The Dubya's Steel tariffs declaired illegal

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 producers.
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 sightedness.
--
Glenn Ashmore

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On Tue, 11 Nov 2003 07:00:21 -0500, Glenn Ashmore

The WTO may have declared it illegal, but it dont mean poop until SCOTUS has made its decision. And its going before SCOTUS now.
Gunner

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wrote:

I'm not with you on this, Gunner. What is it that's going before the Supreme Court? What's the issue they're deciding, in other words?
Ed Huntress
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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.
Regards,
Marv
Ed Huntress wrote:

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buy.
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 agreement.
I believe it's doomed, and that it was from the very beginning.
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Ed Huntress
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Marv Soloff wrote:

If you can't win, spin...
Jon
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On Tue, 11 Nov 2003 16:47:03 GMT, "Ed Huntress"

    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.
Gunner
Antiquis temporibus, nati tibi similes in rupibus ventosissimis exponebantur ad necem.
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Tavoni & Richard wrote:

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 Michigan?
--
Glenn Ashmore

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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.
Dan
.

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Glenn Ashmore wrote:

Another tiny nail in the shrub's coffin. ... I hope, against all hope :-( He's already quite busy buying the next election.
Abrasha http://www.abrasha.com
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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.
Jimbo

:-( He's

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inports
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 softwood issue.
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 removed.
That day is a long way off, based on the results of Cancun.
Ed Huntress
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Ed:
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 nations.
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.
Jimbo

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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 higher prices.
    Dave
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writes:

decided.
cost
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 principal value.
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.
Ed Huntress
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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 fires.
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.
Gary
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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.
Best regards, Spehro Pefhany
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Gary Coffman wrote:

I wish that were so.
The department of indian affairs currently costs our tax payers five billion a year to run. That will continue forever. Not sure why that is. Some say the US conquered all their indians while we made deals with ours. Whatever, but it does irritate me 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 are consumed in land claims and legal wrangling (it is an industry in itself) Smuggling, 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. Forever.

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Gary Coffman wrote:

Gary
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 . Ken Cutt
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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.
Gary
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