The Dubya's Steel tariffs declaired illegal

You ought to look up Warren Buffet's plan. After we've all been buffeted around by China and India for another decade or so, it just may gain some traction.

Ed Huntress

Reply to
Ed Huntress
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Only if you want to run out of money, and watch interest rates hit double digits.

It's a symbiotic relationship. We help each other to screw ourselves. Asia screws their current generation of consumers by keeping the price of foreign products sky-high. We screw our children by running up spectacular deficits that come due some time in the future.

Ed Huntress

Reply to
Ed Huntress

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.

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

Reply to
Ed Huntress

On Thu, 13 Nov 2003 03:33:18 GMT, "Ed Huntress" brought forth from the murky depths:

Will do!

I saw you mention that earlier and it looks quite enticing. Alas, it's still a dream and looky what Dubya is still doing to the economy.

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Reply to
Larry Jaques

It sounds like a better plan than the current (putting out fires) policy. It might have some inherent problems though, as those countries that would like/need to build their trade with us, (but are underdeveloped). They would be hamstrung up front to achieve the "credits" needed to gain favorable markets for their goods here. A catch 22. As long as the US has the appetite & the money, there will never be "balanced" trade. Greg Sefton

Reply to
Bray Haven

You may have missed Geoff's original complaint, Malcolm, and the source of this argument. He was complaining that the US wasn't accepting more of your sheep products -- now, not in the past.

That's in an environment in which your trade balance with the US is in an accelerating surplus. If you annualize the 2003 YTD figure, it's over US$808 million.

Ed Huntress

Reply to
Ed Huntress

I would imagine that a good part of that was the hotel and beer bills coming in from the America's Cup race. :-)

Reply to
Glenn Ashmore

There are supposed to be free trade negotiations between Oz & the US. No way can we get a fair deal when all your farmers are subsidised by the billions of dollars. Our farmers receive no production subsidies - unless you count minuscule drought relief aid, subject to strict conditions, when they are on the bones of their arse, with no income, a subsidy. We are only permitted to send so much beef, lamb etc and when the limit is reached, no more and so you have to pay more in the shops.

2003 Trade figures to September are roughly 2: 1 in US favour Exports to Oz $9,794.6 million Imports from Oz $4,726.6 million Balance in US favour $5,068.0 million and if you examine the figures for the last 19 years they are all similar, we buy about twice as much as we sell, plus of course profits sent back by US owned companies.

If you are in the market for a new car, please buy a Pontiac GTO, a rebadged Holden Monaro, still a GM product but designed & built tough in Oz, where we have harsh conditions for cars.

Alan in beautiful Golden Bay, Western Oz, South 32.25.42, East 115.45.44 GMT+8 VK6 YAB ICQ 6581610 to reply, change oz to au in address

Reply to
alan200

Yeah, I like the idea, and I'm sure that Buffet realizes it's just an exercise to stimulate some thinking.

I see it as a potential stabilizer, like a hedge fund, for situations like the one we face right now: an economy that's been in the dumps, with a serious increase in the national debt, coupled with a level of trade deficits that's unsustainable and unjustifiable except in an economy in which the domestic economic growth is very high.

When we're on top of a business cycle, in other words, we don't need anything like it. We can accept large trade deficits and perhaps even benefit from them, because of the amount of domestic activity stimulated by all of that trade, going both ways. But not now. And to institutionalize $460 billion deficits on the tail end of a recession is to institutionalize a policy that's destructive to the US, and to the world economy as a whole.

China, however, loves it.

Ed Huntress

Reply to
Ed Huntress

All of that is true, and I doubt if Buffet would want to see it implemented just as he has laid it out, especially as an ironclad doctrine that we imposed without considering individual circumstances.

It looks like a philosophy that could be a great stabilizer. We could use something like that right now in the US, to avoid the social/economic carnage that some industries are experiencing. Macroeconomists brush those problems off as "displacements" and "creative destruction," without paying much attention to what a "displacement" really means to the social expectations and principles on which much of our economic activity depends -- particularly the encouragement for small-business investment and entrepreneurship. If you create a generation of cynics about the opportunities in small manufacturing businesses, you've put a big rip in the social fabric.

We aren't chess pieces on a board, in other words. Sometimes the free-trade economists and policy-makers seem to think we are.

Ed Huntress

Reply to
Ed Huntress

Australia is another country that could benefit from an extension of offsets, which you already use to good effect on your purchases of civilian aircraft (they represent nearly half of your trade deficit, but they're a wash in your overall balance of trade because you require large purchases by Boeing that are then sold on US markets) and military hardware. As it is, you depend heavily on ag exports and you need large markets to make much of a dent in your overall deficit.

You have a difficult job of maintaining balance otherwise, and it shows little sign of changing. The ag subsidies of Japan, the US, and particularly the EU, which deep-sixed Australia's anti-subsidy initiative at the Seattle meeting of the WTO, are not likely to change much in the short term. But those are the markets you really need. If there's a better example than ag subsidies of how trade is unfree and unfair, I don't know what it is. They're so ingrained in the social structures of each of those large trading partners of yours, however, that there's little chance they'll be unraveled soon.

You have much more hope of making gains with the US than with the others. I expect some specific easings of US ag-market protections specifically to help Australia's situation. But you also have resistance within your own cattle industry to breaking down barriers in both directions. It isn't going to be easy.

Ed Huntress

Reply to
Ed Huntress

Ed,

Is this the homily/plan under discussion?

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Kevin Gallimore

Reply to
axolotl

The oil exports hardly count. Most of it is produced in the prairie provinces. It's less costly to export it to the US, and import oil on the East and West coasts. Most of the fuel used here is refined in Bellingham Washington.

Steve R.

Reply to
Udie

That may be part of their strategy, but if they stopped buying them how we would we support Dubya's raging deficit? We need to mortgage our future so that little George and his neocon handlers can feel like men.

Reply to
ATP

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

Reply to
Gary Coffman

That's the trade issue in a nutshell. US products are generally overpriced on the world market. Until that issue is resolved, the US will be unable to sell sufficient exports to offset imports.

Gary

Reply to
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

Reply to
Spehro Pefhany

Yeah, that's it. That's not the original source, but those are the words.

Ed Huntress

Reply to
Ed Huntress

I agree, but I was giving the benefit of the doubt by pointing them out. The point is that Canada's exports to the US are not mostly raw materials. They're mostly manufactured products.

Ed Huntress

Reply to
Ed Huntress

If you followed the course of that discussion, no one here was complaining about trade with NZ until Geoff made some silly statement to the effect that the US is the "most protectionist country in the world," or something like that. In fact, our tariffs and quotas are among the lowest in the developed world. That's why we're running a $460 billion deficit.

It wouldn't be so grating if it wasn't for the fact that NZ is running a relatively large trade surplus at the same time he was complaining.

Ed Huntress

Reply to
Ed Huntress

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