Sunday, January 2, 2011

Grading My 2010 Predictions: A Good, Solid B+

Happy New Year!  With 2011 now upon us, a review of my 2010 predictions is probably a little overdue. (It's like soooo last year!)  Nevertheless, it's important every once in a while for us bloggers - and you normal folk - to stop judging other people's mistakes and look back at our own.  So here we go.

Last January, I provided a laundry list of predictions on several different trade issues, broken down by predictive difficulty into three categories: (1) low hanging fruit (i.e., pretty "easy" predictions based on existing facts and trends); (2) 50/50s; and (3) total shots in the dark.  So how did I do?  Well, I'll let you be the judge of that, but my official scorecard is below.  Correct predictions are in green; incorrect predictions are in red; and so-so predictions are in yellow.  Feel free to mock me in the comments.

Low Hanging Fruit

(1) The WTO's Doha Round won't collapse entirely, but it also won't be any closer to completion. 2011 will become the new target date (for whatever that's worth). This one was probably the easiest of all predictions, but there's good reason for optimism in 2011.  Let's hope the White House is up to the task.

(2) There will be no change to US farm and "green energy" subsidy policies.  With the Obama administration paying off Brazilian cotton farmers instead of modifying the United States' WTO-illegal cotton subsidies, and with the year-end tax deal containing billions of additional taxpayer dollars for the debacle that is American corn ethanol and other green energy policies, we scored a really unfortunate "correct" on this one.

(3) Bilateral and regional FTAs will continue at a furious pace across the world, but (4) new US negotiations under the Trans-Pacific Partnership (TPP) Framework will be interminably slow. I can't find any stats on FTAs completed in 2010 (sorry), but I think it's pretty safe to say that (except in the United States, natch) bilateral/regional FTA negotiations continued apace in 2010.  As for TPP, it's still theoretically on schedule to be completed by the end of 2011, but the current members are still stuck on several procedural issues, and membership ain't exactly settled either.  (Oh, and the US appears to already be backing away from that end-2011 goal, although it's unclear whether that's just smart politics/diplomacy.)

(5) There will be no "trade war" between the United States and China.  As I said at the time, "Sure, the WTO cases, strong words, and AD/CVD actions will continue, but that's hardly a 'trade war.'"  I think that's a pretty good summary of what we saw thislast year.  Score one for pragmatism and sanity over media hype and congressional bluster.


(1) 2010 will see a significant increase in anti-subsidy actions under domestic trade laws and WTO rules. At the time, I saw two main reasons for this conclusion: "(i) The massive proliferation of government subsidies in 2009 and increased tradeflows in 2010; and (ii) the continuation of all US farm subsidies."  And while there have certainly been new CVD cases and WTO disputes over green subsidies and US biofuels (or biofuels byproducts), I can't grade this one as a true "correct," because I said "significant increase," and there just hasn't been an explosion of new cases.  So I'm giving myself a "so-so" here - mostly because, as any good lawyer knows, I should have given myself more wiggle room by avoiding a strong adjective like "significant."  Silly me.

(2) Congress will approve none of the pending US FTAs.  Pathetic, but correct.  What's funny/sad about this one is that this was actually not such an easy prediction in January of last year.  A lot of well-informed people actually thought that the Colombia and/or Panama deals could squeak through before the election season kicked into high gear.  Silly optimists.

(3) Eco-protectionism will increase around the world.  We didn't see carbon tariffs emerge anywhere, but there were oodles of new green subsidies and onerous "environmental" standards, including those on "food safety" here in the US.  (Heritage's Jim Roberts has a nice mid-year rundown here.)  And because I wisely didn't use the adjective "significant," I'm giving myself an admittedly tepid "correct" here.

Total Shots in the Dark

(1) The failure of Cap and Trade in the Congress will cause the EPA to begin reviewing import regulations on GHGs and GHG-intensive products.  Cap and trade did die in Congress, but, as far as we know, this prediction was incorrect: the EPA didn't start looking at new import regulations based on their GHG content (although those already-planned regs did come online last year).  But with the Obama administration now looking to use the EPA and other regulatory agencies to advance an environmental agenda that it can no longer achieve through Congress, my prediction might've just been off by a year.  We shall see.

(2) China will not unpeg its currency vs. the US dollar (despite 12 more threatening NYT columns by Paul Krugman).  I was wrong on both counts: (1) since June, the RMB has appreciated about 3.5% against the US dollar and kept moving in that direction even after Congress adjourned for the year (thus killing that silly China currency legislation); and (2) Paul Krugman wrote way, way more than 12 columns on China currency last year.  But hey, betting on Chinese economic policy and/or Paul Krugman's ranting habits can put even Nostradamus in the poor house.  Alas.

Overall, I'd say that this was a pretty good effort.  I nailed the low-hanging fruit, did pretty well on the 50/50s, and missed the total shots in the dark.  Next week, I'll try to match this effort for 2011, but that's not going to be an easy task.  While 2010 was a pretty zany year, 2011 is shaping up to be even zanier.

Thanks for reading and commenting over the past year.  It's be a fun ride.  May you and yours have a truly dominant 2011.

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