THREAD: In doing my PhD research some years ago I learned a bit about the Philippines’ banana industry, & its 2012 experience with SCS tensions. Bananas were rotting in Chinese ports. Why? The official line was a pest, the (genuine) presence of which violated customs rules 1/ https://twitter.com/financialreview/status/1260223330570952704
Does that mean Philippines’ exporters had “blame” here? Yes! The bananas should have been bug free! However, I was told that the bananas regularly had these bugs, & that local Chinese bananas had the bugs too. Certainly, this had never shut down trade...until the SCS tensions 2/
Similarly, for all I know (and I don’t) many Lotte stores may have been in violation of fire safety codes before they were closed in 2017 amid THAAD tensions. And generally, imports often have customs issues, from paperwork to things more serious. This is normal. Delays occur. 3/
But if laws are not enforced with consistency / impartiality, which is a problem around the world, in big and small countries, people will (reasonably) wonder whether politics affects how the law operates. This is relevant to what Australia is experiencing now. 4/
Part of the logic of what I call “informal economic sanctions” is the official regulatory basis for the economic pain has some basis in fact. Plausible deniability does 3 things. One, it helps avoid WTO and related issues. Two, it allows for deescalation without backing down 5/
Three, it affects debate within the target. Is this coercion? Maybe not! If there is blame all around, some attention is shifted from the act, to what the target itself needs to do. Maybe that’s just removing bugs from bananas, or scaling back (Aussie) anti-dumping actions 6/
Sometimes, however, it might be something more substantive, touching on key interests/values, & polities need to be attuned to this possibility. Nevertheless, if one’s house is not in order, coercion that exploits the disorder should not be reason to shirk cleaning it up. 7/
But, to use @stephendziedzic ‘s brilliant turn of phrase from yesterday: “when someone drops a hammer three times in quick succession, it's probably time to start looking for a nail”. I think @mcgregorrichard would agree. 8/
Apart from diversification (hard!), part of a strategy to reduce economic vulnerability has to be raising the cost of actions that exploit that vulnerability—disrupting free exchange in markets, including by enforcing laws inconsistently or selectively—for political purposes. 9/
I sympathise with the govt’s efforts to downplay things now, trying to delink politics from economics themselves to deescalate. If they are afraid of more pain ahead (wine?) this fear = textbook coercion, and a cautious approach does not mean reversing course on the inquiry 10/
Still, it’s in our interest, & our partners’, to raise the cost of politically motivated interventions in markets that punish. I’m not entirely sure yet how to do that (escalation risks are real, and costly!), but shining a light on it will always be necessary END 11/11
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