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This Week in Markets and Democracy: Asian Trade Openness, Palm Oil Abuses, Global Magnitsky

by Shannon K. O'Neil
December 16, 2016

A worker unloads palm fruit at a palm oil plantation in Peat Jaya, Jambi province on the Indonesian island of Sumatra September 15, 2015 in this photo taken by Antara Foto. September 15, 2015 (Reuters/Wahyu Putro A/Antara Foto). A worker unloads palm fruit at a palm oil plantation in Peat Jaya, Jambi province on the Indonesian island of Sumatra September 15, 2015 in this photo taken by Antara Foto. September 15, 2015 (Reuters/Wahyu Putro A/Antara Foto).

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Trade Rules Favor Asia, Not the United States
Asia’s rise in the global trading system continues. Recent World Economic Forum data shows that the ten Association of Southeast Asian Nations (ASEAN) members now outrank the European Union (EU) and United States on trade openness, reflecting deeper integration into the global economy aided by investment and trade deals. But ASEAN and other countries may have a tougher time accessing markets if protectionism in the United States and EU prevails. The rankings back up at least some of the recent political rhetoric—the United States ranks 120 out of 136 countries in terms of foreign market access, facing average tariffs of almost 5 percent—the seventh highest in the world.

Children Still Forced to Work on Palm Oil Plantations
Even companies with the best intentions sometimes struggle to free their supply chains from abuse. The latest scandal comes in palm oil, an ingredient used in everything from pizza to toothpaste. Despite standards set through the Roundtable on Sustainable Palm Oil, an association of hundreds of businesses and non-profits committed to cleaning up the industry, Amnesty International has uncovered ongoing exploitation and abuse. At Wilmar, the world’s largest palm oil producer, unrealistically high production quotas force workers to put in eleven-hour days and recruit their spouses and children to help—all for pay as low as $2.50 a day. This belies the “sustainable” claims of Nestlé, Colgate, Unilever, and many of Wilmar’s other top-tier customers. To really improve conditions for workers, brands will need to invest more in auditing and training to help their suppliers uphold labor standards.

A New Way to Take on Human Rights Abusers
President Obama now has before him bipartisan legislation authorizing the United States to sanction human rights abuses and corruption taking place abroad. The Global Magnitsky Human Rights Accountability Act, named after Russian whistleblower Sergei Magnitsky, expands a 2012 law sanctioning Russian officials involved in the torture and death of the thirty-seven-year old lawyer who exposed a massive tax fraud scheme, and died in police custody in a Moscow prison. The global version Congress just passed (tucked into an annual defense bill), allows the U.S. government to impose financial and visa sanctions on any foreigners who violate human rights and freedoms, carry out extrajudicial killings and torture, or commit “acts of significant” corruption. The legislation provides a powerful tool for the executive branch to hold human rights abusers accountable.

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