TIME White House

Obama Says America’s ‘Open for Business’ at Summit

U.S. President Obama waves after speaking at the SelectUSA Investment Summit
Joshua Roberts—Reuters President Barack Obama waves after speaking at the SelectUSA Investment Summit at National Harbor, Md on March 23, 2015.

President Obama was self-assured during a quick sales pitch to foreign business leaders Monday, saying he was confident that he could work with Congress to iron out trade deals and a budget plan.

“The things that help businesses grow are not partisan,” Obama said in his remarks.

Still, he and a key Cabinet member warned Republicans against blocking the reauthorization of the Export-Import Bank, which helps foreign companies that need credit buy U.S. goods.

Obama faces partisan difficulties on both sides as he pushes ahead with the business-friendly agenda. A conservative group backed by the Koch Brothers launched a new effort Monday to block the Ex-Im Bank, arguing that it represents “cronyism and corporate welfare.”

The administration is also going head-to-head with members of the Democratic Party and typical supporters like labor unions as it irons out the plan that would free up trade between the U.S. and about a dozen countries in the Asia-Pacific region and Latin America.

Some of the most outspoken critics are Democratic Rep. Rosa DeLauro and AFL-CIO President Richard Trumka, who oppose the administration’s goal of moving the trade legislation through Congress quickly because they worry it will threaten jobs and standards on food and product safety.

In an interview ahead of the President’s speech, Commerce Secretary Penny Pritzker said it would be “terrible” if the Ex-Im Bank were to expire and argued the Trans-Pacific Partnership deal is critical to the U.S. remaining competitive with Asia’s growing middle class.

“Today there are 550 million people in the middle class in Asia,” she said. “That number will be 2.7 billion in 15 years. The ability for our companies to be able to sell into the fastest-growing middle class market in the world is really critical.”

Vinai Thummalapally, the executive director of SelectUSA, told reporters that foreign investors are generally confident that the debate over the Ex-Im bank will die down eventually.

“In spite of the debate, it rarely comes up there’s this confidence that things will settle down, based on things that happened in the past.” for the most part, he added, “they’re amused, they shake their heads.”

TIME Oil

The Real (and Troubling) Reason Behind Lower Oil Prices

green-gasoline-pump
Getty Images

It isn't supply and demand, as most people believe

I am obsessed with how the top tier of finance has undermined, rather than fueled, the real economy. In part, that’s because of I’m writing a book about the topic, but also because so many market stories I come across seem to support this notion. The other day, I had lunch with Ruchir Sharma, head of emerging markets for Morgan Stanley Investment Management and chief of macroeconomics for the bank, who posited a fascinating idea: the major fall in oil prices since this summer may be about a shift in trading, rather than a change in the fundamental supply and demand equation. Oil, he says, is now a financial asset as much as a commodity.

The conventional wisdom about the fall in oil prices has been that it’s a result of both slower demand in China, which is in the midst of a slowdown and debt crisis, but also the increase in US shale production and the unwillingness of the Saudis to stop pumping so much oil. The Saudis often cut production in periods of slowing demand, but this time around they have not. This is in part because they are quite happy to put pressure on the Iranians, their sectarian rivals who need a much higher oil price to meet their budgets, as well as the Russians, who likewise are on the wrong side of the sectarian conflict in the Middle East via their support for the Syrian regime.

Sharma rightly points out, though, that supply and demand haven’t changed enough to create a 50% plunge in prices. Meanwhile, the price decline began not on the news of slower Chinese growth or Saudi announcements about supply, but last summer when the Fed announced that it planned to stop its quantitative easing program. Sharma and many others believe this program fueled a run up in asset buying in both emerging markets and commodities markets. “Easy money had kept oil prices artificially high for much longer than fundamentals warranted, as Chinese demand and oil supply had started to turn back in 2011, and oil prices have now merely returned to their long-term average,” says Sharma. “The end of the Fed’s quantitative easing has finally pricked the oil bubble.”

If this is the case, the fact that hot money could have such an effect on such a crucial everyday resource is worrisome. And the fact that the Fed’s QE, which was designed to buoy the real economy, has instead had the unintended and perverse effect of inflating asset prices is particularly disturbing. I think that regulatory attention on the financialization of the commodities markets will undoubtedly grow; for more on how it all works, check out this New York Times story on Goldman’s control of the aluminum markets. Amazing stuff.

Correction: The original version of this story misidentified Ruchir Sharma. He is the head of emerging markets for Morgan Stanley Investment Management.

Read next: The U.S. Will Spend $5 Billion on Energy Research in 2015 – Where Is It Going?

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TIME Economy

What Today’s Trade-Deal Negotiators Could Learn From History

Marco Polo
Print Collector/Getty Images Marco Polo sailing from Venice in 1271. From a late 15th century illuminated manuscript in the collection of the Bodleian Library, Oxford.

The history of trade is one of merchants bending the rules. Governments would be wise to let them

History Today

 

 

 

This post is in partnership with History Today. The article below was originally published at HistoryToday.com.

Plucky merchants, circumventing or breaking the rules, have promoted trade down the ages – governments, for the most part, have hindered it. At a time when negotiations for the Transatlantic Trade and Investment Partnership (TTIP) are at an impasse, governments on both sides of the Atlantic should beware of repeating history. If not, they risk irrelevance.

David Abulafia, preeminent historian of maritime trade, speaks at the Legatum Institute this week about his history of the Mediterranean, The Great Sea, and his current work: a history of the oceans. Abulafia shows that from the Greco-Roman period onwards, huge quantities of goods flowed in both directions between China and the Mediterranean through the Middle East and the Indian Ocean. These goods were transported by traders who had to overcome perilous seas, pirates and, most importantly, avaricious rulers.

The Silk Road was not, contrary to popular opinion, the preeminent trade route during the medieval period: far more was transported by ship. Coins from Iraq, Afghanistan, Persia and Spain have been found in Siraf, a port on the Iranian shore of the Persian Gulf and a trading hub in the 8th century. The 9th century saw the revival of the Greco-Roman trade routes in the Red Sea: Chinese pottery has been excavated in Ayla, located on the site of Aqaba in Jordan. Moving further east 12th century accounts survive of Abraham ben Yiju, a Jewish Merchant based in Mangalore. Ben Yiju imported arsenic from the west and sent back iron, mangos and coconuts from the east.

Abulafia describes a global network, stretching from Spain, and later the Atlantic, to Japan. This network arose not by governmental dictat but through the actions of traders. In doing so some made themselves fabulously rich: a 10th century book by the Persian author Buzurg describes the life of a trader called ‘Isaac the Jew’ whose cargo was worth an estimated million dinars – an incredible amount, given that a middle class family could have subsisted on 24 dinars per annum.

That is not to say that governments did not play their part in promoting trade. But their actions often hindered rather than helped. Trade, then as now, was seen as a source of revenue in many countries. Aden flourished as a point of exchange on the Indian Ocean. Customs officers there extracted tribute or taxes at the government checkpoint, taxes which were attractive enough to tempt the Persian Kish who attacked Aden in 1135. The many checkpoints that goods had to travel through inflated prices – spices were not so rare or the journey so arduous – yet consumers in Europe paid a high price. A lot of which lined the pockets of rulers.

Those who resisted, the forbears of modern free-traders, could find themselves in hot water. Isaac the Jew came to a nasty end after refusing the pay the rajah of ‘Serboza’ (assumed to be the Kingdom of Sri Vijaya) 20,000 dinars for passing through his territory.

When governments weren’t taxing trade they were often disrupting it in other ways. In the 1180s the crusader lord Reynaud de Châtillon launched an attack on Mecca and on the traffic passing through the Red Sea. The result, after Reynauld’s failure, was the closure of the Red Sea to non-Muslims.

This is not to suggest that merchants were all saints preyed upon by dastardly rulers. As the Ottomans took over more territory in the eastern Mediterranean in the 15th and 16th centuries European merchants looked for other markets to obtain sugar. The result was an expansion of economic activity in the newly discovered Atlantic islands. With a little help from Christopher Columbus, a Genoese merchant, this would eventually lead to the Caribbean sugar trade and the slave trade.

This brings us back to the TTIP. History, both ancient and more recent, tells us that economic activity usually finds a way: whether its money-lenders finding loopholes in the usury laws in the 12th century or investment bankers engaged in off-balance sheet transactions in the 21st. The challenge for governments is to prevent the more egregious forms of commercial activity without throttling enterprise altogether. The history of maritime trade in the Medieval period shows that rulers usually fail to achieve both objectives – hopefully today’s leaders will not make the same mistake.

Stephen Clarke is a Research Analyst at the Legatum Institute, London.

The Legatum Institute is currently running the History of Capitalism Programme, a series of lectures which explores the origins and development of a movement of thought and endeavour which has transformed the human condition.

TIME State of the Union 2015

Here’s the One State of the Union Talking Point Republicans Liked

A debate over the next round of global trade deals is heating up in Congress this year

About a half-hour into President Obama’s State of the Union a strange thing happened: most of the Republicans jumped up and cheered while most Democrats stayed seated and silent. It was the only time it happened Tuesday night, and the topic was trade.

“China wants to write the rules for the world’s fastest-growing region,” said Obama. “That would put our workers and businesses at a disadvantage. Why should we let that happen? We should write those rules. We should level the playing field.”

“I’m the first one to admit that past trade deals haven’t always lived up to the hype, and that’s why we’ve gone after countries that break the rules at our expense,” added Obama, who earned a brief cheer from democratic socialist Vermont Sen. Bernie Sanders before continuing. “But 95% of the world’s customers live outside our borders, and we can’t close ourselves off from those opportunities. More than half of manufacturing executives have said they’re actively looking at bringing jobs back from China. Let’s give them one more reason to get it done.”

There are few areas of agreement between Obama and the new Republican Congress, but trade promotion authority, or TPA, which would ease the passage of the 12-country Trans Pacific Partnership, or TPP, potentially the largest free trade agreement ever, is one of them. For years the Administration has been negotiating TPP—affecting about 40% of the world’s GDP and about a third of the world’s trade—but so far Obama has yet to prove to Republicans that he is willing to spend the time, effort and political capital to get it done. But on Tuesday night, the Republicans’ response to his message was ecstatic.

The Republican Senate and House whips, Texas Sen. John Cornyn and Louisiana Rep. Steve Scalise, said that the trade talk was “probably one of the brightest spots” and “the most promising part” of the speech. Other top Republicans who criticize Obama around the clock, like Senate Majority Leader Mitch McConnell, said they hoped the President would now push the issue. Senate Finance Committee Chairman Orrin Hatch, the most senior member, said Obama’s remarks were “welcome but long overdue.”

In 1993, President Bill Clinton led an all-out push to get the massive North America trade deal through Congress. There were face-to-face White House meetings with Congressmen, White House envoys roaming the Hill, and 37 Commerce Department reports targeting industries “from computers to autos,” according to a Christian Science Monitor report, that helped show Congressmen how NAFTA would help their constituents. In October of that year, former CEO of the Chrysler Corporation, Lee Iacocca, stood on the White House South Lawn with hundreds of products (and businessmen) touting what the Administration believed would thrive under NAFTA. Under the white tents, Clinton joked to a pro-trade union man that he would wear the man’s company hat if he gave a speech. A month later, the House passed the bill in a squeaker and the Senate did shortly thereafter.

This time around, Republicans are hoping for another all-out Administration effort on TPP and the “fast-track” bill, which would allow limited congressional debate, no amendments, and an up-or-down vote. The Administration says such a bill is vital to pass TPP, as countries would be less willing to negotiate if they knew Congress could make large changes to the deal. But liberals are livid with Obama’s trade talk; they set up a press conference Wednesday to air out their concerns.

“The typical business plan in this country because of trade and tax policies: You shut down production in Cleveland and you move it to Beijing and sell the products back to the United States,” said Ohio Sen. Sherrod Brown after the State of the Union. “That makes no sense. And he’s wrong on that as his predecessors were.”

“If you think that previous trade agreements. . . have done well, you should support the TPP,” said Sanders. “But if you believe, as I do, that they have been disastrous, that they have cost us millions of decent paying jobs, then it make no sense to go forward in a failed policy and it should be defeated. . . . At the end of the day, among many other concerns, American workers are going to be forced to compete against people in Vietnam who make a minimum wage of 56 cents an hour.”

Still pro-trade lawmakers like Democratic Missouri Sen. Claire McCaskill believe that Obama can bring “enough” Democrats to pass a “fast-track” trade bill. Democratic Maryland Senator Ben Cardin, who supported the North American Free Trade Agreement in 1993 but opposed the more recent trade agreement bills with South Korea, Panama and Columbia, said Obama “probably” has the votes now to pass a TPA bill through Congress, although it’s easier in the Senate than House, where some conservatives have also raised an uproar about giving more power to the President.

The White House has recently increased its outreach efforts, tasking every Cabinet member to divvy up and target 80 House Democrats, according to the Hill newspaper. In an email Wednesday, Commerce Secretary Penny Pritzker told TIME that the trade agenda is a “top priority” for the Administration. “We are taking an ‘all-hands-on-deck’ approach to getting this done,” she said. “We are all out talking not only to members of Congress but to business leaders and workers around the country, telling the story of why trade and exports matter.”

The United State Trade Representative office touts that over nearly five years it has held over 1,600 congressional briefings on TPP. United States Trade Ambassador Michael Froman rebutted liberals’ concerns in a press conference on Wednesday, saying that manufacturing jobs are coming back from overseas and that export-related jobs pay 13 to 18 percent more than other jobs. “It gives us the opportunity to protect workers, protect the environment and level the playing field,” said Froman of TPP.

Still, Obama has a ways to go in getting broad support for both TPA and TPP. New York Sen. Chuck Schumer, a member of the Democratic leadership and Finance Committee, says “many of us wouldn’t support” TPA unless it addressed some China-related concerns. And the top Democrat on the influential Ways and Means Committee, Michigan Rep. Sandy Levin, says the Administration, Congress and outside groups need to immediately “tear apart” other outstanding issues, including those related to the environment and currency manipulation.

“I think it’s a mistake essentially to say let’s fast-track a package when there isn’t a real understanding of the issues and their resolution,” he said. “So that should be the focus right now and that will be the strong basis for getting bipartisan support. If we don’t do that, I don’t think there’s a chance that there will be bipartisan support.”

TIME Congress

Why Republicans Want to Give President Obama More Power

Barack Obama John Boehner
Jim Watson—AFP/Getty Images US President Barack Obama (R) talks with Speaker of the House, John Boehner, R-Ohio, during a meeting with the bipartisan, bicameral leadership of Congress in the Oval Office of the White House in Washington on Sept. 9, 2014.

The politics of passing the largest trade agreement ever—further tying the economies of 12 countries nested on the Pacific Ocean, an area larger than the Earth’s landmass—is complex, to say the least.

But House Ways and Means Chairman Paul Ryan, a pivotal figure on trade in his new perch, appears optimistic that Congress can pass a major bill that would give President Obama greater authority to negotiate an agreement known as the Trans Pacific Partnership, which would affect about 40% of the world’s GDP and about a third of the world’s trade. That is, as long as Obama does his part, of course.

“This is an area we can find common ground with the President, but we need the President to engage,” said Ryan, still sporting his hunting beard at the GOP joint Senate-House retreat, a first for the party in 10 years. “We need the president to engage on this issue with his own party. We need him to make it a priority in the State of the Union. We need him to work with his party to help get votes.”

Ryan’s statement, echoed by House Majority Leader Kevin McCarthy, underlines the difficulties in getting a deal sought by Obama for years. Granting “fast-track” authority, which would allow limited congressional debate, no amendments and an up-or-down vote, poses political perils across the aisle. Liberals, backed by labor unions like AFL-CIO, have raised concerns that TPP will exacerbate income inequality and have already begun planning how they could slow down the process in the Senate. Last month, Massachusetts Sen. Elizabeth Warren expressed concern that TPP could increase U.S. access to risky financial products and take away regulators’ tools over foreign banks “to prevent the next crisis.”

And even though a new Republican-controlled Senate increases the number of pro-trade congressmen, conservatives have been furious with Obama’s executive actions—voting in the House on Wednesday to claw back years of his immigration decrees—and will be hard pressed to grant the Administration the leverage it needs to negotiate. Ryan points out that the Republican party, however, is largely pro-trade.

“By and large the vast majority of our members are in favor of getting these kinds of trade agreements because they know it’s good for business,” said Ryan. “The question that obviously you hear about is should we give this president TPA? TPA is asserting congressional prerogatives early in the process. So it’s a good thing no matter who the president is … and to make sure we get the best deal.”

Still, there is already sniping that the other party could tank the deal before congressional leaders even announce a goal of a timeline of when they would like to pass TPA.

“The one thing we have found time and time again is where are the 50 Democrats,” asked McCarthy, before noting that last year Obama urged Congress for a trade bill in his State of the Union address and then didn’t talk about it a day latter in a private meeting with then-Senate Majority Leader Harry Reid. “The President has to lean in,” said McCarthy.

Some Democrats have said privately that it may be conservatives who tank the trade efforts.

“I think Republicans are going to confront the reality that doing TPA now goes against their central complaint about giving more authority to the president of the United States,” says a House Democratic aide. “They’ve been criticizing the president for months—if not longer—that he’s the emperor-in-chief. And yet they’re going to grant him basically complete authority to put a trade agreement in front of Congress and get an up-and-down vote? The closer this gets to that happening, the more their inexperienced members become familiar with the topic, they’re going to confront challenges in the party.”

If Congress doesn’t pass a trade-promotion authority bill, other countries will be more hesitant to engage in commitments with the U.S. since Congress could amend the deal. But members of Congress have a number of trade concerns spanning labor, environmental and intellectual property issues. In 2013, 60 senators and 230 representatives urged the Administration to address currency manipulation and exchange rate policies that they said could increase the trade deficit and kill jobs.

But Republican leaders at a retreat in Hershey, Pa.—“The Sweetest Place on Earth”—seem willing to work to overcome those obstacles.

MONEY Shopping

How to Get Cash for Your Unwanted Gift Cards

141226_EM_GIFTCARDS
Tom Hahn—Getty Images

Fortunately, you aren't stuck with that gift card to your great-aunt's favorite store. Here's how you can dump it for something you actually want this holiday.

Now that Christmas has passed and the piles of wrapping and ribbons are cleared, you have a good view of the duds in your holiday haul.

For items like that hideous sweater from your cousin, see our guide to returning and exchanging gifts. But if the unwanted present is a little rectangle of plastic redeemable at a store you’ve never heard of or would never willingly wander into, it may seem like you’re stuck with it—or whatever item you find least offensive in that shop.

That’s if you use it at all. This year alone, American consumers will leave more than $1 billion in store credit unused, according to CEB TowerGroup, which tracks gift card trends. Rather than leave that card to languish in your wallet, consider these options for swapping it for something you do want.

Trade It In

There are a number of websites that let you get cash back for your card or swap for another you’re more likely to use, but don’t expect to recoup the full value. These vendors will take a small percentage, meaning you’ll pay a price for your swap.

To make sure you get the most for any trade, try giftcardgranny.com. This online gift card aggregator lets you select the merchant of your card and then easily compare offers from 15 reseller sites, including cardpool.com and giftcards.com, to figure out who will offer you back the highest percentage of your card’s value. Since each gift card reseller uses different fees and payment methods, it’s worthwhile to do this check first and then go to the site offering the most for your unwanted plastic.

Not included in this price comparision site is a new offer from Walmart that’s good if you have a lot of love for the big-box retailer. Walmart will trade store credit for gift cards from more than 200 different retailers, restaurants, and airlines through its own online exchange website, Walmart.CardCash.com. Certain merchant cards will get you up to 95% of the original card’s value, or about 3% more than most reseller websites, which usually top out at 92% of a card’s face value. Others will get you 85% back, and some as little as 70%.

Sell It

If you don’t want to make your swap online, you can visit certain Coinstar kiosks (yes, those same machines you dump a year’s worth of spare change into). These yellow boxes accept gift cards from more than 150 retailers and restaurants, as long as they have a balance of at least $20. It will make you an offer for the card, and, if you accept, will provide you with a voucher you can then redeem for cash at the register of the shop the kiosk is located in.

If you don’t want to have the value of your card dictated by a reseller, use raise.com. Through this site, you can set your own price for the gift card in a marketplace similar to eBay, without the bidding. You can list any e-card for free on the site and a physical gift card for $1, but when you sell it, the company will take a 15% cut, meaning that even if you sell it for full value you can still end up recouping the same or less than a site that pays a lower percentage outright, plus you won’t have to wait as long to get money back.

Donate It

If you’d rather keep another service from profiting off your gift card or don’t find the exchange worthwhile, contact your favorite charity organization and ask if they accept donated gift cards. You could also use a site like Gift Card Giver, which distributes donated gift cards to certain approved nonprofit organizations. Giving the card away could lower your tax bill and extend that holiday generosity even more.

Who do you side with in the Great Gift Card Debate?
Why gift cards are the only present that makes sense
Why gift cards are a crime against Christmas

TIME Nicaragua

Nicaragua Breaks Ground on New Inter-Ocean Canal Project

HKND Group Chairman Wang Jing speaks during the start of the first works of the Interoceanic Grand Canal in Brito town
Oswaldo Rivas—Reuters HK Nicaragua Canal Development Investment Co Ltd Chairman Wang Jing speaks during the start of the first works of the Interoceanic Grand Canal in Brito town Dec. 22, 2014

But faced with fierce protests, authorities held the groundbreaking ceremony in the national capital Managua, some 75 miles from the construction site

Nicaragua started construction of a new $50 billion canal linking the Pacific and Atlantic Oceans on Monday, despite local concerns about environmental degradation, land grabs and related human rights abuses.

The 170-mile (280 k.m.) Grand Canal of Nicaragua, as it has been dubbed, will be wider and deeper than the storied Panama Canal, to which the new waterway intends to be a direct competitor.

“With this great canal, Nicaragua expects to move 5% of the world’s commerce that moves by sea, which will bring great economic benefits and double the GDP,” said Nicaragua’s Vice-President Omar Halleslevens, reports the BBC.

But while authorities in the impoverished Central American nation see the shipping route as key to future prosperity, critics say farmlands will be decimated and much of the cash earned will not trickle down to those most in need.

TIME Business

Ebola the Trade Killer?

Transmission electron micrograph of Ebola virus.
Getty Images Transmission electron micrograph of Ebola virus.

Throughout history, disease has been considered an unwanted import

“Health consists of having the same diseases as one’s neighbors,” the English writer Quentin Crisp once quipped. He was right: when a disparity occurs, the sense of threat to our health inevitably increases. And what is true of the individual seems to be true of societies as a whole. “Parasite stress,” as scientists term it, has long been a factor in human relations, intensifying the fear and loathing of other peoples, as well as marginal groups within our own societies.

For a while, it seemed that we had transcended all that. In the wake of AIDS, a real effort was made to raise awareness of the link between health and civil rights. A more cosmopolitan sensibility emerged, encapsulated in the noble ideal of global health. Money poured into Africa in an effort to reduce the crippling burden of malaria and HIV. But, as Ebola reminds us, fundamental problems remain. No longer confined to remote rural locations, Ebola has become an urban disease and has spread uncontrollably in some western African nations, in the absence of effective healthcare.

The sheer scale of the present outbreak has brought these problems forcibly to our attention, but it has also revived the Victorian image of Africa as a dark continent teeming with disease. Pity and horror mingle with irrational fear, and have led some governments to introduce illiberal measures that have little or no basis in science. And the dread of Ebola is no longer confined to the West. Indeed, it tends to be more apparent throughout Asia than among Americans and Europeans. In August, Korean Air terminated its only direct flight to Africa due to Ebola concerns, never mind that the destination was nowhere near the affected region of the continent, but thousands of miles to the east in Nairobi! North Korea has also recently suspended visits from all foreign visitors – regardless of origin.

Anxiety about Ebola is more acute in Asia because epidemics, poverty, and famine are well within living memory. Hence, the eagerness to disengage from countries afflicted with infectious disease. But this divisive tendency stems largely from ignorance. As shown in the case of HIV/AIDS, we can find ways of dealing with new infections that are both effective and humane. To do so requires leadership and determination, both of which have been lacking.

The slowness of the international community to respond to the problem of Ebola, and the willingness of some to sever ties with the continent, is a legacy of centuries of conditioning in which health, politics, and prejudice intertwine. The roots of this mentality lie deep in our history. After humans mastered the rudiments of agriculture 12,000 years ago, they began to domesticate a greater variety of animals and came into contact with a wider range of infections. But this happened at different times in different places, and the resulting imbalance gave rise to the notion that some places were more dangerous than others. Persons who moved between settlements were regarded with suspicion in a world in which the vast majority were sedentary.

Well into the 20th century, diseases tended to be associated with other peoples and places. Thus, when the disease we call syphilis was first encountered in Europe in the late 1490s, it was labelled the Neapolitan or French disease, depending on where one happened to live. And, when the same disease arrived in India, with Portuguese sailors, it was called firangi roga, or the disease of the Franks (a term synonymous with “European”). The influenza that spread around the world from 1889 to 90 was dubbed the “Russian Flu” (for no good reason) and the same was true of the “Spanish Flu” of 1918 to 19. It is safe to assume they were not called these names in Russia or Spain.

We are still inclined to think of epidemic disease as coming from somewhere else, brought to our doorstep by outsiders. Moreover, notions of infection first developed within a religious framework – pestilence came to be associated with vengeful deities who sought to punish transgressors or unbelievers. In the European plagues of 1347 to 51 (the “Black Death”), Jews were made scapegoats and killed in substantial numbers. It was said that their presence was an abomination to the Christian god. In later centuries, gypsies, merchants, and practitioners of “unwholesome” trades were added to the ranks of scapegoats.

Remnants of such beliefs endure, as we have seen in claims that Ebola has been sent to rid the world of gays, atheists, and others of whom God apparently disapproves. But the Black Death began a process whereby disease was gradually, albeit partially, secularized. With nearly half the population dead from plague, manpower was precious and many rulers attempted to preserve it, as well as to reduce the disorder which usually accompanied an epidemic. Disease became the trigger for new forms of intervention and social separation. Within states, it was the poor who came to be stigmatized as carriers of infection, on account of their supposedly unhygienic and ungodly habits. They were the object of measures to contain the spread of infection and also to some extent of charitable provision. But the threat of disease, at least in the first instance, appeared to come from without. States used diplomatic intelligence to assess the risks posed by communication with other cities or states. Sometimes an embargo was imposed on all movement from infected places or ships and their crews were placed in isolation, usually for 40 days. This practice was known as “quarantine.” Originating in Italian and Adriatic cities in the 1470s, it gradually spread throughout Europe and large facilities known as “lazarettos” were constructed to house people and merchandise from places suspected of infection.

These precautions flowed from recognition of the fact that disease followed trading routes and that plague emanated from countries in Asia, where it appeared to be endemic. But they were reinforced by a heavy blanket of prejudice, sometimes against the poor, sometimes against “the Turk,” a term which embraced the inhabitants of the Ottoman Empire and the Islamic peoples of Central Asia. The Ottoman lands were the gateway through which plague spread from the east and its rulers were seen as corrupt and fatalistic.

In Europe, too, plague became intimately associated with misgovernment. Countries began to use the accusation of disease to blacken the reputation of rival nations and damage their trade. Quarantines and embargoes became a form of war by other means and were manipulated cynically, often pandering to popular prejudice. The threat of disease was frequently used to stigmatise immigrants and contain marginalized peoples, especially as populations became more mobile during the nineteenth century. The actual numbers of immigrants turned away at inspection stations such as Ellis Island was relatively small but the emphasis placed on screening certain minorities helped shape public perceptions. During an epidemic of cholera in 1892, President Benjamin Harrison notoriously referred to immigrants as a “direct menace to public health,” singling out Russian Jews as a special danger. Chinese migrants were similarly branded when they arrived in California.

The 1800s were an unusually volatile period. Industrialization and urbanization strained social relations and brought enormous sanitary problems. Seemingly new diseases – like cholera – emerged out of nowhere. Ancient ones – like plague, which had been confined for many years to isolated pockets in Asia – returned with a vengeance. The appearance of both these diseases was regarded by some as a form of divine judgment. Others blamed ignorance, squalor, and superstition in their places of origin (India for cholera and China for plague). These prejudices were based partly only older ideas about the dangers of the orient but also reflected a new disdain for non-Western cultures, borne of the age of empire. These “Asiatic” diseases followed the contours of the new global economy, eased by modern technologies such as steamships and railways. They were the consequence not of oriental corruption but of the transformative powers of commerce, science and industry.

The response of Western nations to this maelstrom of disease was to erect barriers to infection. They tried to create a kind of sanitary “buffer zone” in the Middle East and imposed strict quarantines against ports in Africa and Latin American which were regularly infected with yellow fever. But as the global economy matured constraints such as quarantine and embargoes became cumbersome. The panicky response to the re-emergence of plague in the 1890s, in cities such as Hong Kong, Bombay, Sydney and San Francisco, created enormous disruption. Trade came to a standstill and many businesses were destroyed. Great Britain and the U.S. proposed a different way of dealing with disease based less on stoppages and more on surveillance and selective intervention. Combined with sanitary reform in the world’s greatest ports, these measures were able to arrest epidemic diseases without disrupting commerce. The international sanitary agreements of the early 1900s marked a rare example of cooperation in a world otherwise fractured by imperial and national rivalries.

In a globalized world, it is simply not feasible to isolate places which appear to present a higher risk of infection. To do so would devastate their economies and detrimentally affect ours. The spill over of refugees and political instability from imploding states likewise has ramifications far beyond the afflicted countries themselves. We should also remember that an effective response to plague and cholera depends not only on the containment of these diseases, but also on environmental and social improvements. The West was able rid itself of epidemic disease in precisely this way. The European powers also began to clean up their colonies, while the U.S. and the Rockefeller Foundation took similar measures in Latin America and the Philippines. Few would advocate a return to “sanitary imperialism,” but the risk of disease is heightened by a laissez-faire attitude to the welfare of other countries.

The present effort to contain Ebola will probably succeed now that more personnel and resources have been sent to the afflicted countries. But our long-term security depends on the development of a more robust global health infrastructure capable of pre-emptive strikes against emerging infections. If there is one positive thing to note about the reaction to Ebola it is that governments have responded, albeit belatedly, to growing public demand. A more inclusive, global identity appears to be emerging, with a substantially recalibrated understanding of our cross-border responsibilities in the realm of health. Whether this awareness and improvised crisis management translates into a long-lasting shift in how we tackle fast-spreading contagions remains an open question – a life-and-death one.

Mark Harrison is Professor of the History of Medicine and Director of the Wellcome Unit for the History of Medicine, Oxford University. He is author of Contagion: How Commerce has Spread Disease (Yale University Press, 2013). He wrote this for Zocalo Public Square.

TIME Ideas hosts the world's leading voices, providing commentary and expertise on the most compelling events in news, society, and culture. We welcome outside contributions. To submit a piece, email ideas@time.com.

TIME China

Why You Should Care About Obscure Asian Trade Pacts

U.S. President Barack Obama Visits China
Feng Li—Getty Images President Barack Obama shakes hands with Chinese President Xi Jinping after a joint press conference at the Great Hall of People in Beijing on Nov. 12, 2014.

They will play an important role in determining America’s future in Asia

As the very name tells you, the Asia-Pacific Economic Cooperation (APEC) summit in Beijing this week was mostly about business. And for good reason. Cross-Pacific trade — especially between Asia and the U.S. — is what made countries like China, Japan and South Korea as rich as they are today. So all of the national leaders who attended — from U.S. President Barack Obama to Russian President Vladimir Putin to China’s President Xi Jinping — are incentivized to promote freer exchange between their economies, and as a result, much of the talk at the summit regarded pacts aimed at further reducing barriers to exports and imports.

But these days, trade has also become a tool of geopolitical strategy, and that, too, showed itself at APEC. Different Pacific powers are pushing for different trade deals. How that competition plays out in coming years will help shape the region’s political and economic future — and most of all, the role the U.S. may play in Asia for decades to come.

China’s Xi is promoting a regional pact called the Free Trade Area of the Asia Pacific (FTAAP), which would build on the many overlapping free-trade agreements in East Asia. On Tuesday, he said that APEC countries “should vigorously promote” the FTAAP and “turn the vision into reality as soon as possible.” China made a bit of progress on this agenda. In their official communiqué, the APEC leaders pledged “to kick off and advance the process in a comprehensive and systematic manner” and set up a committee to undertake a two-year study on forming the FTAAP.

Meanwhile, Washington is advocating a rival trade deal, the Trans-Pacific Partnership (TPP), a 12-nation agreement that includes countries as far-flung as Japan and Chile — but, most importantly, excludes China. The U.S. sees the TPP as a way of redirecting trade toward America, while pressuring China to eventually conform to more market-oriented trade and business practices. Obama on Monday said that he saw “momentum building” toward the completion of the TPP.

Which one of these trade deals comes to fruition will have major implications. That’s because trade flows translate into political muscle. For much of the modern history of Asia, the U.S. was at the center of a vast trading network in which factories around the region manufactured goods exported to American consumers. But the position of the U.S. has declined in recent years. Only 14.2% of Asia’s merchandise exports were shipped to the U.S. in 2013, down from 23.7% in 2000, according to the Asian Development Bank. Meanwhile, as China’s economy has grown into the world’s second largest, it has started to transplant the U.S. as the main trading partner for many Asian countries, and that shift has added to Beijing’s political clout in East Asia — at the expense of the U.S.

Beijing wants to keep that trend going, hence the push toward the FTAAP. The U.S. would rather have the TPP, as a way of maintaining its own influence in East Asia and countering rising Chinese power. Right now, the U.S. has the edge. The TPP talks may be dragging on (mainly due to Japanese resistance to opening its highly protected agriculture sector), but they are very advanced, while China’s pact is just inching off the ground. Though China won a minivictory getting its deal a green light at APEC at all, the nod is just the tip-off to what promises to be a long, arduous process — which may or may not go anywhere in the end.

Further complicating matters is the need for the U.S. and China to cooperate on trade with each other. The U.S. market is critical to Chinese economic growth — China exported more than $440 billion worth of stuff to America last year alone — while access to China’s expanding middle class is no less important for the future of many U.S. companies. That leaves Beijing and Washington in the odd position of both competing over and signing onto trade deals. On Monday, the two hammered out a long-awaited understanding to expand the number of products covered under another pact, the Information Technology Agreement, or ITA. This bilateral step could lead to a much bigger trade deal at the World Trade Organization that promises to reduce tariffs on a wider array of IT goods, potentially giving a big boost to U.S. tech outfits.

What that shows is how the U.S. and China, despite their geopolitical contest for dominance in East Asia, ultimately have no choice but to do business. Whatever trade deals eventually win the day — the TTP, the FTAAP and so on — the world’s two biggest economies may have to create a few more acronyms they can share.

TIME Know Right Now

Obama Pushes for Tariff-Busting Trade Agreement in China

“We're here because we believe that our shared future is here in Asia”

President Barack Obama is in China for the Asia-Pacific Economic Cooperation (APEC) summit. The last time he was in China was 2009.

While there, he will be pushing for the Trans-Pacific Partnership (TPP), a U.S.-led agreement that encompasses 11 countries, which would eliminate tariffs on high-tech goods. China, however, is in favor of the Free Trade Area of the Asia Pacific (FTAAP).

“We’re here because we believe that our shared future is here in Asia,” Obama said in his speech at the summit Monday.

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