Joe Biden's foreign policy

By Luis Fierro Carrión (*)

Twitter: @Luis_Fierro_Eco

As I write these lines, the Presidency of the United States is about to be defined, between the current president, Donald Trump, and the Democratic candidate Joe Biden [on Nov. 6^th Biden clinched the majority of the Electoral College].

The results point to a narrow victory for Biden in the Electoral College (and a more significant lead in the popular vote), along with his running mate, Kamala Harris (whose parents were from Jamaica and India). She will be the first female Vice-President in American history; the second African-American in the Executive branch; and the first Indian-American.

Biden is a well-known figure for Latin America, given that he was Vice-President between 2009 and 2017, during the Barack Obama administration. In addition, he was an emissary of the Obama administration to the region. Before being Vice-President, he chaired the Senate Foreign Affairs Committee.

What can you expect from a Biden government? In general terms, a return to a foreign policy based on norms, alliances, and long-term strategies, as has been traditional in the United States, instead of Trump's Twitter storms, in which he vilified Latinos and rulers from Latin America (remember that, at the launch of his campaign in 2015, Trump said that Mexicans were rapists and criminals).

Instead of an emphasis on building a wall at the border and restricting immigration and asylum applications, it could return to a more humane immigration policy. The crime of ripping more than 3,000 underage children from the arms of their parents and locking them in cages will not be repeated. Shortly before the elections, non-governmental groups said that despite their best efforts, they had not been able to locate the parents of 545 children, who remained abandoned. In the second and final debate, Biden said he would do whatever he could to make amends for this crime.

Regarding trade issues, although Trump imposed restrictions on steel imports from several countries, and also threatened to eliminate NAFTA (North American Free Trade Agreement), in the end he adopted a very similar trade agreement, although he insisted on changing its acronym in English to USMCA (United States-Mexico-Canada Agreement).

With regard to the Bolivarian axis (Venezuela-Nicaragua-Cuba), which Bolivia will join again, Trump maintained a belligerent rhetoric, even threatening a military intervention in Venezuela; but, in the end, he did nothing, apart from recognizing (together with the governments of the Lima Group) Juan Guaidó as interim president. In conversations with his former National Security Advisor, John Bolton, Trump mocked Guaidó’s weakness and said he was impressed by Maduro's ability to stay in power. But he did not grant Temporary Protected Status (TPS) to Venezuelan refugees fleeing the dictatorship and proposed eliminating the TPS for Central American immigrants (including those from Nicaragua). Trump's main drive was xenophobia and not ideological issues (he has tried to do business in Cuba in the past).

Biden, by contrast, argued in a book in favor of addressing the problems of violence and poverty that affected Central America. "Of all the hot spots in the world, I had come to think that Central America presented the best opportunity." In 2015 he was instrumental in convincing Congress to pass an assistance package for the region for $ 750 million (which Trump later thwarted).

Biden and his team of experts “would take a broader approach to the problem of immigration and the region. They also say that they would address poverty and violence, the root causes of migration and instability, furthering the fight against corruption and investing in job creation and improved governance,” Ernesto Londoño wrote in the New York Times.

Rather than being a 800 pound gorilla imposing its ideas on the region, the United States would operate within the framework of mutual respect and shared responsibility, said Jake Sullivan, an adviser to Biden. Biden would propose a $ 4 billion assistance package to try to tackle the causes of unauthorized immigration.

Biden would also renew the United States participation in the Paris Agreement to tackle climate change, and support the region's efforts to combat it, including reducing deforestation in the Amazon (which might put him in conflict with Bolsonaro in Brazil).

Ecuador (depending on who is elected in 2021) could take advantage of this relaunch of U.S. foreign policy by championing the fight against climate change, against deforestation, and in favor of renewable energy. It could also push for a free trade agreement with its main trading partner, the US; and could complete integration into the Pacific Alliance.

One setback for Latin America under Trump was the appointment of a US citizen as President of the Inter-American Development Bank (IDB), a hardline Cuban-American ideologue, which by a "gentlemen's agreement" had previously been reserved for a citizen of the region. The Moreno government was an early supporter of the proposal, leading to the former Ecuadorian Finance Minister Richard Martínez being nominated as a potential vice president. This appointment is frozen, while it is determined if it violates IDB regulations (it does appear to violate the Constitution of Ecuador). But it remains to be seen if Biden keeps Claver-Carone in office (he could hold up U.S. support for a capital increase until Claver-Carone steps down).

Paul Krugman indicates that a Biden Presidency is likely to return the US to its role as a promoter of multilateralism, by returning to bodies such as UNESCO and the World Health Organization. In a more immediate term, we shall see if Biden joins the international agreements for the distribution of an effective vaccine for Covid-19 (something that Trump has refused to do, by prioritizing "America First”).

 (*) A Spanish version of this article was published on November 6, 2020, in "Diario El Universo" of Ecuador.

https://www.eluniverso.com/opinion/2020/11/06/nota/8038237/politica-exterior-biden

How to generate employment in Ecuador

By Luis Fierro Carrión (*)

Twitter: @Luis_Fierro_Eco 

Ecuador faces the most serious economic crisis in its recent history. Added to this is an almost complete absence of leadership, a deterioration of its institutions, institutionalized corruption, and the loss of public faith and trust.

A collapse of the economy of around 10% is anticipated in 2020. Adequate employment, according to the INEC, has fallen to an all-time low of 16.7%; while unemployment has increased to more than one million people, 13.3%. It is urgent to achieve a sustainable and equitable economic reactivation and promote job creation.

High levels of unemployment and underemployment will lead to increased poverty, inequality and malnutrition, and probably also lead to increased insecurity.

The most effective and sustainable way to reduce poverty and inequality is through the creation of quality employment. 

Do you remember that President Moreno offered to create a million jobs in four years? Instead a million jobs have been lost.

Despite electoral offers and rhetoric, there is little a President can do to create jobs. It is true that inadequate economic policies can lead to a drop in private investment and, consequently, to job losses. It is also clear that improper handling of a pandemic can lead to massive job losses. And a pro-cyclical fiscal management, such as the one implemented by the “Alianza PAIS” governments in the last 13 years, can lead to massive reductions in personnel in the public sector in contractionary phases, such as the current one.

But creating productive employment in the private sector is more difficult. It is necessary to generate an environment conducive to attracting national and foreign private investment, in order to increase productivity, generate added value, and, if possible, increase exports.

Legal security must be sought, and an adequate tax framework must be established, to avoid shocks and uncertainty. It was counterproductive that the Correa government eliminated the Bilateral Investment Treaties, and made no progress in signing Free Trade Agreements with our main trading partners.

It is also necessary to improve the quality of the educational system (the same one that has collapsed as a collateral damage of the pandemic), and in particular to establish vocational training systems linked to the demands of the labor market.

In the short term, you can:

•  Provide professional protective equipment (masks, goggles, gloves) to the personnel, and try to operate with the required social distance. As far as possible, implement telework, which is more feasible for intellectual work.

• Channel the resources of multilateral organizations to offer credits and guarantees to micro, small and medium enterprises (MSMEs), in order to preserve and expand labor contracts.

• Make employment contracts more flexible, especially for new workers and young people. Extend the trial period for new employment contracts to two years. Allow part-time and temporary employment contracts.

• Strengthen the protection system for the unemployed.

• Create mechanisms to put job applicants and bidders in contact.

• Allow agreements between the parties to renegotiate working conditions in companies.

• Allow agreements between the debtor companies and the financial system, to extend terms, without incurring default interest.

• Promote the development of the capacity of micro, small and medium-sized enterprises for electronic commerce; the digitization of services; and provide professional training in these areas.

• A profound reform of the social security system is required, changing the governance and administration model of the IESS.

• Channel resources from multilateral organizations to face climate change, increasing the energy efficiency of small and medium-sized companies; and facilitate investment in renewable energy (solar, wind, biomass, hydro).

In the medium term, it is necessary to establish a productive, sustainable economy inserted in the world, regulated by the State, based on the initiative of the private, social and solidarity sector, and oriented towards the generation of quality jobs.

Some policies in this direction:

• Promotion of an economic model based on private initiative, that will generate links with the social and solidarity economy.

• Incentive for the creation of new companies through the streamlining of procedures, reducing the time and cost it takes to create a company.

• Government support for exports in accordance with parameters of sustainability and quality of employment, incorporation of technology into the national human capital and increasing the national added value.

• Provide technical assistance, infrastructure, logistics, services, public funds to support the management of MSMEs.

• Establishment and development of free zones to facilitate the importation of raw materials, intermediate goods and equipment, and then export the final products.

• Incentive to national and foreign investment that helps to promote the creation of productive employment, technology transfer, promotion of renewable energy, energy efficiency.

• Promotion of clusters and development of productive networks between companies-universities-government, and between large, medium and small companies.

• Promotion of financial inclusion by simplifying the regulatory framework for microcredits so that they are less expensive. 

• Promotion of microfinance entities and credit cooperatives.

• Promote access to information and communication technologies. Boosting companies that invest in research and development, either independently or in partnership with universities, ensuring mechanisms for the protection of intellectual property.

• Promote corporate social responsibility actions: including integration in value chains and clusters of MSMEs.

(*) This is an English translation of a column published in the “El Universo” newspaper of Ecuador on October 2, 2020.

https://www.eluniverso.com/opinion/2020/10/02/nota/7997974/como-generar-empleo

 

International Trade, Technological Innovation and Public Policies: the case of Ecuador

Presentation on "International Trade, Technological Innovation and Public Policies: the case of Ecuador".

Presented to a panel at the WTO Public Forum 2018.

Presentation focuses on:

• Trends in Ecuador’s foreign trade and production.
• Public policies to promote change in productive matrix
• Public policies to promote productivity and competitiveness
• Policies to promote clusters, regional innovation strategies, smart specialization and internationalization of SMEs.

Some highlights:

• Between 75 and 84 % of Ecuador’s exports are primary products
• This has been the case particularly during the last decade, with high oil and other commodity prices.
• Even among Industrialized Products Exports, most are based on Natural Resources (Fish and Seafood, Cocoa, Coffee).
• High Technology Intensity Products are 2-6 % of Manufacturing Exports
• In contrast, the incorporated technological intensity of manufacturing imports to Ecuador is much higher.
• Nearly 40 % have Medium Technology Intensity, and 15-18 % have High Intensity
• Some export diversification strategies are presented, geared towards moving to products with a higher level of technological complexity and added value.
• Policies to promote greater productivity and competitiveness are presented. 

https://drive.google.com/file/d/1v_PNUaeZpcQpBNYfEr9HVUMg95mjOYZB/view?usp=sharing