COMPENSATING LOST REVENUE IN REGIONAL TRADE AGREEMENTS

According to The World Bank the increase of free trade agreements and customs unions since the early 1990′s has been significant and has promoted economic integration at the regional level. However, as the shifts occur organizational and fiscal adjustments cannot be avoided and in some cases special provisions to cover adverse impacts on countries economic methods have been devised for mitigation of negative trade effects among members.

One such provision compensates for losses of government revenue from intraregional tariff reductions. Regional trade liberalization does not necessarily lead to revenue losses if tariff reductions activate a proportional increase in trade flows expanding economic activity and if government revenues from trade taxes increase. Revenues from taxes on value-added (VAT) and income taxes are likely to grow because of higher domestic consumption resulting from lower prices of goods and allocation of resources in the economy. Nevertheless, if revenue shortfalls occur, countries with rigorous administrative capacity will often be able to recover the losses by strengthening domestic indirect taxation, broadening the tax base, and increasing the efficiency of raising funds for the government. Notwithstanding, poor countries, and particularly the least developed ones lack sufficient administrative capacity and a well-functioning domestic tax system. Under these conditions poor countries tend to rely heavily on trade taxes as sources of government revenue and lowering or eliminating tariffs on trade with regional partners can become a significant risk to a country’s fiscal position. For instance, the prospective impact of the Economic Partnership Agreement between the European Union and the Economic Community of West African states (ECOWAS) indicate that some of the participating African countries could lose more than 20 percent of their government revenues from preferential tariff reductions. In order to lessen such potentially impact on fiscal policy, revenue loss compensation arrangements (RLCA’s) have been introduced into some regional integration initiatives (RII’s). Most RLCA’s involve the establishment of a compensation fund from which payouts for tariff revenue losses are made.

The World Bank indicates that the RLCA’s in the Common Market of Eastern and Southern Africa (COMESA) and the Economic Community of Central African states (ECCAS) appear even further away from effective implementation. By contrast, the revenue sharing funds in the southern African Customs Union (SACU) and the West African Economic and Monetary Union (WAEMU) have been operational for several years. “RLCA’s differ in their design and implementation characteristics, particularly with respect to their duration and their handling or resource mobilization and payout criteria.”

The funds available for compensation or revenue sharing are distributed among member countries in proportion to their shares in total intraregional imports. Compensation is paid on the basis of submitted customs declarations on intra-RII trade for the period under consideration and the loss in revenue associated with the non-application of most-favored-nation (MFN) tariffs to partner country trade.
 There is no doubt that poor countries need help if they are to be assimilated successfully into the global economy. The WTO can help but it can offer no guarantees, it can provide only opportunities.

Why would commodities price fall according to the Prebisch–Singer hypothesis?

Alfonso Llanes, studied at Florida International University

Answered just now

The short answer is that it all comes down to the terms of trade. Terms of trade (TOT) indicates the relative price of imports in terms of exports and is defined as the ratio of export prices to import prices (landed price) excluding transportation cost, taxes and border crossing duties.

The Singer–Prebisch thesis works with different negotiating positions of labor in developed and developing countries. As a result, the hypothesis was prevalent in the 1960s and 1970s with neo-Marxist economists which provided a rationalization for the expansion of the role of the commodity futures exchange as a tool for development.

The ideas posed by economics of development introduced the “Modernization theory” of development which states that all societies progress through comparable periods of development. It follows that today’s underdeveloped areas of the world are in the same path that developed areas of the world had to trek in their past. The task at hand was therefore; help the underdeveloped areas with investments and technology transfer to accelerate the transition to global market integration.

The “Dependency theory” arose as a reaction to the modernization theory as the notion that resources flow from a "peripheral" of poor and underdeveloped regions to a "center" of wealthy nations, enriching the latter at the expense of the former. This is the basic assumption that is fundamental to the contention of the dependency theory “poor states are impoverished and rich ones enriched by the way poor states are integrated into the "world system".

On the other had the dependency theory also argues that underdeveloped countries are not merely primitive versions of developed countries, but have unique features and structures of their own. Dependency theory no longer has many proponents as an overall theory, but some observers have argued for its continuing relevance as a conceptual orientation to the global division of wealth.

A common account for this economic behavior is that manufactured goods have a greater income elasticity of demand than primary products, especially food. Therefore, as incomes increase, the demand for manufactured goods rises more rapidly than demand for primary products. In addition, primary products have a low price elasticity of demand, so a decline in their prices tends to reduce revenue even when sales volume increase it does not reflect on capital gains.

In basic microeconomics, the terms of trade are usually set in the interval between the “opportunity costs” for the production of a given good of two countries whether primary, semi-manufactured or manufacture products.

An improvement of a nation's terms of trade benefits that country in the sense that it can buy more imports for any given level of exports. Nevertheless, terms of trade are also influenced by the exchange rate because a rise in the value of a country's currency lowers the domestic prices of its imports but may not directly affect the prices of the commodities it exports. (Currency manipulation)

In the simplified case of two countries and two commodities, terms of trade is defined as the ratio of the total export/import commodity to the total export revenue it pays for its import commodity. In this case, the imports of one country are the exports of another country. For example, “if a country exports 100 dollars' worth of product in exchange for 100 dollars' worth of imported product, that country's terms of trade are 100/100 = 1. The terms of trade for the other country must be the reciprocal (100/100= 1). When this number is falling, the country is said to have deteriorating terms of trade. If a country's terms of trade fall from 100/80= 0.8, it has experienced 20% deterioration in its terms of trade. When doing a time series calculations, it is common to set a value for the base year in order to make interpretation of the results easier to evaluate.

Terms of trade do not reveal the volume of the countries' exports, only relative exchanges between countries. To understand how a country's social utility is affected, it is necessary to include changes in volume of trade, productivity, resource allocation, and direction of capital flows.

The notion of Pareto efficiency has been used in engineering quite often. It states that given a set of choices and a way of valuing them, the Pareto frontier is the set of choices that are Pareto efficient. By restricting attention to the set of choices that are Pareto-efficient, a designer can make trade offs within this set, rather than considering the full range of every parameter in the set.

It would be incorrect to treat Pareto efficiency as equivalent to societal optimization, as the latter is a normative concept that is a matter of interpretation that would account for the degrees of inequality of distribution. Generally, more equal distribution occurs with the help of government redistribution of wealth.

A Pareto efficiency does not require a totally equitable distribution of wealth in an economy in which wealthy elites hold the vast majority of resources can still be Pareto efficient. This distribution of wealth within the status quo is Pareto efficient regardless of the degree to which wealth is equitably or not being distributed.

A simple illustration of this concept is to divide pie among three people where the most equitable distribution would to assign one third to each person. Nonetheless, assigning a half section to each of two individuals and none to the third is also Pareto optimal despite the fact of not being equitable. In this scenario, none of the recipients could be made better off without decreasing someone else's share; and there are many other such distribution scenarios to choose from.

A Pareto inefficient distribution of the same pie would be to allocate a quarter of the pie to each of the three persons with the remainder quarter discarded. The origin and value of the pie is considered irrelevant in these cases, whereby an individual gained is made while none of the beneficiaries contributed to it in anyway i.e., land, inherited wealth, a tax cut to a selected group in a society and so on as the criterion of Pareto efficiency does not regulate a unique optimal allocation. For instance wealth consolidation may exclude others from wealth accumulation because of impediments to market entry, etc.

Other methods for studying resource allocation in a society include the partial equilibrium analysis where the determination of the price of a good is simplified by just viewing the price of one good, and assuming that the prices of all other goods remain fixed. The Marshallian theory of supply and demand is a good example of partial equilibrium analysis when the first-order effects of a shift in the demand curve do not shift the supply curve as if one was independent from the other.

Continental European economists made important advances towards a broad “General equilibrium theory” one of them being Leon Walras who introduced the tâtonnement process which translates from French as a "trial and error model.” Walras' proofs of the existence of general equilibrium theory in economics were often based on the counting of equations and variables which are inadequate for non-linear systems of equations.

Walras also proposed a dynamic process by which general equilibrium might be reached, that of the attunement or groping process for investigating stability of equilibra. Prices are announced in this case by an "auctioneer" and agents which state how much of each good they would like to offer or purchase and a given price (supply and demand). According to Walras, no transactions and no production take place at disequilibrium prices. Instead, prices are lowered for goods with positive prices and excess supply. Prices are raised for goods with excess demand. What happens in such process terminates in equilibrium where demand equals supply of goods with positive prices and demand does not exceed supply for goods with a price of zero. Walras was not able to provide a definitive answer to this question.

General equilibrium is designed to investigate such interactions between markets. The modern conception of general equilibrium is provided by a model developed jointly by Kenneth Arrow, Gérard Debreu, and Lionel W. McKenzie in the 1950s.

Three important interpretations of the terms of the theory have been often cited:

1.-Commodities are distinguished by the location where they are delivered making the Arrow-Debreu model a spatial model of as in the case of international trade.

2.-Commodities are distinguished by the time when they are delivered. The Arrow–Debreu model of intertemporal equilibrium contains forward markets for all goods at all dates. No markets exist at any future dates.

3.-Commodity contracts specify states of nature which affect when and how a commodity is to be delivered: "A contract for the transfer of a commodity specifies, in addition to its physical properties, its location and its date, an event on the occurrence of which the transfer is conditional.”

These interpretations are not exclusive of each other and can be combined. The complete Arrow–Debreu model applies to when, where and how goods are to be delivered. Therefore, there would be a complete description and set of prices for each contract: For instance 25 Metric Tons of winter red wheat, delivered on river elevator on 1st week of August in Minneapolis, if there is a hurricane in New Orleans during the summer months. A general equilibrium model of this sort appears to be a long way from describing the workings of trade economics, however, it is argued that it is useful as a simplified guide of how a real economy function under the general equilibrium model describing the workings of the complex economics of trade.

How can free trade prevent war?

Alfonso Llanes, I am a Vietnam veteran interested in military history

Answered just now

Over the years, many scholars have argued the favorable link between trade and peace, because of self-interest centered in the phrase coined by Scottish economist, Adam Smith, “invisible hand” in his 1776 publication of the Wealth of Nations.

Years later, another economist made a follow up argument in his native France expressed in the words of Frederic Passy in the 1840s:

"Someday all barriers will fall; someday mankind, constantly united by continuous transactions, will form just one workshop, one market, and one family. . . . And this is . . . the grandeur, the truth, the nobility, I might almost say the holiness of the free-trade doctrine; by the prosaic but effective pressure of interest it tends to make justice and harmony prevails in the world."

The challenge today is still the same as when Ludwig von Mises quoted the passage from Passy in 1924 and when Boudin in his economy of subsistence and commercial activities joined the same ideas in 1939. We must continue to fight and hopefully prevail through reason and argument against what Adam Smith referred to in 1776 as the "prejudices of the public" or the economic ignorance of our fellow men and the opposition of the "private interests" meaning those who wish to use the power of the state to plunder others in society. Until we do, free trade will not replace economic trade, however, it still makes a significant difference. Once trade is in play, a network of exchanges is structured as nations form a web of trading alliances, which creates financial motivation not only to keep peace with trading partners, but also to protect them from losing their investments so as not to disrupt the established order. In this context of alliances and partnerships trade motives are essential to avoid wars and sustain stable commercial networks. In theory, it is believed that trade networks and military alliances, help prevent future wars. The literature on the subject indicates the incidence of interstate war has decreased nearly tenfold compared with the period from 1850 to 1949. At the same time, since 1950 international trade networks have increased nearly fourfold, becoming significantly more structured. However there are other real-world factors that have influenced war and trade trends since World War II, mainly, the proliferation of nuclear weapons and the threat of Mutually Assure Destruction (MAD doctrine).

Protectionism promotes hostility. This is why free trade, in the aggregate leads to peace. If the United States imposes a tariff on German products, that tariff hurts German businesses and consumers. It creates hostility in Germany toward the United States. As a result, Germany might even retaliate with a tariff on U.S. products, hurting U.S. manufacturers and angering our government, which would retaliate with another tariff. By the end of the day, both countries now have an excuse to leverage nationalist feelings and stir up support in both countries making it an easier sell for war to settle economic issues. In academia this is called the Richardson process of reciprocal and increasing hostilities; the United States harms Korea, which retaliates, causing the United States to retaliate again. History shows that the Richardson process can easily be applied to protectionism.

Wars have been waged despite international business interests, but the world today is far more globalized than ever before and well-connected making domestic interests more dependent on access to global markets, resources, and capital markets which become huge disincentives to start a war.

Thomas Friedman in his book The World Is Flat is an updated version of his previous "Golden Arches Theory of Conflict Prevention" and the Dell theory:

"The Dell Theory stipulates: No two countries that are both part of a major global supply chain, like Dell’s, will ever fight a war against each other as long as they are both part of the same global supply chain. This is mainly due to the economic interdependence between nations that arises from a large corporation (such as Dell) having supply chain operations in multiple global locations and the reluctance of developing nations (in which supply chain operations commonly take place) to give up their newfound wealth”

In his previous book The Lexus and the Olive Tree, Friedman argued that no two nations with a McDonald's franchise had ever gone to war with one another: this was known as the Golden Arches theory. Later, Friedman included that people or nations don't just want to have a better standard of living as symbolized by McDonald's franchise, but also want to participate in labor market that is created by globalization in the global supply chain.

Friedman nevertheless indicates that the Dell Theory should not be considered a guarantee that countries won’t go to war but rather that a government-population in one of these nations will have very heavy economic costs to consider as they reflect on the option of war to settle economic differences.

Unfortunately, “The breakdown” argument was made by Walter Thomas Mills last century in his Struggle for Existence and the collapse of capitalism and global markets. His reasoning is based in the fact that the success of capitalism depends on the sale of surplus products in foreign markets which will lead to global markets “globalization”but as a consequence, it will end the foreign markets. A parallel argument Mills made is that capital markets depend on growth and expansion of markets in order to invest profits from capital gains but as the opportunities for investments collapse so do the opportunities for profit which leads to a financial meltdown of the system of value such as the financial collapse we witnessed in 2008 housing market which was not based on any tangible assets but just promissory notes that were traded for future profit that fail because of its faulty math of expectation of greater value in hollow assumptions.

Do disruptive ideas always lead to successful innovation?

Alfonso Llanes, studied at Florida International University

Answered just now

Disruptive innovation is a particular type of innovation that occurs when an innovator brings to a market an innovation that is simple, which is convenient and that’s accessible as in the words of Scott Anthony who writes an Innovation Insights blog for Harvard Business Publishing Corporate Learning Scott continues: A disruptive innovator transforms existing markets and creates new ones by playing the innovation game in a fundamentally different way. The drivers of change in this light are not only technical but also the model of business adopted making either simpler or more accessible.

The business model must look for something that makes it difficult for people to answer in their occupation and don’t have the skills to resolve the question. Sometimes is lack of funds for accessing a particular solution and other times it just takes too long. Finding a solution to these barriers for obtaining either a technological access or the answer to a difficult question that requires specialized skills can qualify as disruptive innovation. It is not necessarily about doing it better, it is about making it simpler, cheaper, more accessible, more affordable and easier to understand that is what disruption is in a nutshell.

Many a time, detailed quantitative research needs to really pinpoint reality at what the areas of frustration in the market are and where opportunities exist. Sometimes companies provide ways at getting “better and better at things people want less and less” and when that happens, innovation won’t help but innovation of the business model should bring fresh air to the old business practice.

A new technology in the field of innovation which is still work in progress is quantum computing in order to make direct use of quantum-mechanical phenomena, such as superposition and entanglement, to perform operations on data. The difference between quantum computers from binary digital electronic computers based on transistors is that digital computing requires that the data be encoded into binary digits, each of which is always in one of two definite states (0s or 1s). Quantum computing on the other, hand uses quantum bits, which can be in superposition of states. For example, a quantum Turing machine is a theoretical computer model which is also known as the “universal quantum computer.”

According to current research, as of 2017, the development of actual quantum computers still is in its early stages, but experiments have been carried out in which quantum computational operations were executed on a very small number of quantum bits. As both practical and theoretical research continues, many governments and military agencies are funding quantum computing research in additional effort to develop quantum computers for application to civilian, business, trade, environmental and national security purposes.

The basis for this leap in technology is that in quantum theory, light is not only an electro-magnetic wave but also a set of particles called photons which travel with the speed of light. Research and study in the physics of quantum theory tells us that both light and matter consists of tiny particles which have wavelike properties associated with them. Light is composed of particles called photons, and matter is composed of particles called electrons, protons, neutrons.

Much of the current research on the development of a quantum computer involves work at very low temperatures. One of the burning challenges is therefore, to make them more practical for everyday use at room temperature.

According to the University of Chicago, entanglement is one of the strangest phenomena predicted by quantum mechanics, the theory that underlies most of modern physics: “It says that two particles can be so inextricably connected that the state of one particle can instantly influence the state of the other—no matter how far apart they are. “In the long term, it might even be possible to go from entangled states on the chip SIC to entangled states across distant SIC chips. Such long-distance entangled states have been proposed for synchronizing global positioning satellites and for communicating information in a manner that is fundamentally secured from eavesdroppers by the laws of physics.”

Why has the Spanish IBEX 35 stock market index still not climbed up to its pre-2008 high levels?

Alfonso Llanes, studied at Florida International University

Answered just now

Spain’s IBEX 35 reports that the benchmark lost nearly 2% in the new quarter’s first week as tensions increased between the country’s government and Catalonia’s leaders.

According to Spanish newspaper “El Pais”, Spain’s Prime Minister Mariano Rajoy told Catalonia's leader Carles Puigdemont that he will invoke Article 155 and take back all regional power unless the Barcelona parliament confirms it's not seeking independence weakening the Euro as investors watched and waited for the next shoe to drop.

Bloomberg Politics reports that It has been a critical period of brinkmanship. The Catalan leadership is running out of options while Spain is calmly ready to escalate the conflict in an attempt to bring an end to the country’s most dramatic political crisis for four decades. Spain’s Prime Minister Mariano Rajoy is exercising the never tested powers of Article 155 of Spain’s 1978 Constitution to try to impose central government control on Catalonia. The aim is to trigger regional elections within six months and it is expected that Spain will pursue the application of the clause gradually, but will act against people within the administration who obstruct the Constitutional process.

In northern Spain Basque Nationalists, who endorsed Rajoy’s minority government to pass a budget earlier this year, abandoned the prime minister as the Catalan crisis began to escalate, delaying approval of next year’s budget and adding further uncertainty to the outlook of the IBEX 35 and the Spanish economy in general.

The Digital Forensic Research Lab (DFR) at the Atlantic Council has assessed claims of Russian interference and found some evidence to support a role for the Russian propaganda machine in playing up the tensions in the region. Russian bots employed similar tactics during the U.S. election and have flooded social media with controversial posts, influencing in favor of the Catalan move for independence. Moreover, Wikileaks' founder Julian Assange has been actively supporting Catalonia's push for independence and the Kremlin joined in on Assange's in an effort to destabilize the EU just like in the recent French and German elections or the coming elections in Spain and the Czech Republic. Brett Schaffer, an analyst of the Alliance to Safeguard Democracy, stated that Russia is not necessarily interested in the independence of Catalonia for what it seeks is divisions among EU members to foment political disruption and gradually undermine Europe’s democracy and institutions.

In the meant time, the future of the IBEX 35 and the Spanish economy in general remain in limbo waiting for the political crisis to be resolved.

What are the drawbacks of bullet trains?

Alfonso Llanes, studied at Florida International University

Answered just now

There several high-speed design proposals for mass transit in addition to the existing bullet train. One of the biggest problems with anything moving is the physics of friction on a surface or a medium such as air, water or a vacuum. For this reason engineering and construction costs are exponentially high and related to an increase on the speed of any surface vehicle.

A design such as the Hyperloop proposes to do away with traditional wheels by using air bearings and pods instead. This allows the pod to float on air. The design is similar to the maglev, in which the electromagnetic levitation of the train avoids friction unlike a traditional train that runs on tracks.

This is how current maglev trains can achieve super speeds, like the 500km/h maglev train in Japan. One Hyperloop design, from Virgin Hyperloop One, uses “passive magnetic levitation”, meaning the magnets are on the trains and work with aluminum track. Current active maglevs need powered tracks with copper coiling, which is very expensive.

Maglev (derived from magnetic levitation) is a public transport technology that uses magnetic levitation to move vehicles without making contact with the ground or an electrical conduit. Maglev ultimate concept is to compete with high speed rail and airlines.

Maglev technology has fewer moving parts, allowing vehicles to move more smoothly, quietly and faster than transport on wheels. A vehicle travels along a guide way equipped with magnets to control “in-flight” stability and create propulsion and lift, thus, eliminating the physical constraints of friction. In the case of conventional high speed trains, there is a lot of wear and tear of wheels on rails and on the electrical pickup which limit higher speeds.

Maglev vehicles hold the speed record for trains. In practice, as with all high speed transport, time for acceleration and deceleration must be included with having fewer stops if higher top speeds are to be effectively utilized. In the case of maglev, acceleration and deceleration are in essence restricted to protect the safety and comfort of the passengers.

Vactrain technology has been proposed as a means to overcome this limitation. Elon Musk has started the building revolution for a new train system. It's based on the very high-speed transit (VHST) system proposed in 1972. The system combines magnetic levitation with moving in a vacuum transit tube. It has evolved from the original ideas of VHST, but it still uses the tubes and pods to move from place to place liken to the tube-pod combination used by banks to send paperwork from office to office only in a larger scale.

Did the Hurricanes Harvey and Irma give climate change deniers second thoughts?

Alfonso Llanes, studied at Florida International University

Answered just now

Probably the most recognized voice on the issue of global warming is Vice-President Al Gore with his superb work of awareness and documentaries. Gore explains that the vast majority of climate scientists agree that global warming is happening and that it poses a serious threat to the planet. Scientists also agree that the issue is caused largely by human activities releasing greenhouse gases, such as burning fossil fuels and deforesting the land. This scientific consensus emerged gradually over decades of research and debate. The present state of knowledge on the subject climate is found in the periodic reports of the Intergovernmental Panel on Climate Change (IPCC). This report is a collection of data from thousands of scientists. Regrettably the report states, much of the American public remains unaware or unwilling to acknowledge this scientific body of knowledge. Most of the blame comes from well-coordinated campaigns by interest group to spread misinformation about global warming.

The Environmental Defense Center as an NGO proclaims a mission statement that reads: “EDC is dedicated to protecting the environmental rights of all people, including the right to clean air, clean water, healthy food and flourishing ecosystems. Guided by science, we work to create practical solutions that win lasting political, economic and social support because they are nonpartisan, cost effective and fair.”

In 2005 the Environmental Defense Center published a scathing report which is partially reproduce here:

“The Latest Myths and Facts

On Global Warming “

By

Dr. James Wang ENVIRONMENTAL DEFENSE SCIENTIST and

Dr. Michael Oppenheimer PROFESSOR OF GEO-SCIENCES, PRINCETON UNIVERSITY

MYTH: Global warming can’t be happening, since winters have been getting colder

FACT: Winters have been getting warmer. Measurements show that Earth’s climate has warmed overall over the past century, in all seasons, and in most regions.

MYTH: Satellite measurements of temperature over the past two decades show a much smaller warming in the atmosphere than is measured by thermometers at the surface.

FACT: Recent research has corrected problems that led to underestimates of the warming trend in earlier analyses of satellite data.

MYTH: The global warming over the past century is nothing unusual. For example, the Medieval Warm Period (MWP), roughly from A.D. 1000 to 1400, was warmer than the 20th century.

FACT: Ten independent scientific studies all have found a large 20th-century warming trend compared to temperature changes over the past millennium or two.

MYTH: Human activities contribute only a small fraction of carbon dioxide (CO2) emissions, far too small to have a significant effect on the concentration of the greenhouse gas in the atmosphere.

FACT: Before the Industrial Revolution, the amount of CO2 emitted from large natural sources closely matched the amount that was removed through natural processes.

MYTH: The Earth’s warming is caused by natural factors like increased sunlight and sunspots or decreased cosmic rays, not by greenhouse gases (GHGs).

FACT: Modeling studies indicate that most of the warming over the past several decades was probably caused by the increase in human-produced GHGs.

MYTH: The warming observed during the past century was caused by urbanization (urban heat island effect).

FACT: Urbanization does increase temperatures locally, affecting thermometer readings in certain areas.

MYTH: Models have trouble predicting the weather a few days in advance.

FACT: Climate prediction is different from weather prediction, just as climate is different from weather.

MYTH: The science behind the theory of global warming is too uncertain to draw conclusions useful to policy makers.

FACT: The primary scientific debate is about how much and how fast, rather than whether, additional warming will occur as a result of human-produced GHG emissions.

MYTH: Global warming and increased CO2 would be beneficial, reducing cold-related deaths and increasing plant growth (“greening the Earth”).

FACT: If society does not limit further warming, the beneficial effects probably will be heavily outweighed by negative effects.

MYTH: Society can easily adapt to climate change; after all, human civilization has survived through climatic changes in the past.

FACT: While humans as a species have survived through past climatic changes, individual civilizations have collapsed.

MYTH: CO2 is removed from the atmosphere fairly quickly, so we can wait to take action until after we start to see dangerous impacts from global warming.

FACT: Global warming cannot be halted quickly. CO2 and other GHGs can remain in the atmosphere for many centuries.

In closing the EDC states that this report is intended to provide a comprehensive discussion of common myths and misunderstandings regarding climate change. The goal is to provide members of Congress and their staff, journalists and the public with detailed, well-researched and user-friendly information on these issues. This will allow readers to see that global warming science is not split between two opposing camps, as the public may often believe. Our rebuttals of myths are based on peer-reviewed, widely accepted scientific publications, which are cited and listed at the end of the report.