I heard on the news this AM that the WTO issued a final ruling that
declared the steel import tariff illegal and clears the way for other
countries to add almost any retaliatory tariff they want on any US
products. This is going to put the Dubya's tush in a crack again. If
he repeals it he gets the steel states upset and if he keeps it everyone
else gets pissed.
Personally I say good riddance. The tax averaged about 8%-10% but
stainless prices have gone up almost 30% and CRS is up over 40%. I have
used only a few hundred dollars worth since the tariffs went on but I
can see how it has effected small manufacturers a lot worse.
The tariffs were a big mistake in the first place. They were supposed
to reduce imports give the US steel industry time and money to update
facilities but for the most part very little of the extra profit has
been used for any improvements. At the same time imports have not gone
down much. The increase in price has actually attracted more foreign
It was supposed to save jobs but it has cost more manufacturing and
construction jobs than the entire steel industry employees. Now with
the WTO ruling allowing punitive tariffs on US products farmers and high
tech workers get a chance to pay for the steel industries short
I'm building a 45' cutter in strip/composite. Watch my progress (or lack
I don't think the Supreme Court has any jurisdiction in this issue. BTW
- the USA has lost the majority of the recent WTO rulings. The EU is
poised to slap 100% duty tariffs on a number of popular American exports
if Bush does not back down in accord with the WTO. The likely scenario
is that Bush will refuse to back down, the EU (and Asians) will
institute the 100% tariffs, exports will come to a halt, more jobs will
be lost, and the White House will tell us that not being able to export
is actually better for us - there will be more US made goods for us to buy.
I love it.
Ed Huntress wrote:
The only reason I can think of that the S.C. would get involved is if
someone with standing is challenging the constitutionality of the treaty
itself. I don't think that's happening, but maybe Gunner heard something
today that I haven't heard yet.
As for the WTO, don't expect it to last another five years. The Cancun
debacle cripplied its future; the US is making bilateral and regional trade
agreements that are undermining it left and right; the Asians are trying to
do the same thing; and it will collapse like a house of cards if the US
pulls out. We have to give six months notice if we plan to drop the
I believe it's doomed, and that it was from the very beginning.
(remove "3" from email address for email reply)
As I recall it..the legality of whether or not Bush could set
that steel tarrif all by his lonesome. Its been in the papers out here
in the hinterlands.
Antiquis temporibus, nati tibi similes in rupibus
ventosissimis exponebantur ad necem.
The Supreme Court has nothing to do with Asian or European tariff
structures. The WTO has given them permission to raise tariffs on US
products like orange juice and finished metal products. This is no
longer a legal question. It is pure politics from her on out. Will he
keep his big steel buddies happy and piss off Florida, California and
I'm building a 45' cutter in strip/composite. Watch my progress (or lack
I agree that the tariffs were not a good idea. But in the time they
have been in place there has been a lot of consolidation in the steel
industry. There actually was not a lot of extra profit to use for
improvements, just not a lot of deficits.
US softwood lumber tariffs against Canada where also found unsuppotable by
the WTO last month. However the US government was given another 100 days
to spice up their claims and try and prove Canadian softwood lumber inports
into the USA where actually damaging the domestic producers.
I doubt Bush will overturn the tariffs no matter what the WTO says so the
American consumers looses and Canadian's loose jobs.
I'm tempted to go look at the Canadian newspapers (I read the Toronto Star
about once a week, but not the others) to see how this is playing in Canada.
FWIW, the argument before the WTO is almost the exact opposite of the one
Canada made over dairy imports from the US. Canada lost on the dairy issue;
if the WTO sticks to the same reasoning, they'll probably win on the
I'm curious if you guys know the issue on which the case is being decided.
Canada hasn't denied that they subsidize lumber production via
state-determined stumpage fees (well, they *did* make that argument, but
dropped it). What's at issue is a fairly arcane question of where the cost
basis is supposed to be determined for judging relative economic harm.
The WTO, being a new organization, is still working out its doctrines. In a
sense, this case is one in which the US and Canada are testing the WTO to
make it refine its doctrines on how "harm" shall be determined. It isn't an
issue of fair trade at all -- as you can see by checking the course of the
decisions, Canada doesn't deny that they subsidize lumber production. It's a
case of how this tangled mess of agricultural and timber subsidies will be
dealt with, until, hopefully, the day that both subsidies and tariffs are
That day is a long way off, based on the results of Cancun.
I think you will agree that a lot of the trade diputes are really powerful
business interests trying to use or abuse tariffs to give themselves a
market advantage. The companies, usually American, use powerful lobby
groups to force the US government into beating up on so called weaker
Canadians politician for what ever reason have done their constituants a
great disservice by playing the weak cousin in our cross border trade
negotiation and I for one think it's about time we started playing a little
hard ball in those negotiations. That shouldn't make me anti American
should it? Canada and the USA need each other more than most American's
really know and if we don't learn to repect that fact both our countries are
in a lot of trouble.
You sound like a very reasonable person so it might be a good idea for you
to explain to your fellow American's just how much trade both in goods and
technology crosses both our borders every day. If the border between
Canada and the USA where closed tomorrow both our economies would collapse
almost immediately and that's a fact.
The EU is becoming a very power economical force that will hopefully force
both our countries to start working together instead of against each other.
To the best of my knowledge, Canada has not admitted "subsidizing" lumber
production. Most timber lands in Canada are publically owned, and the
trees are sold at stumpage fees set by contract. The contract process
is supposed to bring in enough income to pay expenses (so stuff isn't
being "sold at a loss"), and this also allows the provincial government
to control things like raw log exports - it's better for the economy if
the lumber is processed into products locally.
It seems that the US position is that if the logs aren't auctioned on
the open market, then the companies aren't paying market prices for the
logs, and this is a "subsidy". It isn't what most people would call a
subsidy, but to the US lumber lobby if it's not done the US way it's
wrong. The US seems to want open auction of logs, and also no
restrictions on raw log exports.
Basically, there is a different system in Canada, at least supposedly
managed for public benefit, but the US won't accept any other system as
being equal. Canada isn't selling the logs at a loss, or giving the
lumber companies direct monetary subsidies, or "dumping" (selling the
lumber for less in the USA than Canadian customers pay), it just isn't
charging as much as private US landowners sell their logs for. In the
US view, the US way is right and Canada's way is wrong, but that's a
pretty biased view.
I can't help thinking that if the shoe was on the other foot, and the US
public was providing a resource to producers at less than open-market
prices, the US attitude would be that this was wonderful and entirely
fair, or at least allowed. For example, how much do the farmers in
California's central valley pay for water? Does is pay for the dams and
the network of canals that distribute it? Isn't this a much larger
subsidy of farmers by the public? Doesn't this give California farmers
an unfair advantage in producing and exporting food?
From this side of the border, it looks like US policies are based
entirely on self-interest, not principles. Protectionism is either "good"
or "bad", depending on who benefits and who loses.
In the case of lumber, it's actually in the self-interest of only a
small number of people in the USA, while the general public gets to pay
IIRC, the way it went was that the US first made a claim that the stumpage
fees were artificially low because they were based on a cost basis that, as
you say, "paid expenses." In other words, no real-estate amortization costs,
no insurance costs, no profit on the capital represented by the land's
But the WTO is not equipped to deal in a direct way with such internal
political issues as how to account for public ownership of raw resources.
Canada never disputed that the stumpage value did not account for the costs
that would have accrued if the resource was privately owned in a free
market. It skipped right over the issue and went to one that the WTO *will*
deal with, which is the question of whether an import does harm to the
importer's industry. And there it has bogged down, as the US International
Trade Commission made a questionable case for this point.
This is a good example of why I scoff at the idea of "fair trade," just as I
scoff at "free trade." Former US Trade Representative Micky Kantor once said
there is no such thing as free trade. I'll stick my neck out a degree
further and say there is no such thing as fair trade.
Canada made cases before both the WTO and the NAFTA commission in this
dispute for an "inherent cost advantage" in the production of lumber.
There's no doubt Canada does have such an advantage. But, depending on which
side of the fence you're on, it's either an unfair advantage that has to be
compensated with tariffs, or it's part of the natural imbalances between
nations that underlie the theory of Comparative Advantage.
This is where "fair trade" starts to run up on the rocks. If government
ownership of the resource, which results in low prices being charged to
private industry for raw materials, isn't an unfair advantage, then nothing
is. Which is to say, even contemplating fairness in trade is an exercise in
self-delusion. Canada trades to serve its advantage, not that of the United
States, and vice versa. So, if we're going to trade, it has to be by some
rules that we both accept. The WTO is falling short in producing a set of
mutually acceptable rules. So we will negotiate, because neither one of us
is going to set ourselves on fire for the sake of some abstract set of trade
rules that fails to serve our purposes, no matter how much other nations may
want us to do so.
Yeah, that's the kind of thing that's absolutely necessary -- the trade of
intermediate products of production -- if the market is going to set the
true costs of products being traded. Canada doesn't like it, and it is an
ideological point, but, without it, both free trade and fair trade are a
farce. What you're describing is a classical case of market distortion
caused by government ownership of resources, which is being used to provide
an indirect subsidy to industry.
No other system IS equal. That's why there is no way to produce "fairness"
in trade the way the idea is popularly conceived.
Actually, although I have little sympathy for the US logging industry,
they're quite right on this point. You have a classical case here. The way
an economist would work this out would be to ask, if Canada is charging less
for stumpage than the price that would result from private ownership of the
property, then who is paying the difference? The answer is, your children
and your children's children, because you're selling an asset short today to
gain a market-share advantage, and you're not accounting for the true cost
of your asset. That's the kind of distortion that results from government
ownership. It's your choice, and that economist would say that the US
shouldn't complain, because you're subsidizing low lumber costs for us by
saddling future generations with an asset you're giving away today. But that
would be a macroeconomist. A microeconomist would say you're trying to grab
market share by hiding true costs. <g>
Again, there's no such thing as fair trade.
Nobody's trade policies are based on principles, except the business
principles that produce for us the best possible result. Certainly not
yours, and certainly not ours. We don't elect our leaders to be altruists to
our trading partners, nor to be economic theorists who would sacrifice our
interests in order to fulfill an abstract theory.
That's true, but the final issue is one of both social and economic
structure. Do we want to see timber land values depressed because of cheap
foreign competition? That would undermine the banks that hold the mortgages.
Do we want to undermine the banks that hold those mortgages? That would
force them to call in loans in order to maintain liquidity and to reinforce
their capital reserves. And who will pay for that? Everyone who lives in
that part of the country.
And so on.
Since the Canadian government didn't pay anything for the land, or the
air above it, or the water that flows across it, or the sunshine that falls
upon it, there are no real estate amortization costs. There are no insurance
costs because governments self-insure, and can only be sued if they
*permit* themselves to be sued. Governments aren't supposed to be
profit making operations so no need to make a profit either.
Note that all this applies to US government owned timber lands too.
If the US government *chooses* to charge more than the costs of
administering the sales, it is profiteering. If the US government
*chooses* to refuse to allow timber sales, it is perpetuating the
causes of the wild fires that recently swept through California, ie it
is causing an unconscionable build up of fuel, promoting a tree
density that fosters disease, and virtually guaranteeing catastrophic
Ideally, the governments of both nations would allow the unowned
resources of both their nations to be taken up into private hands
(homesteaded) so ordinary market forces could work.
On Fri, 14 Nov 2003 04:06:13 -0500, the renowned Gary Coffman
I'd rather see the lands continue to be owned by the Crown and
adminstered by competent technocrats with a long-term view for the
greatest public good, forever and ever. Of course, they can privatize
some of the management aspects with no problem. Same with water.
I wouldn't want much of the national superhighway system falling into
private hands either.
"it's the network..." "The Journey is the reward"
email@example.com Info for manufacturers: http://www.trexon.com
I wish that were so.
The department of indian affairs currently costs our tax payers five billion a
to run. That will continue forever. Not sure why that is. Some say the US
all their indians while we made deals with ours. Whatever, but it does irritate
to think that my descendants a thousand years from now will still be paying to
support these guys. This also, does not include the billions upon billions that
consumed in land claims and legal wrangling (it is an industry in itself)
special tax exemptions and the illegal resale of ATF products.
We have paid for the land lots of times. Are still paying. Will continue to pay.
Hi , well the Gov here does not own the land so it can sell logs but so
that we can have a place to camp, fish, hunt, hike etc . I sure would
not want them handing it over into private hands . This way I know my
grandkids will have the freedom to go enjoy what I have always had .
Trees regrow and will always be there .
That's true, it doesn't, but the arrogant bureaucrats of the BLM, Forest
Service, and Park Service act as if they do, at least until it is time to pay
the property taxes. Then they sing a different tune.
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