RADE: China's Not-So-Big Bang

For a moment, it looked like the lifting of global textile quotas on Jan. 1 had produced an even greater flood of exports from China than European and American companies had feared. The first numbers rolled out this month, showing a 47 percent jump in European imports of Chinese textiles in January and a 75 percent surge in the United States. But the truly eye-catching figures were in the details--a 989 percent increase in exports of men's and boy's cotton trousers to America, a 493 percent increase in bra shipments to Europe. "The evidence is irrefutable," exclaimed Cass Johnson, president of the National Coalition of Textile Industries.

Officials and lobbyists in Brussels and Washington have called for a rollback of one of the most sweeping reforms in world trade history. Italy, which represents a third of the EU textile industry, demanded tariffs on Chinese textile imports; the U.S. Commerce Department is considering capping imports from China.

The early data, however, look shaky. January figures are notoriously unreliable, skewed by seasonal factors like leftover holiday shipments. This year many companies delayed December imports, waiting for the quotas to end. Explosive jumps for some goods were due to absurdly low quotas in those categories. China also quit shipping via third countries to dodge quotas, so some of the apparent spike did not reflect new exports. Economist Daniel Ikenson says the United States was supposed to phase out quotas over the past 10 years, but "cheated" to delay action on all the most important goods until Jan. 1, magnifying the big bang.

Top EU and U.S. officials say they will wait for better data before taking action. China said it would consider imposing voluntary restraints on textile exports, and dispatch a trade delegation to visit Washington. Smart move, because in a politicized uproar like this, the right numbers may not matter.

It was a busy week for Nasser Al-Qidwa, the new foreign minister for the Palestinian Authority. While Israel handed over the first West Bank town to Palestinian control, the P.A. worked to get Hamas to extend its tentative truce with Israel. He spoke to NEWSWEEK's Dan Ephron:

We expect to reach a formal agreement on a ceasefire as part of the mutual ceasefire with Israel.

Hamas has started to understand the changes in the world and the need to adjust to them. I believe that change in the region plus the internal debate within the Islamic groups and the international agenda on terrorism all might create that window of opportunity.

The solution is not any external confrontation with Hamas. It should be to encourage its internal transformation. We want a national platform that would include a clear prohibition on targeting civilians inside Israel and a ceasefire in the occupied Palestinian territories linked to the right in principle of the Palestinians to resist occupation.

I don't think they want it, and I don't think we'll get a situation whereby Hamas has a majority.

It doesn't say many positive things, frankly, and I don't think these negotiations are going in the right way. I believe political concepts have to be clear, and the concept for me is the need for an Israeli withdrawal to the pre-September 2000 positions.

Withdrawal is positive as long as it becomes part of the Roadmap peace plan and as long as there are similar steps in the West Bank... This way we would be moving in the right direction.

Al Qaeda frogmen sound like one of the more exotic terrorist threats--but U.S. Homeland Security chiefs are preparing, just in case. Last month the U.S. Coast Guard launched a special program to train members of its seagoing SWAT teams how to protect U.S. ports against scuba-diving attackers. Members of Coast Guard commando teams based at 12 ports around the U.S. coastline will be taught underwater fighting techniques and how to use secret weapons. NEWSWEEK has learned that team members will try to master the proper use of "entanglement nets" to ensnare underwater intruders, as well as a special sonar the Coast Guard is developing which should be able to tell a diver from a dolphin or seal.

The notion that Al Qaeda might turn to scuba diving is not a Tom Clancy fantasy. Three years ago, Dutch authorities looking into a jihad recruiting ring learned that one of their suspects was keen on scuba diving. Investigation led them to a Tunisian diving instructor with a connection to radical Islam, and whose diving classes attracted suspected Islamic militant students from around the Netherlands. The instructor eventually left the country, but a spokesman for the AIVD, the Netherlands' secret service, told NEWSWEEK the investigation is still open.

Dutch authorities note that they know of no current specific terrorist threat posed by Qaeda divers. U.S. officials also say they know of no imminent underwater threat. But only last week, a captured militant from a Qaeda affiliate in the Philippines claimed he and other jihadis took diving lessons to prepare for a seaborne attack.

As the world focuses on planting seeds of democracy in the Middle East, antidemocratic roots are quietly growing in Latin America. Venezuelan President Hugo Chavez continues to curtail press freedoms, while Ecuadorans are still reeling from having their Supreme Court justices forced out of office under a cloud of tear gas in December. And last month in Nicaragua, the race for the 2006 presidential election got off to a rocky start after the most popular candidate in the country, Herty Lewites, was effectively blocked from running by the most unpopular candidate, former president Daniel Ortega.

Lewites, a longtime Sandinista, wanted to challenge Ortega for a spot on the party ticket. Ortega, widely perceived as corrupt, countered by canceling the primaries scheduled for later this year. Ortega also pressured his allies in Congress to pass new election laws that would enable him to win with as little as 30 percent of the vote. Lewites says he'll "start his own movement," but without backing from the Sandinistas his chances are slim. And it doesn't look like he'll have much support from abroad either--Ortega's actions have brought no censure from the Organization of American States or other regional powers. "I'm not sure if people even know what is going on here," Lewites told NEWSWEEK.

The way CEOs grouse about the Sarbanes-Oxley law, or SOX, you'd think the cost of complying with America's new good-governance code was driving them out of business. Indeed, after the law passed in 2002, following the eruption of corporate scandals at companies like Enron and Tyco, there was a spike in the number of companies going private--pulling out of the stock market and thus beyond the reach of SOX. Oddly, now that the real costs are becoming clear, the number of U.S. companies going private fell from more than 100 in 2003 to fewer than 50 in 2004.

So are CEOs learning to live with a law that holds them personally accountable for cooked books? Not exactly. Typically, companies that have the most trouble paying for the audits required by SOX are small, with market caps of $50 million or less. It was easy to buy out these stocks in the depressed market of 2002, but since then small-cap stocks have risen 60 percent. If the market falls again, says Ian Cookson of Grant Thornton accounting, the popularity of going private likely will revive.

When investors think about wireless communications, Africa isn't the first place that comes to mind. But a new study released last week shows that the continent's mobile-phone market is sizable, and growing. Sponsored by Vodafone and the Center for Economic Policy Research, the report says that during the past five years, Africa has seen more growth in mobile subscriptions than any other region in the world. Between 2003 and 2004, the number of handset users rose from 52 million to 82 million. In Nigeria alone, the market had a 100 percent growth rate last year.

Analysts say low-cost phones from firms like Nokia and Ericsson have helped spur the growth. Motorola aims to introduce a $40 phone in Africa this summer. What may be more robust than the numbers, though, is Africa's potential. Right now only six out of 100 Africans carry a mobile, compared with Europe's 55 or the Americas' 48. "Regions in sub-Saharan Africa represent significant untapped markets," says John Jackson, an analyst for the Yankee Group, a Boston-based market-research firm. "Africa is the final frontier."

Israeli settlements in the occupied territories may be a relatively new source of debate, but they have plenty of historical--and literary--parallels. In his new film, "Private," Italian director Saverio Costanzo approaches the issue by drawing on the story of "Casa Tomada," Argentine writer Julio Cortazar's tale of a band of squatters who invade the narrator's house room by room. When a Jewish settlement springs up in the neighborhood, a sprawling house in the West Bank--home to a wealthy Palestinian family--becomes the object of the Israeli Army's ire. The Israelis decide the house is too close for comfort, and try to force the family out. When the owners refuse to leave, soldiers break in, take over the second story as their own living quarters and relegate the family of seven to a single room.

What ensues, however, is less obvious than this metaphor for the Mideast status quo. While living in such close quarters with the enemy turns one of the Palestinian boys into an extremist--in one chilling scene, he fantasizes about becoming a suicide bomber--his older sister begins to see the soldiers as fellow human beings with names, histories and personal aspirations.

This bipolarity of emotions brings life to Costanzo's film. And by avoiding labels such as victim or perpetrator, the director brings out the humanity in a reality often boiled down to just shock-ing photos or headlines. In the final scene of "Private," Mohammad, the father of the Palestinian family, sits down at the breakfast table with the Israeli commander. "Why don't you leave?" asks the commander over a steaming cup of coffee. "Why don't you leave?" replies the father. Sure, neither is about to budge. But they're people, and at least they are finally sitting at the same table.

In the late 19th century, as increasing industrialization ate away at traditional crafts and slowly eroded a centuries-old rural way of life, the British "Arts and Crafts" movement was born, advocating a return to a simpler way of life and an appreciation of the "beauty in everyday things." A rich new exhibit, "International Arts and Crafts," at London's Victoria and Albert Museum through July, showcases the movement's exquisite results with over 300 objects, including furniture, stained glass, textiles, jewelry and ceramics.

Influenced by the writings of philosopher and social critic John Ruskin, artist and craftsman William Morris pioneered the movement in his own workshops, where he insisted on the use of high-quality materials and trained his workers in recently abandoned traditional crafts, like natural dyeing or hand-printing, and long-unused techniques like tapestry weaving, which can be seen in his delicately woven silk and wool work, "The Forest." Gradually, others embraced Morris's vision: C. R. Ashbee's delicate "Painters and Stainers" commemorative cup and a modern-looking Charles Rennie Mackintosh hall chair are among the highlights at the V&A.

The movement went beyond rural Britain. In the United States, Frank Lloyd Wright and the Prairie School brought the outdoors into the interior of homes they designed using local plants as abstract motifs in decoration, evident in Wright's elegant "Tree of Life" window. Georg Jensen was Denmark's most prominent Arts and Crafts proponent, and the V&A includes his stylish silver coffee service. In 1926 the Mingei (Folk Crafts) movement began to flourish in Japan, inspiring simple, alluring designs like Hamada Shoji's elegant stoneware. Accomplished craftsmanship clearly traveled well, and as the V&A exhibit shows, the dream of a bucolic idyll still resonates today.

A gripping page turner that twists and turns on the fine points of accounting standards sounds implausible. But Kurt Eichenwald's "Conspiracy of Fools" is just that: a can't-put-it-down tale of how arrogance, greed and competitive drive ran amok in the meteoric rise and cataclysmic implosion of Enron.

With a novelist's eye for character and ear for dialogue, Eichenwald, a veteran New York Times reporter, takes readers inside everything from White House brunches to Enron president Jeff Skilling's boozy meltdown in a Miami hotel--and still finds time to jet around the world from Houston to Mumbai to So Paulo as both the cunning and the clueless spin an audacious web of schemes to create a fraud of colossal size, bewildering complexity and enduring consequences. The book reads like a thriller, but it's all fact. And given its A-list names ranging from George W. Bush to Arnold Schwarzenegger and Enron CFO Andy Fastow, "Conspiracy of Fools" will likely stand as the last word on turn-of-the-century corporate chaos.

She charmed us as the wine-guzzling biker chick in "Sideways," directed by hubby Alexander Payne (the couple announced their separation just days after this interview). Now Canadian-born Sandra Oh is costarring in a new American hospital TV show called "Grey's Anatomy." She spoke with NEWSWEEK's Nicki Gostin.

Oh, my God, that's the challenge of the show. We all freak out because it's language that you're not used to. But I've learned a lot, just by osmosis. I've heard that actors who have been on "ER" for a long time can diagnose things.

That's a tricky question. It's usually a thankless role, but if it's well written then it's a wonderful and satisfying thing for me.

I'm not going to disagree with you.

[ Laughs ] Well, that's a byproduct of it.

I didn't have to ask.

You know what, that is the biggest f---ing stereotype. I don't know one Canadian who says "oot" and "aboot."

RADE: China's Not-So-Big Bang | News