We are now going to do a deep dive into things economic. Some of this was touched on in the first session, but we want to get a little bit more deeply into some of the economic issues that Asia is now facing. We have a lot of GDP to cover, so we'll jump right into it. And we have a terrific panel of experts who will kind of unpack this for us. Matt Goodman, who is specialty is political economy. Scott Miller is our trade expert. And Rick Rossow is going to talk to us a little bit about India. And I wonder if we could maybe start off, Matt, with you, just reflecting on where the world is right now. It seems to be a great deal of economic experimentation going on. The United States has just gone through its monetary policy. Its QE is now trying to taper. This is terra incognita for the US as well. We have Japan doing something of the same thing, throwing the monetary dice. We have China talking about a restructuring. We're not really sure where that's going to go. We know that the old model is running out of gas. There's a lot of experimentation going on. And I wonder what you think these experiments will ultimately mean for Asia. Will they benefit Asia? Or are we going to, at some point, hit a wall? OK. Well, thank you, John. And it's always nice to be invited to speak at CSIS. Yes, you're right. I think there is a lot of experimentation going on. There's a lot of reform going on in the broader Asia-Pacific region. And on balance, I think, though, I would start with the good news, which is that I think as compared to when we assembled last year, I think the overall economic picture in the Asia-Pacific region is stronger, is sort of clearer. But there are a number of uncertainties still, many of them generated by those issues you raised. And I think this is led by the improved picture for the United States, the world's largest economy and the one, the largest economy in the region, broadly defined, which, because of stronger private demand across the board and less fiscal drag, is in a much stronger economic position than it was a year ago and certainly five years ago. So I think that's both a good news and a bad news story for the region. The good news is that it means we're going to be buying more exports from the rest of the region and supporting demand there. The bad news is, as you said, it means that we are going to probably start or continue to wind down or taper some of the experimentation that had been done to help generate the or just to respond to the crisis of several years ago. I think that tapering has now been pretty well, clearly signaled to the world. And so I think the IMF is saying about the most recent turmoil in the financial markets that the tapering itself is not the proximate cause of that, that it's idiosyncratic factors in this array of countries, Turkey, Argentina, various other places that have a number of challenges of their own. But I think in the broader sense, clearly the fact that the US is doing better and probably going to be in an environment of higher interest rates within the next year or two means that money is other things being equal, going to flow more towards the US and less towards some of these emerging markets. And that's creating some uncertainty and turmoil. I think we can talk more about China and Japan. I have certainly plenty to say about those two things. Yeah, I wonder, Rick, if you could just jump in for a second on India and give us kind of the state of play there, it's done a little bit less experimenting of late. It's in a period of stagnation, it seems. Yeah, well, specific to the question on US tapering, India, they suffered. Last year when it was signaled that tapering might begin, the outflows on foreign institutional investment were pretty dramatic. They dropped about $12 billion between June and August on institutional investments. So the stock markets get hurt, people's investments get hurt. There was real pain there. But when it didn't happen immediately, institutional investment came running back in. Later that year, of course, we have a new Reserve Bank governor in India, Raghuram Rajan, who everybody's pretty excited to see take that role. And in his inaugural speech, he said that looking at US tapering, that he wanted to make sure that India developed a bulletproof balance sheet. Now, government officials, finance ministry, prime minister and others would love to see India begin to bring down their core interest rates as well, to try to stimulate economic growth. And that was an expectation Rajan coming in that he would leave the charge on that. Contrary to expectations, when he came in, they actually increased core interest rates. And in fact, just yesterday, they increased the repo rate by 25 basis points again. So they're attempting to give themselves additional room, dramatic room, in case they do need to bring down interest rates in response to when tapering actually takes place. So specific to US tapering, that's kind of been their reaction. I know the question also is about India and its own fiscal policy following their slowdown. They did, as many other countries did, launch several stimulus packages afterwards. I think they have brought down spending in terms of government spending as a percent of the economy, back down to the levels that they were approximately before the slowdown happened. But it appears so far that most of the cutting that's been done is on things like infrastructure. They haven't actually cut back on social programs and in fact launched more social spending programs. So they have been cutting back to try to meet targets they had pre-crisis, but probably cutting in the wrong places in terms of opposition in the country for the economic growth in the future. Scott, I mean, one additional experiment that's kind of taking form is the TPP, which we've touched on in the previous session, but this is a big roll of dice. It is a big ass, not just for Vietnam, but for a lot of these countries. Can you just give us your kind of top of mind on where that stands, how it's likely to influence economic activity in Asia? Well, the world used to be divisible into the bold, the brave and the amazed to be here. And TPP is one of these amazed to be here situations. If you recall the history, it looks to me like we backed into this thing and it turned out to be quite useful as a policy to a both trade policy and economic policy. But this all started with an existing agreement called the P4 that the United States agreed to join in 2008 and at that time the joke in Washington is we were gonna get a free trade agreement with Brunei and everybody was thrilled about that. What happened is the good news is there's underlying demand for US economic engagement in the region. And I think the reason TPP became something more than a free trade agreement with Brunei and other partners we already agreed with is because there is a real policy imperative to keep US engagement in the region. It's important to US firms and their operations abroad. It's also important to our allies in Asia Pacific. So this became the manifestation of how US rules and US principles and US engagement would be advanced in the region. It became very popular and the popularity, the popularity of TPP accomplished some things that I don't think would have happened in the absence of it.  Senator Obama went in his 2008 campaign, barely mentioned trade except to say he wanted to renegotiate NAFTA. So it was mostly a domestic agenda and frankly with the 2008 financial crisis upon us and the collapse of the housing sector, there was a lot of focus on domestic policy, rightly so. But there really wasn't an appetite for a range of new free trade agreements.  We are to the president's credit renegotiating NAFTA because the entry of Mexico and Canada into the TVV is the opportunity to update a 20 year old agreement and modernize it for the changes that have taken place. So from a policy standpoint, it's really interesting but it is surprising that we're here at this interesting moment. I mean it's remarkable with the Transatlantic partnership trade negotiation going on as well that this administration is one of the most trade inclined administrations we've seen in what since I guess the 90s would seem to me. Clearly in the last 20 years, the only time that's even comparable is when the George H. W. Bush administration was negotiating the Yorga around the GATT, what led to the WTO and the NAFTA at the same time. We haven't really been this ambitious since then. Yeah, Matt, how much of the TPP, let's get back to China for a second, is as a reaction to China. China is sniffing around the TPP, it hasn't said that it's interested in the negotiating entry into the TPP. The U.S. is kind of hoping to bring it in at some point. But this is a, not necessarily an anti-China trade pack but a trade pack with China in mind in that there were deficiencies of the WTO. The business community has been through Washington repeatedly over the last three years of indigenous innovation efforts in China and also lately the anti-monopoly law that's been holding back U.S. business investment and foreign business investment in China. They have been unsatisfied with certain aspects of the WTO. Is this kind of a reflection of the need to not just update the WTO but to correct the WTO? Yeah, I think you've basically answered the question. I think TPP, as Scott said, was sort of something that was kind of backed into and it became and it now very much is the central strategic thrust of both U.S. trade policy broadly but also of U.S. Asia policy, I think, and we can talk about that some more. It is very much about China, but it is not and never has been designed to exclude China. I think there was a sense in Beijing and maybe other parts of the region that this was designed to exclude China. Nobody wants to exclude China and frankly a trade agreement can't contain a country which was the other term that was often used. But it is very much about trying to update and reaffirm the rules of the international trading system. And as you said, there had not been a very happy experience with trying to do that in the first best way, which is to do it multilaterally in the WTO. We had tried to go up that mountain. We couldn't get to the summit and we had to pull back and find another way around the mountain. And I think we had, we sort of were able to latch on to TPP and then TTIP the European agreement as a way, as another path up that mountain. And I think it's about in that sense updating, affirming the rules. And in that sense, it's about China because there's been a 20-year effort to pull China more deeply into the global rules-based system. That's what was the WTO, China's WTO accession was all about. And so this is a sort of continuation of that story in a sense. The other big party here is Japan that is much more engaged at this point. Let's walk through what's happening in the reform efforts in Japan and China. Let's maybe start off with Japan. Yeah, I was thinking that we could ask this first clicker question as well, which is over the next two years, the Japan economy will slowly grow, moderately grows strongly. For those who weren't here in the first round, you can click one answer, you can change your answer for another three seconds and then you're stuck. All right, so it looks like the last 20 years of trajectory is kind of what people think.  Let's go to the second question as well. Over the next two years, the Chinese economy will stall, A, pick A, B, grow moderately, C, grow strongly, D, face a major crisis. So fair amount of confidence. All right, so Xi Jinping is busy consolidating power in China. He's talking about party rectification in the Maoist sense as kind of another way of consolidating political power. Tell us how that now translates into economic reform. When we talk about economic reform in China, changing the model away from export-led economy to a domestic consumption economy, what does that mean? What happens? Okay, well I think I will, you heard Chris Johnson, the real China expert, talk about the relationship between political and economic reform and so I won't delve into that at high risk to all of us, but I will just talk about what I think is going on economically. So China has in a sense been a victim of its own success. For 30 years it's been growing at whatever the real number is, plus or minus 10% a year, and it has brought hundreds of millions of people out of poverty and has been very, I mean just miraculously successful. And I think due to some earlier reforms launched as we know by Deng Xiaoping that really sparked this tremendous increase in participation and productivity and growth. And what's happened is they've now hit what's commonly known as the middle income trap. Many of the advantages that they had during that 30 year period when they had essentially an inexhaustible supply of cheap labor, they had large open markets to sell relatively low value added products into and they had sort of one objective, which was to promote growth and raise incomes. All of those things have gone away. Costs have gone up in China fairly substantially. Markets are not as strong as they were and if China is gonna compete they're gonna have to produce more high value added innovative products and they haven't yet managed to reach that level of sophistication in their economy. So they're stuck. In most countries the World Bank has studied this going back 50 years, something like 100 countries they studied, only 13 or something broke out of this middle income trap. It's very challenging to move to the next level of technological sophistication to overcome that cost structure. And the way China has, I think China, the good news is China recognizes that they have a problem and like all good alcoholics, the first step to recovery is recognizing you have a problem. There's no question they know that this is a challenge and they have laid out in that third plenum document last November a very credible plan that addresses this set of challenges and tries to move them to a more consumption led pattern of growth rather than one based on a heavy investment and exports both of which have reached their limits. So I think this is the challenge, this is that they have a good plan and now the question is can they actually implement this plan? Because all the things they need to do are extremely difficult in themselves. There are deeply vested interests in many of these areas and sequencing these changes is gonna be very difficult if you take financial reform, which is at the core of their old model, basically what's known as financial repression to direct capital to these productive parts of the economy in the previous 30 year stretch of growth. That model, as they say, is wrenched to limits. They need to move to a higher interest rate environment and that's gonna gore a lot of oxen in China and that's gonna create potential financial risks. So this is an extremely narrow path they have to walk and it's going to be very challenging. The record shows they've been pretty smart and sophisticated and flexible and adaptable about how they approach reform and so I wouldn't bet against them but they're certainly substantial risks. So unwinding the state-owned enterprises is a big... And let me step in on that. I'm not a China expert but I did know India pretty well and when these announcements came out about free trade zones, about a thrust into services and also the more recent announcement about potential relaxation of the one-child policy, this has India quite concerned. They think that their advantage vis-a-vis China when they think of current and long-term advantage right now is they tend to be stronger in services. The advantage longer term is they're hoping the demographic shift will swing to them as they continue to be younger while China continues to age. So they are very worried that this is quite serious and China will actually meet its goals. So with any luck they'll actually prompt India into maybe following suit on some of this. Yeah. I think that's right about the challenge and the importance of financial reform. If you look at it, the really the only way if you look at the fundamentals to break out of a middle income trap is to improve productivity. At the moment, most economists would say that state-owned enterprises in China use capital about half as efficiently as private enterprises. So to the extent that the banking system and the financial system is directing funds towards state-owned enterprises rather than private enterprises, it's essentially wasting capital and it's missing an opportunity to for the productivity improvement that's needed. So this is a tough challenge. Matt is exactly right about the vested interests. Businesses, U.S. businesses operating in China report the same basic pulse. The U.S. China Business Council has a very helpful annual survey where they talk to basically the operating managers of U.S. companies in China and they report the same thing. It's getting more competitive, it's tougher to grow. Labor's getting more expensive, talent's getting harder to find and harder to keep. And at the same time, they report that the problems associated with regulation permitting, the very basic things about running a business are not getting any better. So it's an important moment for China. I would agree with Matt. I think the conviction is there to do it. Doing it is actually gonna be pretty hard. It's interesting that same survey though found that despite all those problems, the vast majority of U.S. businesses in China are profitable. Yes, not only they're profitable but they intend to stay for the long run. Look, China is going to be the largest market in the world for many, many products. You cannot not be in China if you are serious about being a global enterprise. So the conviction is there and China is a relatively profitable, as emerging markets go, you can actually make decent returns in China. That's not true in a lot of emerging markets. So, John's right. Yeah, the question I guess then is if you're unwinding state-owned enterprises which has a whole difficult political component to it because that's the party patronage system, if you're unwinding those state-owned enterprises because they're inefficient with capital. What takes its place? A private sector, presumably, that will be fostered by the state and will that create an equally impenetrable environment for U.S. business and foreign business or is it gonna create a freewheeling capitalist economy? Well, I'll take a stab and Scott can jump in. I mean, I think, first of all, in that third plenum document, the reform document last fall, the central organizing principle of the reforms was to give the market a decisive role in the economy. There was less clarity about exactly what was gonna happen to the state-owned enterprises in order to accomplish that ultimate objective but I think it was a clear directional signal of what they were trying to do. I think the challenge is that the state, they're not gonna privatize as Chris says and they're gonna maintain a heavy state hand in the economy and the tension is how they're going to discipline those state-owned enterprises in a way that makes them behave in a more market-oriented way and to level the playing field and that in turn will affect the determination about how foreign companies are gonna be able to compete in that market but it's a big challenge and it goes back and really it's a political economy question as to whether they can manage to control the state-owned enterprises in a way through some disciplines that are market disciplines as I mentioned, for example, financial reform and interest rate regularization, forcing them to compete for capital in a way that they haven't had to before but that's a very tricky proposition to actually implement and there is strong political resistance because as you say, the whole system is tied up in that. I mean, Scott, do you foresee the day in the near term where General Electric or Siemens could win the bid against some private entity in China on a free and fair basis? Well, the government procurement and the public procurement side of the equation is more complicated and probably above my pay grade. I would say that a lot of American firms not engaged in selling to the public sector doing selling to consumers in China are first of all, they have strong Chinese characteristics. They're probably manufacturing in China, they're using Chinese distributors, they're employing 95 to 97% Chinese employees in their China operation so they're already competing against state-owned enterprises. It's that part of the economy, the consumer economy and my former employer was in the battery business and Duracell batteries competed against some very successful state-owned enterprises in China. So it can happen in sort of consumer businesses as well as public procurement but the real question is what is the dynamic and are the markets contestable for firms regardless of their structure and national origin? Can I just say one more thing about China before we move on, if we're going to, that we should applaud the audience for getting the correct answer in B, except that the only question is what moderately means. If as most forecasters predict from the IMF to most private forecasters predict that China's gonna grow about 7.5% this year as it did last year, then in one sense that's not moderate, that's very strong in global terms and by the way from a bigger base, so remember that's gonna have a much bigger impact. On the other hand by Chinese standards, as I mentioned, that's a significant slowdown from where they were a couple of years ago and I think the big question is whether even that 7.5% is gonna be sustainable and whether some of the major risks in the economy are going to emerge in this period and the big risk that everybody's talking about is the rapid expansion of credit in the economy that has created a huge debt overhang, something north of 200% of GDP now, a lot of it in local government but also at the local level but also more broadly in the banking system and the non-financial enterprise system. We had a, Chris did a very good program on this earlier this week and I think the view of our panel then was that this is unlikely to produce certainly a global crisis because a lot of this is RMB denominated, it's state to state transactions, there's not as much counterparty risk, they have a lot of assets they can throw at this but there's a substantial and perhaps the local government debt problem is not by itself unmanageable but the overall debt position in China is worrisome and that's I think why you've seen, in fact I'd say that is the more proximate cause of some of the more recent concerns in the financial markets, that China's gonna have some sort of problem with that. I'm not predicting that but I think there are people who are very worried about that. So 7.4, 7.5% GDP growth rate. Is that enough? Is that enough to absorb the workers coming in from the rural sector into the urban centers? Is it enough to sustain economic growth in the rest of Asia? I mean, I think if they were able to maintain 7.5 to 8% growth, they seem to think and that's I think the most important measure that that would be enough to sustain all of those issues that you raised including employment and managing this potential financial problem, I think the question is whether they're gonna be able to maintain that rate and whether they're gonna be able to do that only by throwing more money at the economy which will create even more debt potentially. It's been estimated that they used to get a dollar of growth out of every dollar of investment. They're now, it takes sort of three or four dollars of credit expansion to get a dollar of growth and I think the concern is if they keep, if that requires them to throw more and more money at the issue to generate that kind of growth, then you've got a potential really serious financial challenge. So I think that's the way to look at all of that that they probably will maintain north of 7.5% growth but there is a substantial risk they won't be able to do without. Rick, what does a slowing China mean for India? Well, unfortunately, probably not much. I mean, the roots of the slowdown is that I understand in China, the ability to absorb more labor from rural areas coming to the urban has come down somewhat manufacturing jobs I've heard have been lost to some extent but they haven't been coming to India. So the root causes of China and slowing down a little bit, India had hoped to position itself to be the next manufacturing destination of choice but they really hadn't taken many steps to actually become that. So the companies that I work with, they talk about Malaysia, Indonesia, they talk about Vietnam, they talk about Mexico, they talk about coming back to the United States. It appears that India is missing that second wave that they'd hoped to be able to take advantage of as increasing manufacturing jobs in China was less feasible. So slowing China, the other big factor related to India is that India's got a massive trade deficit with China. So it sort of depends on what China's reaction is if they do try to put more product in the pipeline to India, which they could. I mean, China obviously produces at a much lower cost than India can for a wide variety of products. So if they put more product in the pipeline, India's trade deficit goes up. And from our perspective in the United States, most of the backlash that we've seen over the last year from American companies concerned about India's trade practices, most of those practices that American companies are concerned about local manufacturing rules and such are a reaction to their massive trade deficit with China. So if this results in, which it hasn't so far, a rearrangement in India's trade relationship with China, if India's imports come down, then that it might actually ease some of the import rules that have impacted American firms. If for some reason it triggers an increase in Chinese exports to India, then we could see more aggravation in the Indo-U.S. relationship.  Oh, no problem. I'm just gonna comment on the rest of Asia. Look, for at least the last decade, the rest of Asia has benefited magnificently from the steady growth of China. And the industrialized economies in Asia, like Japan and Korea, have benefited from the existence of global value chains and the fact of China being sort of the center of factory Asia and a lot of assembly that's taking place of high-tech goods produced in Japan, Taiwan, Korea. But also the less developed economies in Asia, the exporters of mainly commodities have benefited immensely from high growth in China, which has sort of sucked in commodity purchases. So you have these circumstances that are likely gonna need revisiting, kind of like Indonesia. Indonesia has had very impressive, steady 6% annual growth for about 10 or 12 years. When the bloom is off the commodities rose and that is gonna cause for a recalculation of at least the export economy and perhaps the whole economy in Indonesia. There are a few other problems that are somewhat of an idiosyncratic. Matt used that word, I wanted to get it in there. But for instance, Thailand's growth has been cut in half by civil unrest. Philippines, another large economy in terms of population, is recovering from a natural disaster. So there is some unevenness, but I think a China slowdown has not fully been factored in to the conditions in the rest of Asia and are likely to cause a regional slowdown. Does the fact that the U.S. is likely to grow Jack Lew's talking about 3% growth in 2014, does that pick up the slack? That helps, it certainly helps. And having the U.S. in a position of steady growth is very good news for the world just because we're such a large share of the world economy and such a large share of world imports, world exports I should say. At the same time as the United States grows long, we'll see what happens when the Federal Reserve and others take away the punchbowl. So there's some balancing here, but I think on balance that the, I think the audience has been in about the right place for moderate growth and we'll hope for stability, but that I'm clear. I agree with that. So over to Japan.  We've seen incredibly easy monetary policy. Now comes the hard part, the so-called third arrow, which has just incredible political hurdles to overcome. I remember working in Japan in the early 90s and they were talking about structural reform of the exact same type that they're talking about now. What is the likely outcome of the third arrow initiative? Is Abe in a position actually to get some of what he's calling structural reform through the political process in Japan and domestically accepted? And what is that structural reform likely to include? Well, I was in Japan in the early 80s and they were talking about some of the same reforms. So I yield to no one in my caution about predicting dramatic structural reform in Japan. But I would say, I mean, first of all, Abinomics, which includes these three arrows of monetary stimulus, fiscal stimulus, and structural reform, I think is the right plan. And it has got the right elements that will help and have helped Japan come back from what's commonly known as the two decades of lost growth. A lot of it to date has been based on the first arrow in particular, the monetary stimulus. And that will continue. I expect that the Bank of Japan has clearly signaled that they will do what it takes to maintain their part in ending deflation and supporting growth. Fiscal will probably remain broadly supportive as well. They're working on a $50 billion stimulus package right now largely to offset a negative fiscal event that's gonna happen on April 1st when they impose an increase in their consumption tax or value added tax from five to 8%, which will undoubtedly have a negative impact at least in the second quarter. So fiscal will be supportive. And the big question is this third arrow and structural reform. Again, I think Abe gets a lot of credit for including this in his package and continuing to talk about it. Just last week in Davos, he made a very strong statement about the third arrow and about the elements of that that he was gonna continue to pursue. It was a much clearer message by the way and to the extent my Japanese friends are listening when I was critical last year of their package in June, the growth strategy. A lot of people said it didn't have enough in it. I actually thought it had too much in it. It was too confusing and it looked like an old style meaty industrial policy plan. I think what Abe-san said last week in Davos was much clearer. He talked about higher wages. He talked about labor participation particularly women and that is a critical element of, it's a macro element of getting more people into the workforce to help support growth. He talked about deregulation and electricity markets and in healthcare and even agriculture, which I think would have a not insignificant growth impact. Talked about tax cuts and all of this design to get businesses to invest, to give more wages, to people to get more people to participate in the labor markets to offset their demographic disaster that they are facing as their workforce shrinks rather dramatically over the next 50 years, whatever happens and to get consumers to spend. And I think the one thing, when one is a little skeptical about this stuff because like you, we've been working on this for a long time. I think the one thing that is different about this, if I single out one thing that's different and I include with all due respect to Prime Minister Koizumi who did some other things well, I think Abe is the first Prime Minister who really has put his political weight behind broad economic reform. I think Koizumi was more interested in the sense in political reform. I think Abe has really, I don't think he really understands all of the economic issues that he's pushing on but I do think he understands that it's an important political, part of his political strategy and he's been willing to spend some capital. Scott, I'm wondering whether trade, Japan in the past has used foreign pressure to get things done domestically, even have a word for it, Gatsu, that comes up periodically, sometimes has an effect, sometimes does not. I wonder whether the TPP is being deployed strategically by the Japanese to begin to push some of the structural reform. I hope so. If TPP achieves its objective, which is a high standard comprehensive 21st century agreement, now this is, as I step back, the parties who are involved in the Transpacific Partnership have agreed to this conception in the words of trade minister of New Zealand, Tim Grocer, so TPP has a dress code. You gotta be able to meet the dress code and for Japan to meet the dress code in a high standard comprehensive market opening agreement would be, first of all, an important piece of reform strategy and second would be a real boost to growth when in some ways their biggest challenge is not the existing circumstances but the demographic collapse that's coming. I mean, Japan is getting older very fast. It's gonna get smaller in terms of its total workforce. It's gonna get smaller in terms of its total population. Without some major reform in sort of the way it utilizes factor endowments, Japan's, the normal path, and the null hypothesis is Japan shrinks, okay? And that's not Japan's goal. So my view is, and if I were Prime Minister Abe, I would be looking at the Transpacific Partnership as a major tool to help leverage, open some of these sectors and to really stimulate reform. It can be done. It's one of the key features of trade agreements is you can blame the concessions that you've made on foreigners but you actually benefit from the internal reform. I mean, any economist will tell you the most important benefit of trade liberalization is for your own consumers. And so getting those benefits while being able to blame them on foreigners is a win-win situation. I don't think he uses it. Is that sense of demographic crisis that Abe may see? Is that something that the Japanese population has accepted and realizes that these kinds of very difficult politically challenging structural reforms actually, in fact, need to happen? I mean, I think there's actually been too gloomy of you. I mean, it is gloomy. It's a gloomy situation. I mean, the workforce in Japan was about 85 million people in 1990 and by mid-century it's gonna be 55 million. I mean, that is a scary trajectory. And so there's reason for gloom but I think the Japanese were a little too pessimistic and thought, well, we're shrinking, we're never gonna be able to grow again. And I think every organism needs to grow and Japan needs to grow. I think what was missing was a sense of confidence that it was possible to grow. I think that is, at least for now, coming back and I think that Abe Sun, again, gets a lot of credit for that. I think if it's true that people are able to participate more in the workforce, earn higher wages, if businesses feel more confident about investing, I think there is a chance that they could get themselves on. Not, they're not gonna grow five, seven, 10% again but they could grow steadily at 2% over the medium term if they were to do these things and get more labor force participation and an increase in productivity. Let's switch to India for a second and go to our third question, if we could, for the audience to respond to. Through November, America's year-on-year trade with India in 2013 is A, up 3%, heading towards an all-time record, B, down 10%, heading for its 2011 level, C, down 25%, heading for its 2010 level or D, down 50%, heading for its 2007 level. Tirely. That's good. And let's go to the fourth question while we have it up.  This is over the next four years, okay, through the election. All right, so Rick, that's not too gloomy and the audience got the trick question right? More predictably. I predicted actually a decline though, although the number of the first answer. A lot of people got A. Yeah, they did, they did, but more pick. Which is the correct answer. It is, it is. This is a very astute audience here. I really thought that would be a good trick question because the mood in Washington about trade relations with India over the last year has just become so terrible because of a lot of short-sighted economic policies launched by the government of India, so good group, well done. Start with the good news out of India. I mean, there's just been a lot of gloom because there has been stagnation and we've been waiting for good dough, right? We've been waiting for this election now for the last year basically and nothing, very little has happened while we've been waiting. Start with the good news. What did the Congress party achieve over the last many years? Yeah, I agree with the general perception that nine years of Congress rule, they focused efforts while in governance on expanding social programs and kind of with the result of the economy coming down from a peak of about eight, nine, 10% growth down to four and a half percent, one bit of good news out of that is it appears without ever attempting any major economic reforms, they're now at four and a half percent growth and that looks like we may have actually hit the floor. So as bad as India could be, barring a war or something like that, it looks like four and a half percent is a real floor for India's economic growth. So after two years, two straight years of quarterly declines in economic growth, it's nice that we appear to hit the trough. Yes, there hasn't been quite as many things as I think we all had hoped when Manmohan Singh, the reformist economically, that's how he was termed when he came into office nine years ago, has spent time and energy on promoting economic reforms as people had hoped and the economy has suffered as a result. But just to provide some alternative viewpoints for this group, we did pull together some of the things that we think if you look back at this period 10 years from now and say, well, there were some nuggets that they began while they were in power that actually yielded real fruit in economic growth later on. Let me just point out a couple of those. First of all, this program that they call ADAR, setting unique ID for every Indian citizen. 600 million Indians now have been IDed biometrically. Their eye scan, their finger scan, name, identity attached. So for the first time in India's history, they may actually know who's living there. That's a good step. They're tying that to direct transfer of benefits. This to me could be the most game-changing reform. A huge chunk of India's fiscal spending is done on social programs of one sort or another. And the leakages are immense. Low results for the variety of programs would be 20% of whatever is shoved down the pipeline for food subsidies, for pensions, for whatever it is. 20%, I think, is probably the lowest I've ever seen in terms of what the expectation is that the government loses in sending trucks of rupees down dirty roads to deliver to villages. If they're able to link these unique IDs to a bank account and begin with the push of a button transferring that money, but also targeting subsidies a lot better. Right now, if you want to buy kerosene or cooking fuel or something like that, all of it is subsidized in the country. But some people certainly don't need it. And they've got a lot of millionaires, a lot of billionaires. So if they can target those subsidies, a little bit better. So unique ID, direct benefits transfer, they've also taken some tough decisions on reducing fuel subsidies. What is that unique ID? I'm sorry, just to interrupt. What does that unique ID also do to labor mobility in the country? Yeah, that's a great question. Huge benefit on labor mobility. Right now, if you want to apply for benefits, it's all done through a local office. And so if you were to move from a rural village to Mumbai because you've got this prospect on a great job, you were to move there. Well, you get in the queue. You wait in line, various lines, lots of lines, wait lots of time, bribe somebody to get to the front of the line, bribe somebody to be able to fill out the paperwork. It's an excruciating process. And that does harm labor mobility. If you do move, you're going to go there with essentially no social support system from the government, unless you're willing to spend weeks and months to actually fill out the paperwork, get in lines, things like that. So if you can carry the ID, and that's the plan, carry the ID with you, move to a new city, and immediately be able to avail of the same services you had in the past place, labor is going to be able to get to the places where it can be deployed most effectively. So the great question, that's right on the mark. The Reserve Bank Governor right now is licensing a new series of banks. That should take place this year where the banks will get licenses. Great new competition. Could double the number of private banks operational in the country. So that certainly is going to be deli Mumbai Industrial Corridor. And lastly, and thanks to my colleague Persas for pointing this out, the Right to Information Act. The transparency on how India conducts its own government business right now is increased dramatically because of a Right to Information Act. Any citizen can request a document that previously maybe had been internal about how the government's operations are going, data, the government's gathering, things like that. So overall, this government hasn't spent as much time, and as much political capital on doing things to encourage economic growth. But here you go. Some nuggets there that I think if you look back 10 years, may prove to have been more valuable than we give them credit for right now. All right, so give us the bad news and tell us a little bit about the investment environment for foreign business, not just US, but around the world. Well, again, I think there's been some bad decisions taken by the government of India. A couple of years ago, this announcement that they would kind of look through the existing tax treaties that India has, which most investors avail of, to try to get favorable tax treatment for their investments, India announced that they were going to look through that and actually tried to tax transactions that were used through this treaty mechanism. Using the treaties is perfectly legal. Companies have been doing it since India signed its first tax deal with Mauritius. And this came to light with Vodafone, where transfer shares for Vodafone's acquisition of a telecom company in India were done through Cayman Islands, where both companies had an operation. It was legal, Indian law, the treaties were there, but India decided that that transaction should be taxable in India, because even though the shares were traded in Cayman, the company itself was resident and operational in India. And shortly thereafter, the Supreme Court ruled in Vodafone's favor, India amended its own tax laws and said, for the last 60 years, we will open up every deal that's ever been done potentially and see if there's a tax liability for doing that. That's not a way to run a country. It's just not. That's not good, solid economic management that makes companies feel secure that what you invest today will be treated the same for time and memorial. These local content rules that they've done for manufacturing have gotten under a lot of people's skins. A pharmaceutical, the patent rejection by the Supreme Court, the first compulsory license issued. So there's a lot of things that have been done that have harmed the environment, some of which have been repaired. I mean, to its credit, let me point out that, last summer, we had one of the most sustained periods of high-level political engagement with India that we ever have in our history. And the last summer, starting in June through September, Secretary of State went to India, Vice President went to India, most of India's cabinet, the economic leaders anyways, came here twice, and India's prime minister came for a head of state meeting. All that took place within four months. And to its credit, India actually was reactive to some of these economic concerns that were raised. They introduced new transfer pricing rules. They further opened up FDI caps a little bit in some areas. They froze introduction of one of these local content rules, the Preferential Market Access. So they were reactive and good praise to my colleagues in the government. Engagement actually does have an impact in India. It worked out pretty well. But that being said, all the time and energy that we spent engaging India on economic issues over the last two years has been spent on getting India to roll back bad things they did. Almost none of this time and energy was spent on, let's open up this new area, let's reduce this barrier, let's do those kind of things that would trigger new and more interest from American investors. So that's the downside. You know, a lot of India's decision making has went the wrong way. The time that we've been engaging India has been trying to get them to roll that back. I mentioned the trade numbers, you know, as you saw on the last slide, actually American trade is pretty good with India. But foreign investment has taken a hit this year and it's been on decline the last couple of years. So game the election for us. What's likely to happen? What's it likely to mean for economic policy? Well, you know, game the election, everybody is looking for India's Nate Silver and you can be certain that the India Nate Silver does not exist. Maybe it's Nate Silver, what's that? Maybe it's Nate, you know? Well, the problem is, you know, to do that kind of work, you need to have a lot of raw data. You need to have opinion polls that can be trusted, things like that. India had five state elections, big states, you know, representing 26% or something that of India's population, just back in November, December. Exit polls.  Exit polls where you're actually interviewing people that walk away from the booth and ask him, how'd you vote? They all got it off by 20, 30, 40%. Exit polls. So Nate Silver, you're gonna have a really tough job in India. It's really, so I can make a prediction. I'm happy to do so, probably not on stage here. I'm happy to, you know, who I think is gonna do it. There's three possible outcomes. Either Congress comes back with a weaker coalition, and nobody predicts Congress is gonna get 206 seats again. They'll get something less than that and cobble together a coalition. And if so, Rahul Gandhi will likely be Prime Minister and likely you'll see very similar policies.  They came back in another one and, you know, they weren't in power in other ones. It really wasn't as big of a setback, I think, for Congress as people say it was, but it was a setback to some extent. But overall, Congress right now is in charge of 12 states, same as they were in 2008 when they won the national election, same as they were in 2004 when they won the national election. They won the key state of Karnataka last summer. It hasn't been all doom and gloom. That's just the last thing that happened, so that's kind of the perception that we have right now. So Congress, you know, they may come back. I think most people are betting against that at this point, but it's reasonable that they will. And if so, we'll see economic policy and social policy that I think would be pretty similar to what we've seen. Alternative number two is BJP coalition comes to power. BJP has 120 seats or so, and I think expectations now is that they may win 180 to 200 seats. With Narendra Modi, who's got this reputation of being a very pro-Hindu anti-Muslim, but also great for economic growth, he's got a lot of supporters and detractors. He may have a more difficult time trying to coalition allies after achieving these numbers, but it's very reasonable that he will become the next prime minister of the country. And I think if you were to look at his track record in Gujarat of attracting investment, running a relatively transparent administration, but also, and people kind of forget this, but the BJP not too long ago was actually empowered in the center for five years from 98 to 2004. And they did test nuclear devices and that caused a little bit of friction, I know, but beyond that, they did a lot of work on economic reforms. They opened up new sectors for investment. So looking at their track record and Modi's track record, you know, you can expect that probably the economy will get a lot more attention under a BJP government. The third possible is a coalition of these regional parties, manages to cobble together enough numbers where they can form a government. Likely they can't do it unless they have the external support of either Congress or BJP, but it's reasonable and it's happened in the past, and it's never been stable, and most of the regional leaders, you know, they're gonna be fighting for their own peace of mind. These regional parties have no pretense that they will ever become a national party. Some of them pretend they will, but they've never really been able to do so. So if they become in power at the center, they're gonna be focused on devolving power back to the States, which is not what Congress wants. It's not what the BJP wants. So the third possible is a coalition of these regional parties, and I think that's inherently stable and won't last that long. So a Congress coalition or a BJP coalition is the most likely Congress coalition. You'll see pretty much status quo BJP. I think you'll see a focus on economic reforms and possibly some further openings with the United States as well from some new areas. Let's bring back to TPP and ask a fifth question. If we could, will the Obama administration obtain trade promotion authority from the Congress? This is the fast track authority that allows it to be the negotiator and not have all the TPP members have to negotiate with Congress. So A, yes, B, no. Will they get it? Looks like, looks like they, looks like he will. Okay. And our next question, our last question, in 2014, the, this year, the Trans-Pacific Partnership negotiations will, A, conclude and be ratified by the parties, B, conclude but not be ratified, C, proceed but not conclude, D, stall. Conclude but not be ratified. Scott, walk us through this. Where are we? What's likely to happen this year? Okay, well, first of all, I'm delighted to be speaking to such a hopeful audience, where two thirds of you think Congress will approve the trade promotion authority. Look, I think you're right, but I would counsel patients, first of all. Today, in the House of Representatives, they will vote on the conference report for the Farm Bill. Anybody recall when the Farm Bill expired? 2012. They actually, keep in mind, this is a piece of work that gets done every five years by the Congress, so there's habits. Second, there's a big authorizing committee that does nothing but agriculture in both the House and Senate. Third, they knew when the authority was going to expire. And yet, they started working on this in spring of 2012. It never came to the House floor in 2012. They extended the authority for a year and went two months past the year of extended authority on the old bill before they got something done. All right, these things take time. Now, the reason I'm counseling patients is, here's the situation with trade promotion authority. The last time it was authorized was 12 years ago. Of the 217 members of the House who voted for trade promotion authority, and it passed by one vote, of those 217, 53 are still in Congress. It's a whole new ball game. And importantly, the members of Congress, the sort of quarter or so members who were still there, whether they were for or against, have some strong views about whether that 2002 authority worked or not. And will need to be heard on those views. And then you have roughly two-thirds to three-quarters of the Congress, probably three-quarters of the House and two-thirds of the Senate, have never voted on this before. This is gonna take some time to build consensus. Now, the good news is we've started. We have good sort of centrist, thoughtful bills that are the same in the House and Senate. It's probably six to nine months of very serious work by Chairman Baucus, by Chairman Camp, by minority ranking member Hatch and their staffs. They worked very carefully and have a really good starting product. The bad news is, in 2001, 2002, it was 10 months from the introduction of the bill in the House to the signing ceremony at the White House. Is it gonna be faster this time? Maybe, okay. Is it, could it be slower? Possibly, all right, but so the first thing is be patient. Second, I think you're right that the President, the trade promotion authority will be approved, but the essential ingredient here is White House leadership. The President himself must take off his jacket and fight for TPA. You mentioned in the speech last night, what gets said in the State of the Union address is not nearly as important as what the President does today and every day between now and the signing ceremony. It has to be worked on. If I were to give him some free advice, I would not focus on the process. Michael Barone is right. All process arguments are insincere, including this one. So don't focus on the process and whether it's constitutional, it's been done for 40 years. Focus on the foreign policy imperative of Asia because that's where members of Congress who swear and oath to uphold the Constitution and defend the United States can be addressed in the best and highest manner and can support the need for US presence in the East Pacific and the need for a good rule set with our European allies. Matt, this does have that perspective to it and it is historic and it's big. It didn't even get a drive by in the State of the Union last night, though the State of the Union was primarily a political speech about 2014, but it wasn't an element. Is this something that the US kind of needs to recalibrate on and how does the President make it? Yeah, it was disappointing. The speech was disappointing. It was a political speech, but I was hoping and expecting a little bit more on both TPA and TPP and Asia because to me this is, I don't wanna be overdramatic, but I would say that TPP is the key to the Obama legacy and I say that with a full stop at the end because I think if you look at what history is gonna write 100 years from now, the first two paragraphs are written already. Paragraph one, first African-American president. Paragraph two, pulled the economy back from the brink of disaster and established a new economic foundation whether healthcare makes it into that paragraph or not, we'll see, I think so, but we'll see. And what we're fighting for is paragraph three and I think if you think about all the issues that he has dealt with or may deal with, there are one or two other potential ones out there like some kind of breakthrough with Iran might make that third paragraph, but I think it's not killing Osama bin Laden although that was great, but that was a sort of tactical victory. It's probably not immigration because immigration's coming, the times there are changing and 100 years from now when we have a gay Latina president, I don't think the president of the United States beyond that first paragraph is going to have substantially be able to affect that outcome. But on Asia, he has a chance to, as he puts it, bend the arc of history and I think that is central to his legacy and I think if you strip it away, it is economics and it's TPP that's at the heart of the rebalance to Asia because without economics, it just becomes, it's perceived as a military exercise and not a serious engagement strategy to create an enduring US presence in the region and a US presence that champions the rules of the region and I think TPP is the key to that. So I certainly, I think the president knows that and I think certainly Mike Froman knows that. I worked with Mike pretty closely and that's what gives me the most hope in all this. A lot of the things that need to be done on both TPP and TPA are not particularly, they're certainly not politically very attractive and they're not things that you can mostly reduce to a sound bite. They require rolling up your sleeves and working the politics and the economics and the negotiations themselves and there's nobody better than Mike Froman to do that has the full confidence of the president in doing that and so that's what keeps me hopeful about this but I would just stress that it's gotta happen and whether it happens in the next three months before the president goes to Asia or not and I do think that's an action forcing event as our previous panelists said and I'm hopeful that it will get done by then but whether it does get done then or later this year or even next year, it's gotta get done. Yeah. Mike Froman, the chief trade negotiator of the USTR. I wanna go to questions in just a second but come back to Scott for just one more moment. That being as it is, where are the negotiations now? Is it even conceivable that, given the complexity of them, they're talking about constraining state-owned industries that affects everybody from Vietnam all the way through Asia. These are complex issues. Where are the negotiations now? Is it conceivable that they could be concluded in 2014? TPP is an unusually complicated agreement and it's complicated because of the diversity of the parties associated with this. You have the largest economy in the world, you have Brunei, you have multi-party democracies, you have authoritarian states, you have everything in between in terms of level of development, economic heft, and finding a landing zone as negotiators talk where all 12 parties go back to their domestic constituency and say, hey, guess what? We had a trade agreement and we won. That's the hardest thing to imagine saying. Now, I think it can be done. I think there is goodwill on the part of the negotiators. People know what they signed up for when they engage with TPP, so I think you can find your way through to something that looks like a very high quality agreement. I personally don't think we get the last best offer from any of our trading partners till the president has authority from Congress. And so, for me, the timetable is, deal with trade to motion authority, get your marching orders from the Congress, have that TPA set the red lines and then close the agreement. And the Congress, our Congress was never gonna see the implementing bill for Trans-Pacific Partnership before the 2014 elections anyway. So if it's a 2015 deal, use 2014, get the authority, close the deal. But so I think we know what a close might be. I don't think we actually get there till our partners in the negotiation are confident that the deal's not gonna get picked apart. So, great. Questions? Yes please, right here. And again, please use the microphone and identify yourself. Thanks. Well, I'm Andre Silverzone. I'm the chief representative in Vietnam for our company based in Detroit. And full disclosure also, one of President Obama's presidential partners. So, you know, kind of a foot in a couple camps. Now, my question is on TPP. And I favor it myself for all the reasons that you've said, Nanny Bauer, and all of you. But here's a question. It seems strange to me in terms of domestic politics. The sum of President Obama's usually strong progressive supporters, such as Harold Meyerson writing in the Washington Post and some of the commentators on MSNBC like Ed Schultz, usually very supportive of him. But they have said in, they use a lot of arguments that it's bad for U.S. labor. And one of the majority of comparisons they often make is they'll say, oh, a Vietnamese worker, the country I work in, a Vietnamese worker makes how much money an hour. And the American workers already underpaid and they need to make more. And it gets back to the complexity that you were talking about. My question is, are the critics of the TPP who are against it that I just mentioned, are they wrong in their facts? Or are they right in everything we've been saying this morning is also right? And it's just that we have to decide which is more important. Yeah, Scott, where does labor stand on the TPP? Sure, let me answer your question, both questions. First, the question about the president's supporters, is the political calculation here is very tough for the president. And I wanna say, I understand completely how difficult his politics are. Trade is an issue that unites Republicans and divides Democrats. And he's gotta deal with the skeptics in his own party and he's gotta cooperate with Republicans, both of which are difficult political acts in this town for any president, including this one. Second, with regard to the arguments that are made, I won't let the FLCIO and others speak for themselves about their opposition to the agreement or why. But if you look at our current economic recovery, where we're still having problems are in sectors like housing, which were part of the bubble and slow to recover, housing and construction. But the parts of the economy that are doing well are the export sectors of the economy, agriculture, high-end, high-technology, manufacturing goods, those kinds of things. Trade agreements open up markets for those high-performing sectors. The US workers earn more than Vietnamese workers because they're more productive, okay? And the US manufacturing is high-tech, high-productivity manufacturing. Therefore, commands a high wage. Our economy is largely complementary with an economy like Vietnam. They don't make a lot of things that we make. We sell them things we make, they sell us things they make. So there's a degree of complementarity that gets missed in the simplistic argument about labor rates. But at the same time, I think the president is on strong economic grounds, as well as foreign policy grounds, by promoting the trans-civil partnership. But he'll have the hardest time selling it to his supporters. Question, yes, please, right here. Hi, I'm Caitlin with Congressman Charles Bustani's office. I just had a quick question regarding how US energy development and export capabilities could play a role with our Asian partners in the future, whether it's LNG specific in India and Japan Tai, or oil exports and offshore development going on in Vietnam. That's a great question. We're not exporting oil quite yet, but LNG's lining up. Key for India. You were asking India, the government of India, what are your couple of requests you've got for the United States? Because we've got a list a mile long for India. It's a really short list. You know, they'll talk about they want more visas, they want totalization agreement for Social Security, and they want American natural gas. You know, India's got power plants right now that are like idle, despite the fact that they've got a massive power deficit throughout the country. And they see, you know, American gas, especially at the same time we're trying to push them to reduce their reliance on, actually, it's oil exports out of Iran. We're trying to get to India to find alternative sources for that. So it's a natural complementarity to our other asks there. And two of the four facilities now that have been licensed, two of the American export facilities that have been licensed for free export, not just FDA partners. Two of those, some of the export from that is already tied up to go to India. So a couple of nice steps, but India would love to have a blanket exemption for all terminals to be able to export there. Because, as you know, it's a funny thing, but having ducked into this a little bit, and I'm sure you know, most American natural gas terminals were built for import. And so these two terminals that are now allowed to export, they got to go through a multi-year refitting so that they can actually transport it out rather than bring it in. So a funny scenario there, but critical for India, they very much want it. You know, in farm policy, the dust bowl lives on. In American energy policy, the Arab oil embargo of 1973 lives on. So we negotiate all these free trade agreements, but crude oil is not a part of them because there's a congressional ban on exports of crude oil. Despite the fact, we're now at a 40-year high in crude oil production in the United States. And you'd- But that was done for national security purposes. Right, so you'd stabilize markets and you'd probably improve consumer pricing and certainly get price stability if we could export crude oil as well. Likewise, natural gas is a big export opportunity now thanks to the revolution in unconventional shale gas production. So we'll get there a piece at a time through FTAs, but I think there's a larger role for Congress to think about the United States as a major energy producer and potential energy exporter where we've always looked at us through the lens of an importer. Matt, is that being used as a lure to get Japan sort of more deeply at the table at TPP? Promise of possibility. I don't think those things are being linked directly. I mean, it is true that Japan in an FTA would have easier access, but I think there's already been a sort of political decision to support Japan in this way and actual approval of some initial export of gas. I mean, I would just say on energy, we should have our energy team up here because they've done a lot of work on the implications of the big revolutionary changes in the energy markets. I would say two other effects in addition to the ones that were mentioned there. One is simply the economic growth benefits to the United States of this revolution in shale gas is going to, I think, be a big impact on the rest of the region because if the US grows more as a result of this, that's gonna be good for everyone. And then geostrategically, it's a huge issue because a lot of our strategic posture in the world has been premised on our providing the public good of overseeing the movement of that energy around the world. And if we're less dependent on those movements because we're doing it ourselves, producing ourselves, then somebody else is gonna have to provide that public good and that raises a whole bunch of questions. So for what it's worth it does. John. Yes, please, in the back. Steve Winchers, local researcher. I'd like to get the panel's reaction to a skeptical note on TPP, which was sounded actually just around the corner on Massachusetts Avenue, and which surprised me. But the argument was TPP actually, in an ultimate sense, is irrelevant because of the fact, as was mentioned by the panel, at the moment China is the factory floor of the world. You've got supply chains going way down into Southeast Asia and other ways. They've been cultivated for three decades now. And that's the economic reality and actually the new reforms in China are just, as you say, going to increase this powerhouse that was created under Deng. And the argument is TPP is just not gonna make a dent in that. And then of course, the panel hasn't mentioned that, but is aware there's this also competing RCEP or whatever that's floating around. So could we get a comment on that? Sure. Look, I think that there's certainly a great deal of economic integration that has happened because of the voluntary, mutually beneficial exchange that has promoted trade throughout the Asia Pacific. I think it's important to establish a rule set and what TPP does, and like most trade agreements, most trade agreements conform policy to the existing commercial footprint. I mean, there was trade with Canada and Mexico before NAFTA, all right? What NAFTA did was open up and expand and enhance economic engagement between among the three countries on a commercial footprint that already existed. How it's developed. So that doesn't make NAFTA irrelevant because the rules actually help. Also, I would note, RCEP, to my mind, first of all, TPP I think eventually includes China. My own view is TPP has been discussed by officials who are part of the negotiations, including US officials, as part of the free trade agreement of the Asia Pacific. That's a long-held policy goal or political goal of the APEC process, which includes all 21 APEC members, including China. So I think however TPP concludes with its current partners, there's room for a session and I think ultimately it will become the free trade area of the Asia Pacific with rules. On RCEP, I would note that to my mind, RCEP structurally is ASEAN centric. It is ASEAN plus the six parties that they already have free trade agreements with and at least in the early years and things take a while on ASEAN, that's not a criticism because the trend, the direction is right, the pace is not always as fast as other fora, but the near-term benefits of RCEP will be in consolidating existing arrangements that are sort of ASEAN plus N. So I think that the two agreements, TPP and RCEP, can both be interoperable and will both benefit consumers and producers in the region, but I do think that it's important for governments to conform policy with business realities and for me that's the real benefit of TPP. Can I just, I totally agree with everything that Scott said, let me just add one additional point to plug a report that we put out in late last year about using APEC this year under Chinese leadership to start talking about how to work to bring these different approaches together and to make them interoperable. And obviously the key to this is the global supply chain story and trying to facilitate that because whichever one of these agreements you're in, you're not gonna wanna have three different customs forms for different people whether they're in or out or one particular agreement. And China has been a pretty constructive host of APEC in the past and I think they're taking it quite seriously and certainly I think Scott and I hope that they will look to these issues to try to figure out a way of bringing these agreements together in a practical way because the ultimate objective is one big area that conforms to the business realities. There's one other agreement too that doesn't get nearly as much attention. We don't have a clicker question for this but can I get a show of hands? Who here has heard of the trade and services agreement? Very small number. Something good to look up when you get back to the office there. This is a free trade agreement that so far the United States, Europe, China showed an interest in getting involved in. It won't include agriculture and it won't include import, export of goods but on the services side, you know who knows how big this can do is being done under the auspices of the WTO. It doesn't get the attention because some of the meetings take place in a coffee house in Geneva rather than these big ministerials but a number of companies, financial services, retailers, technology companies on the services side are very excited about what the opportunity for this is. Now at the end of the day it's got some very different actors. You know, Pakistan for instance is a member of the negotiating group for the trade and services agreement. It's not the usual cast of characters. It's not ones where we necessarily have trade agreements with already but at least for the services side of the economy it could also be another large one in terms of this president's trade agenda being sort of underappreciated in some sense. That's another deal that's kind of out there right now that has already had a couple of rounds in negotiations formally. Next question, yes please, right here. A reporter from Voice America, a follow up question about TPP in China. China is now showing more interest in joint TPP and Mr. Gome you mentioned that the TPP is also a correction to WTO. So my question is, is it more difficult for China to join TPP than when China joined WTO? And with the economic reality they mentioned here, can China afford not to join TPP? Thank you. Very good pair of questions. So first of all just to confirm your premise that China has fairly dramatically changed its view of TPP in the last nine months. If you went to China as I did last about a year ago you would hear almost unanimity of view in Beijing that TPP was designed to contain or exclude China and they needed to sort of find another approach. I think what changed in the winter or early spring is that Japan joined TPP and I think that changed the Beijing's view of what this arrangement was. This is now a grouping that is a serious critical mass of the world economy, 40% of the world economy that now is the place where the rules are being written. I mean for better or for worse they're not being written and it is for worse actually that they're not being written in Geneva but the second best approach is TPP and this is where the rules of the game are being written and China understood rightly it needs to be part of that conversation. Now whether it's gonna be able to join and by the way it's been reflected not just in their sort of words but I think the fact that they came to the table at the last strategic and economic dialogue Beijing did, willing to talk about a US-China bilateral investment treaty on the terms that the US had long been seeking a negative list approach to regulation and pre-establishment market access I think was a reflection of that changed view of TPP. I think the Shanghai Free Trade Zone is another example where they realize they have to have these sort of rules that are consistent with global standards. So I think there have been some real changes as a result of this changed attitude. Now in terms of China getting in I think it'll be very difficult and you asked the right question which is politically can China really convince its people that it should join a grouping of countries in the region that it was not a part of originally founding and it was difficult enough to do that with WTO but to do that for a mega regional deal that it was not part of originally I think politically is gonna be very difficult and that's why I personally believe that no country except possibly Korea because substantively Korea could easily exceed but politically still difficult and maybe some of the smaller Asian countries where they could work the domestic politics I don't think countries will exceed I know that's not the official position but I just think as a practical matter it's gonna be very difficult and so I think what's gonna happen is what Scott said which is that we're gonna leapfrog to a free trade area of the Asia Pacific or at least that's gonna be the next effort is to try to take the 12 or 13 countries in TPP are gonna go to the rest of the group and say look we've got this agreement let's try to move it into a broader regional arrangement obviously starting from that as the floor and moving up, not down that's where the rub is because you'll obviously have to only negotiate up not down the current members Matt made an interesting point about a session which is pure speculation at this point but I would observe also that NAFTA had a session clause not many people know it but one of the last clauses in the NAFTA treaty was a clause for a session that nobody ever used about 20 years so it's harder than it looks. Yes please right here. Hi I'm Andrew Oros from Washington College in the East West Center of Washington also following up on the China point if I bring us back to the initial remarks you all had on China one of the issues that I had interest in was about state-owned enterprises and Chinese support for state-owned enterprises and also relatedly China trying to move up the value chain and so it's competing more with US industry and as we look forward in the next few years China's almost certain to become the largest economy in the world even though it's not per capita basis I think this will be a really big media issue in the United States so I'm just wondering as the US and China are competing more in the same areas but the playing field doesn't seem to be very level whether you see this as potentially a very big political issue in the United States in the way that the US-Japan conflict really took off in public imagination in the 1980s. Look a lot of political tensions are often driven by a sense of unfairness. It may or may not have to do with hard measures. At a point in time a few years back when China was growing at 10% a year and US unemployment was getting close to 10% there was a sense of unfairness and that can drive politics. I would note though that the United States that the sheer size or who's number one is less of a factor than who's benefiting and one of the reasons I would also note politically that you've seen a real drop off in members of Congress going and proposing loudly that we're going to accuse China of currency manipulation and put 27% tariffs on all their imports. Well what happened is those members of Congress heard from constituents, companies and farmers and businesses that operate in their district saying wait a minute China's a customer of mine. Okay, so this goes two ways and so I focus a lot more on what is a mutual benefit because ultimately our economic relations are founded in free transactions voluntary for mutual benefit. To the extent there's mutual benefit in this we'll have a rising economic relationship whoever's number one. We have two minutes left. I want to squeeze in one more question than you had one right here. So if you could. My name is Takel, Sumino, I'm from a bank Nomura. Following up the question, I do like to know how is this global economy will impact their industrial policy in China or India? Similarly, is it more protectionist to foster the domestic companies to go global or are they gonna be more open minded to actually incur more foreign direct investment into the countries? China and India. China and India, yes. Well for India, I think they've taken a step backwards to close the market but not because they want to create national champions that can export but just because particularly for government procurement and for some private sector procurement they've got a huge import bill. India's trade deficit last year was about $195 billion and as a percent of the economy it was more than two times America's trade deficit and we know the problems that we've got when we talk about our deficit here. India is considerably larger than ours as a percent of the economy so they needed to do some things they thought to try to head that off. So it wasn't about building national champions and finding export markets and maybe that's the case in China more so. For India it was about trying to increase manufacturing in country, soaking up the increased urbanization rates that they've had in recent years, the number of use that are in the workforce and the fact they don't have basic manufacturing and assembly jobs to soak that up so it's more about domestic considerations but definitely moving in that direction. I mean I think as Rick just said I think in China's case there is probably more of a conscious effort to build national champions and to try to find markets abroad and there have been a number of policies that have supported that including ones that have been certainly in the view of the US business community tilting the playing field against them in the Chinese market and elsewhere and on the other hand it's not all I think that tendency. I think there's also a tendency as I mentioned with respect to opening up the Shanghai Free Trade Zone. I mean I think there's a realization in China that they need to be competitive on global terms and I think that those tendencies are there as well and I expect that TPP and the discussion about the rules of the road are going to help shape China's view on all of this. It's already having that impact I think and by the way one little straw in the wind also that I should have mentioned from last year when the attitude changed is that Korean friends have told me that shortly after Japan indicated it was ready to join. The Chinese came to the bilateral Korea-China negotiations which had been going on for some time. Again with a much more open attitude towards the investment chapter in particular and the negative list and pre-market establishment pre-establishment market access and I think it's having that effect in terms of the way they look at how they compete in the world and how they play by the rules. So I think there are tendencies in both directions. I got a small addendum to my answer which is that India's broader economic policies the fact they haven't built roads, airports, electricity, that kind of stuff, amended the labor laws. The reason that they don't have a vibrant manufacturing sector is involuntarily triggering a lot of Indian companies to become global players. Tata bought Jaguar and Land Rover. A lot of major aluminum manufacturer on the road, steel manufacturer, Tetley T, the IT company. So not as a, actually kind of in reaction to the government not doing enough to encourage the domestic economy. They've involuntarily created a lot of international and global champions. So a little different spin on the question there. Kind of meeting that need without trying to do it. So we've run out of time and you've earned lunch. Please join me in thanking Matt and Rick and Scott. Thank you.


Hello, I am Dr. Alicia Pallett, the officer in charge of the OB-GYN clinic at Longstall Regional Medical Center, and I'm here to discuss your prenatal care in our clinic during COVID-19 operations. Across all military medical treatment facilities, including here at Larmsey, some routine care appointments are either being deferred to a later date, or they are being done by telephone consultation or virtual health synchronous video appointment. Based on guidance by the Society of Maternal Fetal Medicine, we have changed a few of our OB appointments. The goal was to combine some of your visits so that you do not have to come to the hospital multiple times. Overall, you will still have routine OB care throughout your entire pregnancy. First, if you are newly pregnant, your initial OB physical and dating scan ultrasound will occur during the same appointment in order to again decrease the number of times you have to come to the hospital. Regular OB visits will occur during your 16th, 20th, 24th, 28th, 32nd, 36th, and 38th through 41st weeks of pregnancy. For patients that have high-risk conditions, the frequency of visits may be different. For our uncomplicated OB patients, the 16 and 24 week appointments will be done via a telephone consultation. However, if you have any concerns at all, we can and will bring you in for a face-to-face appointment. We are also joining your anatomy scan ultrasound and the 20-week OB appointment into one visit. In general, you will have your ultrasound done first, followed by your visit, so that your provider can discuss the results of the scan at that time. There is no change to the 28-week OB appointment or the labs that need to be done beforehand. Pregnant patients will still do their glucose tests and other lab work. If you are RH-negative, you will also get your Rogam injection at this time. If you have any questions about your prenatal care, please feel free to call the OB clinic at 06371-9464-5839 or send a message through TricareOnline.com. If you experience an emergency during your pregnancy, please report to the emergency room if you are under 20 weeks pregnant or go to labor and delivery if you are over 20 weeks. We look forward to providing your OB care, and we will continue to work hard to enhance your pregnancy experience while you're with us. Thank you.


There's something really important I want you to see that sometimes goes unnoticed in Romans five. In verse nine he says, how much more than having now been justified by his blood, we shall be safe from the wrath of God through him. Now this justification impunes God's righteousness if indeed we are not justified. Justified means to be declared right and treated as such. We are declared right because of what? The blood, we are justified by the blood. Look what he says, we shall be safe. And the word for we shall be safe really is the future. And so it's a future indicative, the future passive indicative means we will be saved. It is going to happen. If not, that also impunes the integrity of God. He justifies us and that's how we know that we shall be saved in the end. Nothing is going to change that why because of our faith in what the blood has done. Amen.


The new constitution proposed by Tunisian President Kais Saeed has been approved in a referendum as per preliminary results. 94.6% of voters adopted the constitution, according to numbers released by the Tunisian Independent Higher Election Authority. The referendum was held on July 25 amid widespread calls for boycott by opposition parties and civil society. It took place exactly a year after President Kais Saeed sacked former Prime Minister Hisham Mashiishi. In the subsequent months, he assumed more power. He also sacked a large number of judges after accusing them of inefficiency and harboring terrorists. The draft constitution proposed on June 30 by Saeed faced immense criticism from all sections of the country. Critics said it was a power grab by Saeed. Tunisia's opposition attributed the low voter turnout to illegitimacy of the referendum. Taeed has claimed that low turnout will not affect the prospects of the referendum. The new constitution will replace the existing one that was claimed following the Tunisian Revolution of 2011. It will give the president more powers over legislation and the judiciary. Parties such as Islamist Anhadah, Democratic Progressive Party, Free Disturion Party and the Workers' Party of Tunisia have been leading various campaigns asking the people to boycott the referendum. They argue that the process through which the new constitution was drafted is not democratic but illegitimate. The proceedings of the committee which drafted the constitution have also been questioned on the grounds that its appointment was arbitrary. The committee was not allowed to consult any political party while drafting the constitution. Despite being invited to Tunisia's largest union, the Tunisian General Labour Union boycotted the committee's consultation asserting that the dialogue was arbitrary and unilateral. The main sort of thrust is that it will be basically doing away with what had been a divided executive between the president and the prime minister and it will be giving all of the power to the presidency. We'll see that there is still a parliament but it seems that its powers are vastly reduced. There seems to be very few checks on the presidency. Actually, one of the advisors who was involved in the drafting of this draft has given an interview where he's actually condemned the final version. He says that the version he presented to the president, all of the checks that were there have been reduced and it's no longer just a hyper-presidential system but he says that it really is a dictatorial system and that's one of the criticisms we've seen from many political parties. That said, human rights are still protected within the new draft constitution but many of the institutions and institutional checks that were there to really guarantee them seem to have been taken away and that seems to be the main concern that we've heard from human rights activists. There are no guarantees of some of the independent state bodies that previously had been assured about the constitution, whether that's the higher electoral board or whether that's an anti-corruption authority. There are question marks over the regulatory board for broadcasting in media and so these are certainly some concerns that people have. At the moment, I can tell you that the debate over the referendum for them, people who are supporting it, really are not supporting it on the merits of the constitution. They're supporting it either as a way to say that we don't want to go back to rule under a parliamentary system where the main party, the biggest party would be the Anasta-Islamist party or they're just saying we want to basically give a vote of confidence to the Kaifayat but really not engaging with the substance of the constitution. Large-scale protests have been going on in Tunisia since the President's power grab last year. Last week, several thousands took to the streets in the capital Tunis against the referendum. The police forces tried to brutally suppress the demonstration and arrested scores of human rights activists and members of the Workers' Party of Tunisia. Alongside the political conditions, Tunisia is witnessing a major economic crisis and the past few years have seen increased frustration amongst labour and social movements. Kaifayat has continued neoliberal economic policies and has not been able to manage the crisis. There was an amnesty bill after the revolution in 2011 that took many years. It was finally passed but activists who had pushed back against it had basically succeeded in limiting it to amnesty only for corrupt officials of the Benali era but not for corrupt businessmen. And the President basically extended amnesty in the hopes that this would convince these businessmen to bring money back in in the form of investment. Now, it's really not clear that that's the case. It's not clear that there's any sort of transparency or accountability in terms of actually tracking that wealth. He's made a few sort of, let's say, at the rhetorical level and pay-ons to tracking down illicit capital flow that has gone out of the country to a debt audit. But he hasn't taken any substantive steps. And in the meantime, he's continuing negotiations with the IMF for a new loan of something like $4 billion, which in many cases we're hearing people say there really isn't an alternative. Even people who are very critical of the IMF are saying that Tunisia is at the moment unless there's significant debt forgiveness, unless there's really very strong steps towards energy and food sovereignty. There really isn't an alternative at this current moment to a new IMF loan, but it doesn't seem that the President has really tried to offer alternatives that are really substantive to the way that Tunisia was going before economically.