operating picture within the RCAF on over-planning. The final section will focus on RCAF corporate over-planning by discussing the structural unexpended rate, applying an absorption rate in operations and maintenance activities, and planning investment opportunities.
  • Topic: Government, Armed Forces, Military Affairs, Budget
  • Political Geography: Canada, North America
  • Author: David Carment
  • Publication Date: 01-2020
  • Content Type: Policy Brief
  • Institution: Canadian Global Affairs Institute (CGAI)
  • Abstract: After three years of limited discussion, the leaders of France, Germany, Russia and Ukraine renewed their peace talks to resolve the separatist conflict in Eastern Ukraine (Donbas). Efforts to facilitate a peaceful resolution to the conflict in the Donbas began five years ago with the meeting of the Trilateral Contact Group on Ukraine. This framework, developed by the Organization for Security and Co-operation in Europe (OSCE), attempted to facilitate a dialogue between Russia and Ukraine through the mediation of an impartial actor, and it culminated in the Minsk I (September 2014) and then Minsk II (February 2015) agreements. The Minsk II agreements comprised a 13-point peace plan, chief among which is an arrangement specifying support for the restoration of the Ukrainian-Russian border. While the implementation of the military portions of the Minsk II agreements were finalized within three months of signing, the political and security portions remained unresolved. Though President Vladimir Putin has declared his intent to protect the Russian-speaking peoples of the region, he has also stated he has no interest in reclaiming Eastern Ukraine. Not surprisingly, since Russia’s ultimate goal is undeclared, the conflict has proved very difficult to resolve.
  • Topic: Conflict Resolution, Security, Territorial Disputes, Negotiation
  • Political Geography: Russia, Europe, Ukraine, Canada, France, Germany, United States of America
  • Author: Colin Robertson
  • Publication Date: 01-2020
  • Content Type: Policy Brief
  • Institution: Canadian Global Affairs Institute (CGAI)
  • Abstract: An internationalist and a progressive, Justin Trudeau consistently boosts diversity, social justice, environmentalism and reconciliation with Indigenous peoples. A gifted retail politician, Trudeau prefers campaigning and contact with voters to the hurly-burly of the House of Commons. He possesses an empathy and emotional intelligence most people found lacking in his famous father, Pierre Trudeau. But are these attributes and causes out of sync with our turbulent times? Mr. Trudeau is learning firsthand what British prime minister Harold MacMillan warned U.S. president John F. Kennedy what was most likely to blow governments off-course: “Events, dear boy, events.” As Trudeau begins a second term as prime minister, the going is tougher. The Teflon is gone. He leads a minority government with new strains on national unity. Parliament, including his experiment in Senate reform, is going to require more of his time. Canada’s premiers will also need attention if he is to achieve progress on his domestic agenda. Does he have the patience and temperament for compromise and the art of the possible? The global operating system is increasingly malign, with both the rules-based international order and freer trade breaking down. Managing relations with Donald Trump and Xi Jinping is difficult. Canadian farmers and business are suffering - collateral damage in the Sino-U.S. disputes. In what was supposed to be a celebration of “Canada is back”, there is doubt that Canada will win a seat on the UN Security Council in June 2020. Losing would be traumatic for his government and their sense of Canada’s place in the world. It would also be a rude shock for Canadians’ self-image of themselves internationally.
  • Topic: Foreign Policy, Government, Politics, Justin Trudeau
  • Political Geography: Canada, North America, United States of America
  • Author: Vern Kakoschke
  • Publication Date: 03-2020
  • Content Type: Policy Brief
  • Institution: Canadian Global Affairs Institute (CGAI)
  • Abstract: Defence procurement in Canada has had some well-known challenges in recent years. Many commentators have suggested possible strategies for fixing the defence procurement system. The identified problems include overspending on defence programs, unnecessary and undue delays in re-equipping Canada’s fleet of aircraft, ships and ground transport, and defence budgets that remain unspent. The problems also include procuring authorities experiencing a shortfall in manpower and expertise, the inability to execute on defence procurements, unjustified sole-sourcing without a proper competition, political interference in selection issues, and the list goes on. The proposed solutions often address process-related matters: establish a single agency responsible for defence procurement or perhaps a cabinet secretariat to manage the involvement of three of four government departments who are often not on the same page. To date, not much has been written or discussed in public policy forums on a critical question: How should the necessary capital assets be financed? At one extreme, Canada could simply write a cheque and pay for them up front, thereby placing the assets on Canada’s balance sheet. At the other extreme, Canada could drop the financing obligation into the laps of private-sector bidders and let them worry about the most efficient way of raising the necessary capital. A middle-ground solution could involve a public-private partnership (P3) structure, a model which seeks to balance the interests of the public and private sectors in a manner that leads to a better solution for all parties. Any public policy discussion often begins with first principles. What is the government’s policy objective? It is to procure the best available equipment, with the most benefit to the Canadian economy or local interest groups and at the lowest possible cost. All three goals must be balanced in a manner that is politically acceptable, meets budget constraints and withstands public scrutiny. In major procurements, capital can be the largest single cost of a defence procurement.
  • Topic: Defense Policy, Government, Armed Forces, Finance, Public Policy
  • Political Geography: Canada, North America
  • Author: Ian Mack
  • Publication Date: 03-2020
  • Content Type: Policy Brief
  • Institution: Canadian Global Affairs Institute (CGAI)
  • Abstract: Canada’s experience with the Phoenix pay system is not just a pay problem. It points to wider problems in Canada’s management of complex major projects. Learning from Phoenix is important for the Government of Canada as a whole and the Department of National Defence specifically, the latter arguably responsible for the largest portfolio of complex projects – both for weapon systems platform and information technology initiatives. Fortunately, it appears that the Liberal government has taken notice. In the most recent Mandate Letters to Ministers, the Treasury Board President has been directed to ‘improve project management capabilities so that all major projects in government are led by a certified professional with at least five years of experience’. Additionally, the new position of Minister of Digital Government was tasked to ‘lead work to create a centre of expertise that brings together the necessary skills to effectively implement major transformation projects across government, including technical, procurement and legal expertise’ (and to lead in the replacement of the replacement pay system). This paper attempts to shed some light on the matter of pursuing complex projects and the enormity of the task at hand. I say “enormity” because complex projects are difficult to deliver at all (let alone on time and budget), as in evidence by the number that continue to fail in the private and public sectors, regardless of the complex project capabilities of those responsible for delivering them.
  • Topic: Government, Budget, Public Policy
  • Political Geography: Canada, North America
  • Author: Adam Chapnick
  • Publication Date: 01-2020
  • Content Type: Policy Brief
  • Institution: Canadian Global Affairs Institute (CGAI)
  • Abstract: On Feb. 11, 2016, Prime Minister Justin Trudeau briefed the Ottawa press corps after a meeting with the United Nations (UN) secretary-general, Ban Ki-moon. Having pledged during the 2015 election campaign to re-engage with the UN, he noted that doing so would include “looking towards a bid for the Security Council.” Perhaps this comment should not have surprised. The Conservative government’s failure to win a Security Council (UNSC) seat in 2010 had been a subject of Liberal ridicule for years. Yet, council membership was not included among the Liberals’ 167 campaign promises, nor was it mentioned specifically in then-Foreign Affairs minister Stéphane Dion’s mandate letter. One month later, Trudeau met with Ban again, this time in New York. Afterwards, with Dion looking on, Trudeau announced that Canada would be joining the 2020 Western European and Others Group (WEOG) election for one of two non-permanent seats on the Security Council in 2021-2022. The move was unprecedented. It marked the first time that a Canadian prime minister, and not the Foreign Affairs minister or a member of the foreign service, had publicly declared Canada’s initial interest in a council seat. It was also the first time that Canada had deliberately entered an already contested election: Ireland, Norway and San Marino would be its opponents for two WEOG seats. This brief history of Canadian interest in Security Council membership will suggest that attempting to return to the UNSC was the right decision, made at the wrong time, and for the wrong reasons.
  • Topic: Diplomacy, Government, Politics, History, UN Security Council
  • Political Geography: Canada, United Nations, North America
  • Author: Yuka Fukunaga
  • Publication Date: 02-2020
  • Content Type: Policy Brief
  • Institution: Institut français des relations internationales (IFRI)
  • Abstract: The multilateral trading system under the World Trade Organization (WTO) has been of the utmost importance for Japan's trade policy. In particular, Japan strongly supports the WTO’s rule-based dispute settlement mechanism, and frequently uses it. At the same time, in recent years, the adoption and implementation of regional and mega-regional trade agreements have become critical in Japan’s trade policy, with the stalling of the Doha Round negotiations in the WTO. Although the core of its trade policy remains the same today, Japan has been forced to rethink and modify it in response to the aggressive and unilateral trade policy of the Trump administration.
  • Topic: World Trade Organization, Governance, Internet, Free Trade, Trade Policy
  • Political Geography: Japan, China, Asia, South Korea, North America, United States of America, European Union
  • Author: John Seaman
  • Publication Date: 01-2020
  • Content Type: Policy Brief
  • Institution: Institut français des relations internationales (IFRI)
  • Abstract: From emerging technological fields such as 5G, artificial intelligence (AI), the Internet of Things (IoT) and smart cities to traditional sectors including energy, health care, railways and agriculture, China is increasingly proactive in nearly every domain where technical standards remain to be developed and set. Technical standards are the definition of processes or technical specifications designed to improve the quality, security and compatibility of various goods and services, for instance GSM for telecommunications or WiFi for wireless Internet. They can be thought of as basic specifications or technologies on which other technologies or methods will evolve – creating lock-in effects and path-dependency for future products and technological trajectories. Defining standards can provide significant benefits for society at large, but can also carry significant implications for which technologies will dominate future markets and provide substantial advantages to those who master standardized technologies. Chinese policymakers have become keenly aware of the relationship between technical standard-setting and economic power. Indeed, a popular saying in China posits that third-tier companies make products, second-tier companies make technology, first-tier companies make standards. In 2015, the State Council highlighted China’s deficiencies in the field and set out to transform the country’s standardization system, seeking to harness the capacity of standard setting not only to improve the daily lives of its citizens, but to drive innovation, boost China’s economic transformation toward the industries of the future, and turn China into a premier purveyor of international technical standards.
  • Topic: Science and Technology, Communications, Multilateralism, Standardization
  • Political Geography: China, Europe, Asia, United States of America
  • Author: Rawi Abdelal, Aurélie Bros
  • Publication Date: 01-2020
  • Content Type: Policy Brief
  • Institution: Institut français des relations internationales (IFRI)
  • Abstract: Sanctions have become the dominant tool of statecraft of the United States and other Western states, especially the European Union, since the end of the Cold War. But the systematic use of this instrument may produce unintended and somewhat paradoxical geopolitical consequences. The sanctions imposed on the Islamic Republic of Iran and the Russian Federation in the field of energy are particularly illustrative of this phenomenon.
  • Topic: Economics, Energy Policy, Sanctions, Geopolitics, Secondary Sanctions, Transatlantic Relations
  • Political Geography: Russia, Iran, Middle East, North America, United States of America