Trade
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Koret Distinguished Lecture Series: Lecture I

This year marks the 60th anniversary of the Korean Armistice Agreement but the situation on the Korean peninsula remains tense and uncertain. Eight months after stepping down as the Republic of Korea’s Minister of Foreign Affairs and Trade, Kim Sung-Hwan will address the difficult challenges to achieving sustainable peace on the Korean Peninsula.

Minister Kim will examine North Korea’s policies toward South Korea and the United States in light of major developments on the Korean Peninsula since the end of the Korean War in 1953. He will also address international efforts to stop North Korea’s development of nuclear weapons. He will share his insights into the current situation in North Korea, including the differences in North Korea’s policies and behavior since Kim Jong Un succeeded his late father Kim Jong Il two years ago as the supreme leader. Minister Kim will conclude by offering his policy recommendations for dealing with the North Korea of today.

Minister Kim completed thirty-six years as a career diplomat in the Republic of Korea’s foreign service in March of this year. His final two positions in government were as Senior Secretary to the President for Foreign Affairs and National Security (2008 to 2010) and as Minister of Foreign Affairs and Trade (2010-2013). Earlier assignments in the ministry headquarters included vice minister (2010) and deputy minister for planning and Management (2005). From 2001 to 2002, he served as director-general of the North American Affairs Bureau, in charge of the Republic of Korea’s relations with the United States. Overseas, Minister Kim’s postings included service in the United States, Russia and India. He was Ambassador to the Republic of Austria and Permanent Representative to the International Organizations in Vienna (2006-2008) and Ambassador to the Republic of Uzbekistan (2002-2004). In July 2012, UN Secretary General Ban Ki-Moon appointed Minister Kim as a member of the High Level Panel on the Post-2015 Development Agenda. Minister Kim graduated from Seoul National University and studied at the School of Slavonic and East European Studies, University of London. Currently, Minister Kim is Chair of the Institute for Global Social Responsibility and Distinguished Visiting Professor at the Graduate School of International Studies at Seoul National University.

The Koret Distinguished Lecture Series was established in 2013 with the generous support of the Koret Foundation

Philippines Conference Room

Sung-hwan Kim Former Minister of Foreign Affairs and Trade for the Republic of Korea Speaker
Lectures

Extreme weather events and climate variability threaten crop production, food prices, food security, and human lives at local and global scales. Ten years ago, a record heat wave killed over 30,000 people and seriously damaged crop yields in France and northern Italy; summertime heat waves and associated droughts have subsequently decimated maize and soy yields in the U.S. and wheat yields in Russia, causing global food prices to soar.

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Corporate Affiliate Visiting Fellow
Satoshi_Ogawa.jpg MS

Satoshi Ogawa is a corporate affiliate visiting fellow at the Walter H. Shorenstein Asia-Pacific Research Center (Shorenstein APARC) for 2013-14.  He has been working since 2003 for the Japan Patent Office, one of the external agencies of the Ministry of Economy, Trade and Industry (METI) of Japan, as a patent examiner handling applications for car engines and production machinery.  From 2011 to 2013, he was also in charge of the policy planning of space industry at METI.  He received his master of engineering degree in aerospace from Tokyo University in 2003.

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This paper summarizes the lessons learned from implementing a realistic, game-based simulation of California’s electricity market with a cap-and-trade market for greenhouse gas (GHG) emissions and fixed-price forward financial contracts for energy. Sophisticated market participants competed to maximize their returns under stressed (high carbon price) market conditions. Our simulation exhibited volatile carbon prices that could be influenced by strategic behavior of market participants. General uncertainty around carbon price as well as the deployment of strategies that were privately profitable but adversely affected overall market efficiency resulted in total costs of electricity supply that were significantly higher than would have been observed in perfectly competitive allowance and electricity markets. 

We observed several striking phenomena in our game. First, all teams in our game found themselves in a position to prefer higher carbon prices, even those holding high-emitting power plants. This occurred both because electricity price rose faster with carbon price than the average variable cost of producing output for most teams and because the initial allowance allocations functioned as “free money” with a face value that could be increased through the unilateral actions of market participants. Second, teams exercised unilateral market power on both selling and buying sides of the carbon allowance market, with the net effect being a carbon price far above that which would have been expected based on allowance supply and demand in a perfectly competitive market. Third, disagreement among teams over the appropriate price of carbon allowances combined with the exercise of unilateral market power in both electricity and allowance markets dramatically increased electricity prices and often resulted in the use of a more expensive set of generation units to produce the electricity demanded.  Numerous authors have pointed out that electricity markets are extremely susceptible to the exercise of market power, and emissions allowance markets can exacerbate this problem, as demonstrated in Kolstad and Wolak (2008). Fourth, there was very little liquidity in the secondary market for carbon allowances until right before the final emissions “true-up,” with a flurry of trading at the last minute, which resulted in inefficient market outcomes as several trades failed to be completed before the deadline.

These findings have several important policy implications. First, policy measures that increase the transparency and liquidity of the carbon allowance market would make both the allowance market and the electricity market work better. In our simulation, all market participants showed a strong unilateral desire to limit the amount of information publicly available about conditions in the carbon market, much to the detriment of market performance. Second, guardrails that constrain market outcomes, such as price floors and ceilings, can play a valuable role by limiting carbon price volatility.  Third, position and holding limits can reduce the ability and incentive of market participants to attempt strategies that, while privately profitable, have a negative impact on overall market efficiency.

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Journal Articles
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The Electricity Journal
Authors
Mark C. Thurber
Frank Wolak
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On July 8th, 2013, the United States and the European Union started negotiations on the  Transatlantic Trade and Investment Partnership (T-TIP), which is to create a free trade area.  In this working paper, Tim Josling and Christophe Crombez study the prospects for such a transatlantic free trade area, starting with the background behind why the T-TIP is on the agenda now and what areas of trade are being negotiated.  They analyze who stands to benefit from such a trade and investment agreement, how long it might take to reach such an agreement, and what factors might influence its acceptability to legislators.

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Publication Type
Working Papers
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Authors
Christophe Crombez
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Transparency in the multilateral trade system is fundamental. Monitoring the compliance of WTO members with their obligations is an important part of that transparency, and timeliness in the notification of compliance is crucial. In the case of domestic support to agriculture, the notifications of compliance with obligations has been slow and opaque. But another database exists that could both illuminate the extent to which policy instruments are correctly notified and provide a convenient way to ensure timely ‘pre-notifications’ in the event that delays occur in the future. This note shows how the OECD database can be used, for example, to shed light on the extent to which payments to producers that require production as a matter of eligibility are presently notified to the WTO as having no effect on production. We also demonstrate the feasibility of using OECD data to construct ‘pre-notifications’ by calculating the (as yet un-notified) domestic support notifications for the EU for the years 2009/10 and 2010/11.

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Journal Articles
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World Trade Review
Authors
Klaus Mittenzwei
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In this tenth session of the Strategic Forum, former senior American and South Korean government officials and other leading experts will discuss current developments in the Korean Peninsula and North Korea policy, the future of the U.S.-South Korean alliance, and a strategic vision for Northeast Asia. The session is hosted by the Korean Studies Program at the Shorenstein Asia-Pacific Research Center, in association with the Sejong Institute, a top South Korean think tank.

 

PARTICIPANTS

Republic of Korea:

Taeho Bark, Graduate School of International Studies, Seoul National University; Ambassador-at-Large for International Economy and Trade; former Trade Minister

Cholho Chong, Research Fellow, the Sejong Institute; Brig. Gen (retired); Professor, Sookmyung University; former commander, Air University, ROK Air Force

Young Sun Ha, Chairman, Board of Trustees, East Asia Institute; Professor (retired), International Relations, Seoul National University

Sang Woo Rhee, President, the New Asia Research Center; former chancellor, Hallym University

Yoon-joe Shim, Member of the National Assembly, Saenuri Party

Daesung Song, President, the Sejong Institute

Myung Hwan Yu, Chairman, Board of Trustees, Sejong University; former Minister of Foreign Affairs and Trade

United States:

Bruce W. Bennett, Senior Defense Analyst, RAND

Karl Eikenberry, William J. Perry Fellow in International Security, and Shorenstein APARC Distinguished Fellow, Stanford University; former U.S. Ambassador to Afghanistan

Thomas Fingar, Oksenberg-Rohlen Distinguished Fellow, Stanford University; former chairman of the National Intelligence Council

T.J. Pempel, Professor, Political Science, University of California, Berkeley

Gi-Wook Shin, Professor, Sociology; Director, APARC, Stanford University

Daniel C. Sneider, Associate Director of Research, APARC, Stanford University

David Straub, Associate Director, Korean Studies Program, APARC, Stanford University

Katharina Zellweger, 2012-2013 Pantech Fellow, Korean Studies Program, APARC, Stanford University; former North Korea country director for the Swiss Agency for Development and Cooperation (SDC)

 

Bechtel Conference Center

Workshops
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** We are currently experiencing some problems with our online RSVP system.  If you have any difficulty registering for this event, please send an email directly to the organizer, Denise Masumoto, via email masumoto@stanford.edu.  Thank you for your cooperation.  **



 

 

In this session of the Shorenstein APARC Corporate Affiliate Visiting Fellows Research Presentations, the following will be presented:

 

Mitsunori Fukuda, "Learning From Regulations About Electricity Supply in California"

In March 2011, a massive earthquake and tsunami struck Japan causing a severe accident at the Fukushima Daiichi Nuclear Power Plant.  As a result of this accident and an electricity crisis in Japan, it has become increasingly more important to create a more stable and robust electricity supply system.  On the other hand, there is a unique electricity supply situation in California.  Although the situation is much different from the one in Japan, the California government has also tried to improve its situation by reforming regulations for electricity supply companies.  In his research, Fukuda reviews the Japanese electricity supply situation and related regulations.  Additionally, he identifies significant learning points for Japanese improvement from the California situation. 

 

Chengbao He, "The Characteristics of Research and Development Management of Large Oil Companies"

Large oil companies play a dominant role in the oil industry, a vast majority of which is integrated with upstream and downstream business.  These large oil companies consist of international oil companies (IOCs) and national oil companies (NOCs).  Along with the accelerated economic globalization process, competition and cooperation between NOCs and IOCs will be more extensive and diverse.  The competition between these enterprises is not only a competition for resources, but more importantly, it is about the technical strength of competition and the ability to develop and deploy new technology.  Strengthening the management of research and development (R&D) and improving the efficiency of R&D is the constant goal of each oil company. 

In his research, He introduces the typical generation of R&D management mode at present, focuses on the analysis and comparison of R&D management and operation practice of the five well-known large oil companies, namely ExxonMobil, BP, Shell, Chevron and CNPC.  They have formed their unique management mode, technological advantage and competitive advantage in technology innovation. 

 

Tsutomu Morigaki, "How Do Japanese Electric Companies Expand Business both in Japan and Globally?"

Traditional Japanese electric companies have been struggling with expanding their own businesses as well as their declining international competitiveness in the field.  Why is it difficult for Japanese companies to recover and succeed in international markets?  Morigaki analyzes the current situation from various points of view such as cultural features, technological trends and the movement of leading companies in the United States.  In this presentation, Morigaki provides suggestions on how to make strategies and which fields Japanese electric companies should focus on in the near future. 

 

Toshihiko Takeda, "Enhancing Multiculturalism Through Implementing Immersion Programs in Japan – Learning from Schools in the San Francisco Bay Area"

The United States has accepted generations of immigrants for more than 240 years from all around the globe.  While on the opposite shore of the Pacific Ocean, Japan maintains a virtually homogeneous society.  However, some local governments in Japan are facing an influx of foreign migrants who need to communicate with new neighbors in many places including classrooms.  The United States has a long history of language education for immigrants and its children.  Takeda explores various language immersion programs and analyzes good practices in the San Francisco Bay Area and implementation options for Japan. 

Philippines Conference Room

Mitsunori Fukuda Speaker Ministry of Economy, Trade & Industry, Japan
Chengbao He Speaker PetroChina
Tsutomu Morigaki Speaker Mitsubishi Electric
Toshihiko Takeda Speaker Shizuoka Prefectural Government
Seminars
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