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Economy

The Game of Tariffs

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Adam Smith is considered the father of economics. Back in 18th century, he presented the concept of protectionism, which was given to promote the local industry. Nevertheless, in 21stcentury, the world is facing its repercussions.

It is time that the world should be well concerned by the actions that are being opted by the two economic giants. Trade deadlock between Beijing and Washington is getting intense. U.S. protectionist and unilateral approach is the impetus behind this trade war and hence so far no promising foreseeable future can be anticipated. Moreover, China’s economic and development initiative i.e. BRI and its successful pilot project CPEC is also giving headaches to Oval. This Game of tariffs has engulfed whole of the globe into its chakra.

Trump and his policies have always been scrutinized by the analysts everywhere. Even before the elections, Trump expressed his strong urge to subdue China by means of trade restrictions. It was clearly evident even before the elections that if Mr. Trump will somehow make his path to Oval, he will surely give Chinese a sturdy time.

In Nov 2016, it happened just as it was feared. The heat of July 2018 had resulted into an economic cold war. With the world being the witness, there is no doubt that when Washington says, it knows how to make it happen. Therefore, when Washington flaunted its intentions to put serious tariffs onto Chinese commodities, it actually meant it. What started from a mere USD 34 billion, has crossed over USD 200 billion till-date. So far, Washington has imposed tariffs on USD 250 billion worth of goods coming to United States. Furthermore, it has also threatened to increase the threshold to an approximate value of USD 325 billion. In return, Beijing retaliated with putting tariffs on US$ 110 billion worth of goods.

The latest development that added fuel to the fire was on May 10, when United States raise tariffs to 25% on $200 Billion products coming from China annually. This escalated tensions between the two more as it projected that U.S. is not coming slow. Not only this, China has also banned the trade of rare elements. These elements hold prime importance in making of a number of electronic products such as mobiles and laptops in the United States.

China’s ministry of commerce has shown concern over American intentions regarding the engagement of two in the trade war and had warned that the dispute may even lead to “largest trade war in economic history”. China has repeatedly shared its concerns over the trade stand-off between Beijing and Washington. Whereas, continuous cold responses from Washington are leading situation to worse ends. China, as a responsible state, talks about equality, inclusiveness, and shared future for the globe. It always encouraged openness and cooperation.

Stubbornness of Trump’s Administration is pushing the Globe towards an economic and trade crisis. High tariffs on products will ultimately raise the costs for suppliers, manufacturers, retailers and then eventually affecting the people at tail¬— consumers. The end consumers will have to face large price raises even for the general products. On November 30, 2018, Chief of the World Trade Organization had said that global free trade is facing its worst crisis since 1947 and warned that the current spectrum of conflict will lead to global trade crisis.

These tensions are not restricted between the two; instead, they have led the global market to fluctuations, which has put business persons and investors in a situation of uncertainty. This investment dilemma can halt the economic progress inside of both countries. International Monetary Fund has also warned that a full-blown trade war would weaken the global economy. Earlier in this month, Cristine Lagarde gave remarks on Donald Trump’s intent to tax all trade between two countries that it would “shrink the global Gross Domestic Product (GDP) by one-half of one percent”.

China is the new reality. Washington needs to realize that. There are new players onto the scene. Oval’s actions will be scrutinized now; its ways will be challenged. It will no longer go uncontested.

The world knows that global economic ship today is sailing towards east and Chinese dockyard is where it will anchor. Mutual understanding is beneficiary for both the countries as well as for the world economy. Beijing is determined to meet Washington’s intentions with full capacity. United States is inducing self-inflicting pain to itself and to the world too. Companies inside US have already started showing their grievances regarding the trade stalemate between Beijing and Washington. Over 600 companies including Walmart urged Trump to resolve the dispute with China as it directly affects the business community and customers inside US. Washington needs to comprehend that it will become victim of its own protectionist gambit if it continues to be on the route on which it has maneuvered itself.

Sabah Aslam is the Founder & Executive Director of Islamabad Institute of Conflict Resolution (IICR), and member visiting faculty Dept. of Peace & Conflict Studies, NUML, and School of Politics & IR, Quaid-I- Azam University, Islamabad.

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Economy

The Philippines’ Circular Future

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From the period of 2000-2019 The Philippines placed 4th as the most affected by climate-related disasters according to the Climate Risk Index. This is because geographically, it occupies an area that makes it a hotspot for tropical typhoons and other natural disasters. But the system of rural livelihood in the Philippines and it’s archipelagic state are also contributing factors to its vulnerability to the impacts brought about by the climate crisis, such as sea-level rise and extreme weather events.

Understanding these realities, the government has been proactive in developing the country’s adaptive and mitigating capacities.  These efforts are seen in their national and global initiatives such as the establishment of The Climate Change Act of 2009, a law that aims to prevent and reduce the adverse impact of climate change, as well as taking part in the Paris Agreement through its NDCs that commits to a 75% reduction in carbon emissions by 2030.

A Circular Economy

Beyond the health and social crises caused by COVID19 pandemic, it has also underscored the importance of fast tracking climate action and the need to rethink economic systems through circular models as supported by the Department of Finance Secretary Carlos G. Dominguez III. Currently, the House Bill (HB) 7609, also known as “Philippine Circular Economy Act of 2020” is being proposed to serve as a mitigation strategy to accelerate the country’s contribution to the 2030 Agenda for Sustainable Development through mainstreaming of circular and sustainable consumption and production strategies. Similarly, according to The Circularity Gap Report 2021 of the Circle Economy, the implementation of a circular economy would complement the efforts of the NDCs globally, as it will aid in keeping the global temperature rise to well below 2degC by 2032.[1]

Circular economy is a consumption production model that in essence would allow elimination of waste through maximizing the use of valuable resources within systems, the opposite of current linear economies in which products are disposed of after use. This can be achieved by ensuring that materials circulate within operating networks while also allowing natural systems to regenerate. In order to implement this effectively would require collective commitment from stakeholders across the value chain i.e. from the public and private sector, up to the consumers.

Inline with this pursuit, among other proposed key initiatives of the government that are being developed is the Single Use Plastic Regulation Act (HB 9147), a tiered phase-out plan for single-use plastics (SUPs) that aims to improve the country’s waste management and promote circularity. The HB 9147 is also aimed to foster engagement within the business community through the integration of an Extended Producers Responsibility (EPR) scheme. This EPR scheme will serve as a policy tool that would instill accountability from producers throughout the lifecycle of their products that utilize plastic packaging. This scheme will promote funding and collaboration among the private sector and the government through the shared responsibility in managing these waste. At the same time this will encourage innovation of more sustainable and eco-friendly designs for products and packaging.

Business opportunities in the shift from linear to circular pathways

Accordingly, these proposed policies should not be viewed as threats by businesses in order to reap the benefits it entails. Gary Steele, group CEO of TES, enumerates several opportunities that businesses can leverage from this scheme, such as improved reputation and customer relationship through extended value adding services. Steele recognizes that this system also decentralizes sources of raw materials needed for the production of goods, thus contributing to strengthening the supply chain. As such, a circular economy would open avenues for innovative business opportunities that would result from the recycling of waste materials and even repair of products among others. Ultimately these opportunities contribute to reduced cost and increased profits, making a strong case for the implementation in business models and marketing strategies.

Building momentum towards transformational change

However, the degree of circularity within the Philippines is still relatively low as noted in a study by the Asian Development Bank in 2020[2]. Reasons for this are mainly due to its large primary resource extraction sector, growing infrastructure development and poor waste management at municipal levels. Albeit laws such as the Ecological Solid Waste Management Act of 2000 have been implemented, the country’s lenient law enforcement and lack of infrastructure continues to serve as barriers to its waste management efforts.

That being said, it is imperative that the Philippines continues to develop an enabling environment for businesses to champion circularity through financial incentives, new legislations and the enforcement of already existing laws. Given the economic, environmental and social benefits that a circular economy presents, it’s vital that it continues to build on this current momentum in contextualizing and mainstreaming the concept of a circular economy in the country. It is important that the countries, including the Philippines, exhaust all efforts in contributing to climate action to prevent the forecasted catastrophic events that lie ahead. This would need transformational changes in our systems, one of which is a shift to a circular future.


[1] Circle Economy. (2021). The Circularity Gap Report 2021.

[2] ADB. (2020). Regional: Supporting Implementation of Environment-Related Sustainable Development Goals in Asia and the Pacific (Philippine Subproject) Circular Economy in the Philippines.

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Economy

Will Meritocracy Save The Post Pandemic World?

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The Reality of Human Endurance: Protection of self-incompetence is a condition of the human heart as our own self-discovery by our own mind only exposes us to our own fragility and our limits on our already acquired skills. Despite such skills always surrounded by additional untapped hidden talents, but when passages of excruciating pain required achieving transformative advancements the heart draws curtain to such adventures out of fear. 

Most importantly at times, self-discovery alerts us of a dormant self-destructive beast living in stagnation within us. To advance and search for any new thought, any new skill, or any new enlightenment,  it is always an odyssey for the mind, to search for wisdom is to fight monsters, like a warrior on a bold adventure of courage in a lonely journey.  Be a warrior and discover your own universe of hidden talents. Meritocracy awaits for you…

Most economies of the world already visibly damaged, Covid-19,a new sheriff in town, a dealer’s choice game on the table; needed is an ace card to bring meritocracy, performance, productivity and profitability or lose big time. Select a few nations of your choice, observe their levels of executions and digitization, study their bureaucracies and determine their rate of resilience and if and how they will survive over the next five years. Now, the real difficult questions

Why shut down the electricity of the building and climb the skyscraper via the staircase. After all the gross negligence by most nations to neglect digitization and to not to adopt almost free technologies is now visible as an unforgivable fault. Digitization, most critically needed in the main economic hubs, trade-groups, associations and the entire small medium businesses across the nation on integrated platforms. With the majority of nations locked up in an old mindset. They simply cannot zip up to the top floor, exhausted and breathless as they are climbing stairs and badly stuck on lower floors.  

Therefore, what is wrong with stubbornly bureaucratic mindset and why it refuses to showcase its diversity of talents and skills to the world. Most importantly, why are such questions not part of the daily national debates?  Why are layers of economic development leadership so shy, trade groups so afraid and political leadership so confused about it?  

The New Realities: Post pandemic recovery will take no prisoners. Out of the cage, the constant mutation of our economic thought has now morphed into an ugly monster. Alarm bells are ringing. The world has changed on economic behaviorism every millennia and this period is no different. Eventually modern intelligentsia of the world, seeking common good, one again will pass through the eye of the needle and arrive on the other side badly battered and bruised but a bit better. This is how humankind has saved itself from total obliteration. This is how the global populace has learned to linger as economic shifts of power are coming near you.

The Rise of Meritocracy: Unless bureaucracies unlearn to leave their broken past behind, embrace the future, digital platforms, global diversity and exportability, the paper-based mindset economies will only end up in waste-paper-baskets.  Meritocracy will eat bureaucracy for lunch. There is no other way. Soon it is going to be lunchtime. 

Adjustments: acquire mastery of such affairs on fast track; rediscover constant learning, constant disruptions and constant advancements, future needs a new global-age mindset. Understanding of the micro manufacturing and micro-exports logic is a key issue, the digital platforms and the sense to where commerce headed are the landscapes.  Unless western economies rediscover manufacturing, blended with technology, platform economies the billions will march down on the old system.

Century ago, the industrial age forced acquisition of heaviest machinery to advance, now there is nothing heavy investments, but the free flying minds on freely available technologies and platforms that are in charge.Today optimization of freely available technology requires little or no muscle power but definitely demands superior mental-powers. Upstanding how to use critical thinking and declaring lifelong learning as a normal requirement will bridge progress. Smartness today means to identify your hidden enemies; knowing what messages that draw you towards tribalism, hate and destruction, knowing what is Media and what is fakery, what is Social Media or if Political Rhetoric is nothing but a special agenda to divide and conquer. Do not become divisible.    

What a difference a century makes, during 1922, the Union of Soviet Socialist Republics formed, Tomb of Tutankhamen discovered, BBC formed and Gandhi put in Prison by the British. Our 2022 will unfold the post pandemic economic realities. With dozens of elections, reshuffling of cabinets, recycling of promises and Teleprompters on garage sales the socio-econo mood swings will test freedom to yell the truth.

Global shift of powers now defined. Colossal economic failures identified. Global opinion solidifies. Universal struggles start to appear. Neither, super-taxing bearers of the Pandora papers will save the economies nor will the real surprises out of the Pandora’s Box from hyperinflation to hyper-deflation will save us. Candle light visit to tragic landscapes of Beirut speaks volume as it sinks to the dark ages. Uplift mobilization of entrepreneurialism will save nations. Advancements towards “meritocracy” are personal development trends, therefore, a call of the times, a new truth, and new reality. Change and change again, statues are for the birds to poop on…

The rest is easy 

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Economy

Work safely from Paradise

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Due to the pandemic, Caribbean nations have been among the most impacted and most devastated economies, as most of them rely on tourism to keep their economies afloat. Tourism has decreased dramatically as a result of the Covid-19 pandemic and the suspension of air travel, with the Caribbean countries seeing a 69% percent drop. This has inevitably caused a major shock to Caribbean economies, requiring them to adopt measures to mitigate the pandemic’s economic consequences. Caribbean nations have made a number of steps to lure remote workers to their country, including launching a range of programmes. This has been accomplished by creating new visa categories and using targeted marketing to entice remote workers and freelancers to come and remain in Caribbean countries, allowing them to “Work from Paradise.”

This approach has also been warmly received by the broader Caribbean population, as it allows remote employees from other parts of the world to come and work in the Caribbean without displacing local workers. Increasing income from foreign travelers/remote employees is also helping to improve local trade and the Caribbean economy, making this a win-win situation for Caribbean countries. Given the ongoing movement from traditional workplaces to remote working and digital workspaces, there is a fantastic opportunity for Caribbean countries to fill this new niche and grow their economies. Countries whose economy are based on tourism can genuinely benefit from this potential, since digital nomadism is expected to grow even more in the post-covid era. Anguilla, Antigua and Barbuda, Aruba, Bahamas, Barbados, Bermuda, Cayman Islands, Curacao, Dominica, and Montserrat are among the Caribbean countries that have introduced digital nomad visas and similar programmes to improve their economies. Emphasizing the low cases of Covid in these countries make them more than ideal locations to work safely.

Such visa programs have received widespread support across the world, as seen by the enormous popularity of Barbados’ Welcome Stamp, which allows remote workers to stay as digital nomads in Barbados for a period of 12 months. This has aided in the inflow of income into the country, boosting the Caribbean nation’s economic condition. To take advantage of these digital visa programs even more, Caribbean nations have been investing in infrastructure, communications, and healthcare to improve their facilities and entice more digital nomads to their country. This has also led in economic growth, owing to the increased focus on communications infrastructure, which has resulted in quicker and more reliable internet access. Not only has this boosted the economy, but it has also benefited local businesses and the Caribbean public because of the enhanced, stable access to the digital domain. Barbados’ capacity to swiftly attract digital nomads and investments due to its fast internet speeds demonstrates the necessity of good digital infrastructure and a fast, stable internet connection. The advantages to other Caribbean countries’ economy will surely be larger than merely attracting digital nomads if they invest in internet infrastructure as well. Having personally visited and have done business in many of these Caribbean nations, it is not a bad thing working from paradise.

Apart from focusing on remote workers and digital nomads, Caribbean countries have been working on a variety of fronts to strengthen their economy. To begin with, several Caribbean nations are concentrating on regional domestic tourism as an underserved market and are thus recruiting Caribbean residents to strengthen their tourist-based economies. This is assisting in bringing in revenue for pandemic-affected countries. Second, to stimulate economic growth, Caribbean nations are investing in both physical and digital infrastructure to give their economies a boost amid the Covid pandemic. This infrastructure investment has not only helped their economies float, but it has also brought in some much-needed cash, thanks to greater, reliable access to digital markets. Finally, Caribbean nations are focused on stabilizing and assisting small and medium-sized businesses to keep them active and operational and avoid additional income and revenue losses. The Caribbean economies are trying to not just stabilize, but also to increase their economic growth, using tactics and strategies like these to take advantage of the new global realities brought about by the Covid pandemic. If all the Caribbean nations take use of the pandemic’s productive potential, they will be able to ride out the pandemic wave with little to no economic consequences in the long term.

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