The Dubya's Steel tariffs declaired illegal

That's an interesting point, and the EU sometimes tries to draw parallels between the countries of Europe and the states of the US. They do that when it helps support one specious argument or another.

But this is one country, albeit a large one. There are no trade barriers of any kind between the states -- 'never have been. The specialization and comparative-advantage issues are built right into our industrial- and total economic structure. We all operate under the same government and the same set of federal taxes and laws. The only variations are in local taxes, and that's only a marginally competitive issue among the states, used to attract business or not. So there aren't many meaningful parallels that can be drawn between the states of the US and separate countries that trade with each other.

Whether the EU will ever achieve that level of economic integration is questionable. As you know, there are strong proponents on both sides.

I think the important underlying points are that there is no free trade; there is no fair trade; each country engages in trade for its own advantage; and the operating theory, around the world, is that trade is good for everyone's economy.

So everyone tries to get as much trade going as they can, without paying any more than they have to for it. When you look at the totally free trade between the states of the US, you can draw the conclusion that there *is* no price to be paid for free trade. But, in fact, that isn't the case. In the US, the costs are invisible, and are built into the structure. We see only the benefits, which are considerable. The situation isn't necessarily the same between nations. Trade has a powerful influence on a country's social structure. Internal trade in the US is going on all within a single country. Different situation.

Ed Huntress

As they integrate economically, it makes some sense. The more they standardize their byzantine system and consolidate all those bureaucrats into a lesser number in Brussels, the more they will save. That benefits those of us trying to export there, too. Instead of trying to get safety agency approvals from a dozen agencies (at $thousands each), one will do for all the countries of Europe (like UL or CSA or ETL works for the US and Canada). It's mostly all positive, as there's little argument that, say, Germany needs safer products than Italy, even if the standards may have been written that way. The cost savings of making a crappier product just for Italy are just not worth it. It might be different if you were talking about a totally different economic level, say in India, where they are happy to take the dregs of even Chinese manufacturing (30% faulty product in one case I'm aware of, but the unit cost was still okay because the labor to sort the bad ones out was considered negligible even though the product cost only 17 cents each!).

Mmm.. are there not licensing barriers for Professional Engineers, construction contractors and such like? I think there are *some* barriers, just not that many. NAFTA put most goods and *some* services in that category except for those items that are being "managed" between the nations of North America. NAFTA also allows many professionals to work in any of the countries with negligible paperwork. The *big* difference is that ordinary Joes cannot easily move to where there are jobs or other economic opportunity, even if they wanted to.

I think there are useful parallels. One is that economic disparity continues even when goods, services and people can move with almost complete freedom. So we can probably expect Portugal to be poorer than Switzerland for the foreseeable future.

Yes.

;-) Maybe not so good for many individuals, even though the GDP per-capita looks good.

Or maybe Americans don't tend to analyze the negative points because it's just assumed that all states are in it together. For example, the restructuring that led a lot of the northeastern manufacturing into the sunbelt might not have happened if there had been a border in there. That would have resulted in a different set of winners and losers. Much has been written about the effects of how cities are funded, and that's very much affected by invisible administrative borders (because of taxation issues).

I see many, many shades of gray (or is it grey?) there. I put a number on the shade when I decide how much more (if any) I'm willing to pay to get an equivalent product from different suppliers, based on their location and the location of their control or ownership. I'm more likely to want to deal with fair traders, and less with those who are costing me money.

BTW, one of the issues that's bothering me is that the current system (international trade, NGOs, resource pricing) tends to give the advantage to the biggest consumer and whoever has the most economic power and growth. That's fine so long as you happen to be the dominant top dog, but it could turn against you if others start competing and outbidding. We may live long enough to see this happen in an obvious way, but it's already happening subtly.

Best regards, Spehro Pefhany

The arguments are not primarily economic. They're primarily over how much sovereign decision-making they're sacrificing with the EU. No one in the US would ever imagine tolerating it between our country and any other. Because we start off with a highly centralized, nominally federal system, we can't really see what they're facing, nor can we put ourselves in their place.

They really aren't barriers. They're just cases in which you may have to be licensed in the state in which you practice. My wife went through that with her teaching certificate. It's just a duplicative bureacratic procedure, not a barrier against practicing her profession.

NAFTA is a collection of halfway measures. It's long-term prospects look better than those of the WTO, in my opinion, but only slightly so.

But somebody moving from, say, Alabama to Michigan doesn't have to learn another language, doesn't have to function as an alien worker, and so on. That's why I say the parallels between the US and the EU are pretty flimsy.

I'd have to know what specific events you're talking about to follow what you're saying here.

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.

No, I would say the EU would be amongst the most protectionist in the world. The US is somewhat hypocritical however, wanting free access without returning the favour.

Well, the US has a large population (both physically and numerically :-)with lotsa money and a "consumerism" culture . It is hardly surprising they import lots of stuff. Expecting other, poorer countries with smaller populations to buy an equal quantity is unrealistic. More to the point, if you want to reduce the trade deficit, get out and sell stuff. It is a world market, and you have to be competitive,and unfortunately, in my experience, US companies are largely domestic focused, and don't realize there is a world outside the US borders. Many US sourced products are uncompetitive in the world market anyway. A couple of things I have tried to source from the US in the past include plastic resin (HDPE, PP and other commodity plastics, and some engineering plastics), fan motors (3* the cost of our Taiwanese supplier, 2* the Spanish and even more expensive than the overpriced Germans) and impellers. Don't bleat if you can't compete. Finally, complaints about trade deficits are a bit thin, when it doesn't include repatriated profits. Bell Ameritech owned the NZ monopoly telecom company in the 1990s, which regularly made profits ~$NZ700m (approx $US350m) per annum out of 3,8million people, by the expedient of not spending any money on it. ~$NZ400m was returned to the US each year - this was larger than our trade deficit but doesn't show in the figures Geoff

It is a non-trade barrier, which helps keep some bureaucrats employed and stops out-of-state workers taking the jobs. I doubt if teaching has such differing requirements between US states that it needs different certificates for each state, or at most a short course it is the same as non trade barriers (eg certification requirements) between countries.

complaining

What you actually said, on Oct. 16th, is "> The US is one of the most protected markets in the world. >> Geoff

Which is patently untrue. Take a look at the average tariff figures in the WTO stats and you'll see that the US has among the lower tariffs, as well as some of the lowest non-tariff barriers. As for "returning the favor," the trade-balance figures make clear that you're off base on that, as well.

No problem. You said you favored that offsets idea. Buy what you can from us, and we'll buy the same amount from you. That will keep your exports in line with what you can afford to import. Fair enough?

The most interesting thing to me in this discussion is the insular, parochial view you (and perhaps the other New Zealanders) have of what's really going on in world trade. Geoff, the US is the world's largest exporter of goods, and the world's largest exporter of services. We "get out and sell stuff" quite a lot; a lot more than any other country.

As for being competitive, we have (according to the World Bank and other sources) the most efficient and productive manufacturing in the world.

You just did an interesting switch here. I wonder if you recognize it. You're living in a country with a gross national income of about 1/3 that of the US, per capita, so your ability to buy is low, and your costs of manufacture are also low, despite a poor capital infrastructure. Then you say the US should try harder. Try harder at what, to sell products to a country where incomes are a fraction of ours? It's a waste of time and money.

My guess is that most of the readers here don't know much about New Zealand's economy, and it would be useful here to inset a capsule summary. This is from Nationmaster, and I think it was written in late '01 or early '02:

"Since 1984 the government has accomplished major economic restructuring, transforming New Zealand from an agrarian economy dependent on concessionary British market access to a more industrialized, free market economy that can compete globally. This dynamic growth has boosted real incomes (but left behind many at the bottom of the ladder), broadened and deepened the technological capabilities of the industrial sector, and contained inflationary pressures. While per capita incomes have been rising, however, they remain below the level of the four largest EU economies, and there is some government concern that New Zealand is not closing the gap. New Zealand is heavily dependent on trade - particularly in agricultural products - to drive growth, and it has been affected by the global economic slowdown and the slump in commodity prices."

A little explanation: New Zealand had a post-colonial economy until the mid-'80s, at which time it decided to join the developed world. Tariffs were high, foreign investment was low, and the country had neither the resources, the technology, nor the economic structure necessary to grow into the world economy on its own.

The NZ government took some very brave action to change this situation, and they have had considerable success. One of the major steps was to slash tariffs, although most of that occurred over the past six years. Their tariffs on manufactured goods are now about the same as those of the US: averaging the last few years, we're both at about 4% actual, average tariffs on goods, and both of our tariffs are dropping (although you have a moratorium on any more reductions until your economic policymakers do an evaluation in 2005).

Because NZ is so dependent on ag exports, it also dropped ag tariffs to

1.8% -- as a tactic to leverage lower tariffs from its trading partners more than anything, because the effect of lower tariffs on ag *exports* is many, many times the effect on ag *imports*. The purpose was to gain freedom to increase ag exports, in other words. It is one of the lowest ag tariff rates in the world. It was a smart move.

Another thing the NZ government did was to actively solicit foreign investment (US investment is only 13% of the total). They also encouraged high-technology workers to move to NZ, to boost the technological base of industry. Thus, a good deal of the industrial infrastructure is now foreign-owned. The benefit to NZ, in both job production and in improving the standard of living, has been high, and the government is encouraging even more of it.

One benefit of foreign investment in commercial enterprise is that the benefits nearly ALWAYS exceed the value of any profits that are taken out, at least while a country is developing its technological base. Without the foreign investment, there would have been no returns to take out in the first place, because the jobs and the economic output wouldn't be there, either. (This is vastly different from the foreign investment being made in US government securities, for example, which saddle us with future tax liabilities.) The only problem with this will come if you maintain a high rate of foreign ownership *after* you've developed into a world leader in industrial efficiency, and if your growth rate slows down for an extended period while that is going on.

Right. That's why we have higher levels of exports than any country in the world.

Apparently your anecdotal example proves that the WTO world trade data is all wrong.

So, if you don't like it, don't accept the foreign investment. Do you have an objection to the foreign investment in New Zealand? Do you believe that those investors shouldn't take out profits? And, most importantly, how does that investment replace jobs or economic activity that you had going on before?

Obviously, it doesn't, or NZ wouldn't be welcoming all of that investment. When you run big trade deficits, however, you *may* experience job losses and other problems. That's where the US is right now -- not because of NZ, of course, but because of the aggregate numbers.

Again, if you'll track the course of this discussion, no one here was bitching about the trade situation with NZ until you started bitching that the US was "protectionist" and unfair to small countries, all the while you're running a half-billion-dollar trade surplus with the US. It isn't that NZ is an annoyance that's on our minds all the time. It's just the grating reaction we have when a country that's already running a surplus with the US says they want more, and that we're "hypocrites" for not giving it to them.

Oh, mine Gott... OK, Geoff, we'll take them before the NAFTA council and the WTO and straighten out those trade protectionists, by golly...

That's all it is. A test, actually. My wife knocked off the studying for it in a couple of days.

Certification for professions is hardly a trade barrier. It's a matter of regulating the granting of authority in order to fulfill a local government responsibility.

You probably don't know the issues here. Education is a state prerogative in the US. So is administration of medical doctors, barbers, and a lot of other things.

If the states are going to pay for it and are responsible to regulate and manage it, they're going to administer the authorization of it: the issuing of certificates to practice the profession.

It's a remnant of state sovereignty. It's political and social, and it's much less of an impediment than you may think.

Ed Huntress

On Sat, 15 Nov 2003 02:25:48 GMT, "Ed Huntress" brought forth from the murky depths:

Wow, they have become JUST LIKE US! (I wish the best of luck to the Kiwis for that.)

I love that 180° agreement, Ed. ;)

- - - - - - - - - - - - - - - - - - Heart Attacks: God's revenge for eating his little animal friends --

Comprehensive Website Development --

And all I did was point out that balance of trade figures are cyclical and as in the past you will be ahead again one day. If you are worried then get out and do something to improve your export figures, don't just slap on tariff's.

I interpret Geoff's "returning the favour" as asking for the US to refrain from imposing tariff's at the drop of a hat. We don't and we ask that you don't either. There is no reason why trade between two countries needs to be balanced in any calendar year. If we sell more to the US but you sell more to Aust and Aust sells more to us, then whats the problem. Add a few more countries in there and things even out. The only problem is if you consistently end up in the red, but then your dollar falls and so you are more competitive and you get your act together and your exports increase again.

We can afford to import more from you but there are other countries also vying for our business, and if you aren't marketing to us or if your products are too expensive or if they are badly designed then we'll buy from someone else. Simple as that. Your suggestion above would involve a massive bureaucracy to monitor trade flows in and out, and issue licenses. We don't have that level of regulation.

You are the world's largest exporter in dollar terms but that is meaningless. You have a large population, large landmass and lots of natural resources. Of course you export lots. What is more meaningful is the value of goods and services as a percentage of GDP. The WTO gives NZ exports as 32% of GDP in 1992 and US as 23.6% in 1996. If you can find more recent figures I'd be interested to see them but I don't think you can accuse us of not knowing about world trade.

As far as parochialism goes, check out the percentage of US citizens who have never left your boundaries as compared to other countries. I recall seeing the figure for your national politicians as being only about 40%, I'd be very surprised if ours was less than 100%. I think you can expect the general population to be proportionately less than that in both countries.

Well don't complain that we don't buy enough of your products. We have the whole world to choose from.

Actually the move from depending on access to Britain as a market started in the sixties when Britain joined the then EEC. 1984 onwards led to the floating of the dollar, freeing up money flow in and out of the country and the sale of some government owned operations. The description of NZ as an agrarian economy in 84 is "interesting". :-)

I think perhaps you need to widen your sources of information!

The obvious difference between NZ and the US is that we have not had any tariff's considered by and judged illegal by the WTO. The only tariff I can recall being imposed recently was against Korean whiteware manufacturers who were clearly dumping product here.

The evaluation happened this year, the tariff reductions are to continue, beginning 2005 as previously planned.

See my comments above regarding GDP.

No, but it may explain why you are rightly concerned by the US performance. I could add an anecdotal piece about working on a piece of US manufactured equipment this last week but I don't think it's worth the effort.

Actually it was you who was complaining about trade deficits. I believe Geoff was pointing out that if you total your export receipts to us, and repatriated profits from here, then you are in the black. Not usually a thing to complain about.

And the constructive solution is to improve your performance, not impose tariff's like the steel one which is the topic of this thread.

The lamb tariff's I referred to the other day are an interesting example of some thinking in the US. I think you'll agree that sheep meat is not a large selling product in the US. When it became obvious that the US sheep farmers had succeeded in getting government support for the tariff, the NZ lamb marketing company approached the US industry body and suggested they form a joint venture to actually raise the profile of sheep meat in the US and grow the market. A win win situation for both parties. The US farmers weren't interested. As predicted the tariff's were judged illegal and eventually removed, and the US farmers are still where they were, struggling. .

As I said before, I think you are misinterpreting. We don't want more exports to the US unless we can win the sales openly and fairly. Slapping tariff's on at your whim is being hypocritical because you profess to be against them.

Regards Malcolm

-- Remove sharp objects to get a valid e-mail address

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

concessionary

When you here a statement like the one above, it's almost always an eye-opener to step back, think about what it means, and then look at the actual numbers.

It's not a good idea to do this with the current Budget Office predictions for US deficits or Social Security over the next five or ten years, however. It will make you turn blue in the face.

Ed Huntress

It would seem to be a violation of Article IV section 1 of the US Constitution. That requires each state to provide full faith and credit for the acts of other states. That's why, for example, your driver's license is good in any state, not just in the state which issued it.

By the same measure, professional licenses obtained in one state should be honored by all other states. But they aren't, because the licenses are primarily a way of implementing state taxes on professionals. (Nearly two thirds of the questions on the state electrical contractor's exam I took were about taxes, and the forms required to be filed to allow the state to collect them.)

Gary

Upon the subject of "import licensing" - any New Zealander who remembers the 1960s and 70s will shudder at the thought. THey made a few people very, very rich - those with the magic paperwork. You couldn't bring in a car unless you had "overseas funds" (eg money in the UK). The local assembled rubbish was on a take it or leave it basis, with limited supply. heaters and radios were high priced options. It was not unknown for dealers to buy back a 1 year old car for more than the new one, as there was a shortage, and of course, could charge whatever they wanted for an old heap of rubbish (or a now one). I can't see the US consumer or the large retailers standing for that very long. Geoff

"Full faith and credit" applies primarily to judicial proceedings. Misinterpretation of Article IV is rampant. Take a look at 28 U.S.C. Sec.

1738-1739 for laws that reflect Court doctrine on the subject of "full faith and credit." It's all about legal proceedings and court judgments.

You're more likely referring to the "priviledges and immunities" clause, which is in Sec. 2. That's applied mostly to states discriminating against non-residents in licensing, not in the states' authority to license. Essentially, licensing is a states' rights issue, and the supposed constitutional issue regarding states respecting each others' driving priviledges is primarily a matter of practice that grew up without Court challenges, and is today called the "driver's license model" of comity under Article IV. The Court has never directly ruled on it as far as I know.

In other words, you'll find no legal comfort there, nor any Constitutional history to support your view.

That's a supposition on your part. Firstly, professional licensing has a history that goes back to common law, and there is nothing in the Constitution about it. So the states enact licensing laws for a variety of reasons, under the doctrine of states' rights.

Maybe you can be a tax consultant now.

Ed Huntress

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

There's nothing to worry about, Malcolm, except with countries that are operating under mercantile policies and that are running surpluses with the US that are at least 30 or 40 times larger than that of NZ. And how do you "improve" the world's highest volume of exports? For that to happen, a lot of economies would have to grow a lot stronger.

The irony here is that, not long ago, you had exceptionally high tariffs. Your entire economic policy reversed itself over the course of a decade. Now you're true believers -- barrier-free-trade converts -- who happen to be left with some very high, targeted tariffs in textiles and a few other barriers, and you're objecting to a lower targeted one in the US on lamb -- which no longer exists, by the way. Is the pot calling the kettle black?

I have no idea what the basis of that lamb/sheep-product tariff/quota may be, by the way (but see below, I looked it up after writing this). That was never the issue in this discussion. It may be totally unjustified for all I know. The point was Geoff's silly and inaccurate accusation about US economic policies as a whole.

Thank you, Milton Friedman. The are few economists today who use(d) that "dollar falls" line -- Hayek, Samuelson, and Friedman are the best known -- but it's basically a 30-year-old doctrine that's out of touch and out of favor.

The dollar isn't likely to fall more than a few percentage points, and that will only affect our trade at the margins. No country in the world wants it to fall (NZ is high on that list), and, for the most part, we don't, either. The Japanese, the Chinese, the Asian Tigers, and even Europe are ready to pump it up if it shows signs of hurting their exports. In fact, most of them do it all the time.

What's different now is that anything more than a small decline in the dollar would precipitate a worldwide recession. Our Treasury Dept. is playing with fire right now, in fact, letting it drop against the euro, and the Europeans know it and don't like it a bit. Neither do the Japanese. There's some brinksmanship going on here and it makes me nervous because our Treasury Dept. is run by political ideologues, not by objective economists.

Simple as that? Well, look at the numbers. The US is already the second-largest supplier of your imports, after Australia. Your imports from the US are running 25% higher than those from Japan, 212% higher than those from the UK, and 494% higher than those from Germany (all 2002 figures). It looks like your market is pretty well saturated with US goods, in terms of the percentage of it that our goods represent, and your current levels of

spending on imports. If we're too expensive or too badly designed, you must be a bunch of patsies, buying all of our overpriced junk.

In other words, it isn't "as simple as that." In fact, the round-robin of trade you describe is perfectly reasonable, and that's the way it usually goes, within limits. We're now at or beyond the limits, however, with a $460 billion trade deficit in goods ($418 billion in combined goods and services).

Indignant demands that we accept even more imports are going to meet with even more indignant demands that you balance up your accounts before we'll do so. Otherwise, US politics are going to lead to a closing of some import doors, and the WTO can go piss up a rope before we'll keep gutting our manufacturing.

No one really knows what the long-term consequences will be from running such huge trade deficits because they're unprecedented. But many economists believe that we're now approaching a kind of structural limit, in which widespread dislocations resulting from huge deficits are starting to hurt our economy more than the overall level of trade is helping. Your per-capita average income (for working-age adults) is around US$17,600. Ours is US$33,000. We aren't interested in heading in your direction.

I realize that you're dependent on the world's most frustrating and intransigent sector of trade, which is agricultural products. My sympathies, that one's a bitch to deal with, and the big potential high-volume consumers, including Japan, China, the EU and the US, all have horrific tariffs and subsidies. The best thing I can offer is what the WTO has been telling you: get your manufacturing going faster so that you aren't dependent on agriculture for 62% of your exports. You're up against a wall on that one. The 22% hit you took on agricultural land values from 1984 to

1990, when you dropped your own ag tariffs and subsidies, will never fly in the big economies. We'd all have wide-ranging bank collapses and some serious social disorder if we tried to wean off of those protections too quickly. Well, China could handle it, but not the rest of us, because the rest of us do our farming on privately held land. And the Chinese banks already are running on smoke and mirrors anyway.

You may have missed the original conversation that Geoff resurrected in his first comment in this thread. He said that he thought the idea of universal offsets -- in other words, zero balances of trade -- was a good one, using the opportunity to sarcastically remark that the US has one of the most protective economies in the world.

Firstly, Geoff probably didn't know at that point that NZ was running a substantial surplus with the US, or he wouldn't have been so favorable to the offsets idea. Secondly, he must have a sheep-induced bias , because the US most certainly is not a protective economy compared to the other big ones (and most of the small ones are FAR more protective than any of us, the screams of poor countries at Cancun notwithstanding). When we *do* put a tariff on something, the world screams bloody murder -- not because they don't do it themselves, often to a greater degree, but because their economies depend on being able to sink a large amount of their production into the US market.

It's basically a concept to stimulate thought, not a specific plan. As for "regulation," you most certainly *do* have it, unless you're letting products flow on and off your shores with no accounting for them. But it would be clumsy to implement, even if the data and the tracking of trade shipments by virtually every trading country in the world are minutely detailed -- except for drugs and guns.

Oh, jeez. So, what would be "meaningful"? I think your wiggling around the obvious is a little...er...obvious.

Thank you! A little recognition of reality here is a big help...

What is this, Fun With Statistics Day? Your figure for NZ is roughly accurate (it's 36% now) but you must have copied the figure for the US wrong. It's around 10%, and has been in that range for a while. The 23% figure is about right for total trade, imports and exports combined.

Let's see, NZ has US$27.5 billion in exports (goods and services), and the US has US$974 billion in exports, and, somehow, that translates to more knowledge of trade in New Zealand? What do you do, distribute knowledge based on per-capita export amounts, a proportionate amount to each brain? Do you pass any on to the sheep?

If you want more recent statistics, your Stats New Zealand government service looks pretty good, and it tends to agree with WTO and World Bank stats:

For the US, there is a veritable wonderland of statistics available, but the trade stats you want can be found here:

I posed that as a question, and I referenced it to things that Geoff was saying (sorry again, Geoff). I don't know how much Geoff or other New Zealanders know about trade, but there are some very narrow focuses there, at least. Do your fellow New Zealanders complain as Geoff does about American "protectionism"? Do they know how our average tariffs compare with those of some of your other trading partners, for example? Your doing around $20 billion in product exports, 62% of which is ag exports, most of that being meat, doesn't encourage one to think so.

I'm not complaining about what you buy. I'm complaining about people bitching because we don't buy more of *your* products, when we already buy more than you buy from us. If you were running a deficit and you bitched, that's human nature. If you're running a surplus and you bitch it isn't bigger, then what the hell is going on here?

I have the numbers here, Malcolm. Your dollar was in the tank, you had state ownership of many industries and transfer payments and subsidies all over the place, a shortage of capital, and few sources of technological self-development. After '84, the numbers changed slowly at first, and then more rapidly. In 1975, according to your own trade minister and to the OECD data, NZ had the highest effective rate of protection (ERP) among all OECD countries -- the very worst, by a factor of more than two. To quote your ambassador from the latest WTO meetings, this year, "New Zealand was the only developed country to have had a comprehensive system of import licensing, to k ep out competitive imports, until it was finally abolished in the late 1980s...Tariffs had also been reduced, from an average rate of around 30% in the late 1980s to 4.1%." You made a lot of progress in short period of time, but you were coming out of a very deep hole to begin with. Just look at your exchange-rate currency valuation over that time, and your GDP growth. They tell the story.

Of course not. When your entire population is less than that of Brooklyn and Queens, and when you already produce excess dairy products, eggs, and some other protected products for export, who is going to bother?

Mostly they wag their fingers at you. At the last WTO meeting, more than half the countries crabbed about your "sanitary" restrictions on cheese, milk products, and eggs. You have roughly zero imports of those items; you've erected a brick wall based on a non-tariff barrier. But it isn't worth enough money to anyone to launch a case with the WTO.

And you have industries that you protect, including footwear and apparel, with tariffs running around 15% and, in one case of women's clothing, 30%. Are they justified? Only if you're protecting industries, and the WTO is letting you get away with it, largely because you've reduced other tariffs so much -- from a very high starting point.

(Why, BTW, do you keep initiating dumping claims and then dropping them before they come to a hearing? The WTO really let you have it over that at the last meeting. )

Look at your tariff schedule on textiles. You still have some remnants of highly protective tariffs, but note that your drop from 30% average tariffs occurred all in one decade. Suddenly you got economic religion. And like sudden converts of all kinds, now you're becoming a bit sanctimonious.

Hmm. That's twice. Why don't you tell us why you buy so damned many of them, if they're so "uncompetitive," relative to what you buy from Japan or Germany?

I have no concern about US performance, Malcolm. As the World Bank will tell you, we have the highest productivity in the world, the highest level of exports in the world, and one of the highest personal incomes in the world. Which performance indicator are you thinking about? Our agricultural exports?

As I said, people in a small country so dependent on exports are likely to have a parochial view of world economics. The fact is, exports are only a small part of our economy, partly because we already have the largest single share, and partly because commerce within our own borders is so active and so lucrative that the higher costs of doing business overseas don't make sense for many of our industries. And in those areas in which per-capita incomes go directly to the bottom line of manufacturing costs, and where technology is a commodity that anyone country buy (much of metalworking, for example), the result of chasing the manufacturing costs of low-wage countries is a race to the bottom. No thanks.

Probably not. Your anecdotes will be more meaningful in another thread, right here in this NG.

No, you probably missed the beginning of this, from another thread, which Geoff just resurrected. Gary C. and I were debating whether offsets were protectionism, and Geoff piped in with this:

I'm all for offsets, Malcolm. So when is NZ going to start investing more in the US?

Oh, BTW, I looked up the lamb situation out of curiosity. Yesterday marked the second anniversary of the day on which the US dropped its lamb tariff-rate quota on NZ and Australian lamb. What the hell is it that Geoff is complaining about?

investment.

You have a very narrow view of "performance." Trade isn't an end in itself. The purpose of trade is to raise one's standard of living. Our incomes average well over US$30,000. How about yours? They're about half of that. From what basis are you giving this advice, in other words? Do you think the US should behave like an island country with a population of less than 4 million? Or do you think that perhaps another standard of "performance" applies? Hmm?

As for your surpluses with the US, no one except a few sheep farmers complains about them here. Just don't YOU complain that you aren't getting a bigger dollar value of our market pie. You already are getting a lot more than you're giving. And if you weren't benefitting more from foreign investment than the profits that are being returned to the investing countries, you wouldn't be encouraging it. I see no sign that it's an act of altruism on NZ's part.

You neglect to mention that Aus. and NZ flooded the US market with lamb in the '90s, more than doubling their exports in less than five years. That's what they call an import "surge." Most countries protect against surges with quotas and tariffs. The US has a trade act that provides for it (Sec. 201, it's called), which was invoked in the case of the lamb surge. The WTO has a very weak set of rules for protecting against surges. That's one reason I think the WTO is living on borrowed time.

Whether exports based on wages that run around half those of the US is "fair" is an interesting question. It's come up in a very big way in our trade relations with China. It would never come up in relations with NZ in the absence of our China situation, partly because the gap is much smaller but largely because your economy is relatively small.

But the question is, what's the *consequential* difference between trading with a country that's "dumping," versus one that has low wages? The answer is, nothing, if the country has some structural control over wages (as China does) that keeps them low, and that doesn't allow the market to drive them up.

NZ isn't in that situation, and one hopes that we both maintain a goal of reducing trade barriers to let the market drive your incomes up as you integrate with the world market. As the WTO says, you have a tough row to hoe, with so much of your exports based on agriculture. Even among your manufactured products, the largest single group actually is food products.

I'm sure you grasp the concept of dumping and its relation to wages, as you initiate so many dumping actions yourself. And you have a number of countervailing duties and other actions in effect, mostly against Europe and South America, with a couple against South Africa. And, of course, you have those protectionist tariffs and non-tariff barriers on apparel, eggs, and dairy products. So you know about dealing with surges and the damaging effect of some types of competition.

As for which "we" is against tariffs, you'll find that "our" ideas in this area are hardly uniform, nor have they ever been. China and India are forcing us to refine some of them. That's what Buffet's idea is about: an idea tossed into the ring, to deal with overwhelming imports and outsourcing with low-wage countries.

I think that Geoff needs to think about it some more before saying he favors it, however. NZ would be in a bit of a jam if it was applied across the board.

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Is 40% regarded as high? That's what the US placed on lamb outside the quota. Now quotas are an interesting concept!! I had already stated the lamb tariff's had been removed.

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We'll buy what it suits us to buy. I get the impression that you think we are dependent on imports from the US? The value of the USD relative to our dollar at present makes your products reasonably cheap. Today the rate is 63c to the dollar, the 2001/2002 average was 44c. The value relative to Sterling and the Euro has been much more steady.

After all the OT threads in this ng over the last few years I am not surprised by that attitude! Must we come searching for things to buy? Perhaps you could get out selling.

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Well I've looked for it but the only post from Geoff that google records on the date you gave seems to be a short post on pop-up ads?

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Regulation implies a central system to give approvals to what can be traded, and from where. Apart from the obvious illegal items and sanitary measures I can't think of any, unlike in the past, as Geoff mentioned.

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Yes, my mistake, Apologies. But the real figures makes my point even more clearly.

With the exception of the sheep, yes. What you are talking about here are attitudes (parochial, insular). I'd hazard a guess that a higher proportion of our population is involved in international trade and that their resultant attitudes influence the rest of the population to a greater extent than in the US, where the proportion of people with direct experience is less, even though their numerical number may be greater than here.

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From where you sit they may appear narrow but then you've just admitted you don't now much about how we view trade. From where we sit the US focus sometimes seems narrow, "if our producers are hurting then we'll make things difficult." rather than "hey, we could do things better".

Sorry I don't understand what you're saying here. The fact that 62% is primary produce means we don't know what other countries are applying in tariff's?

Because I don't think the bitch was that the trade is not bigger, it was that you have at times applied tariff's to stop it growing, when any growth is ultimately as a result of what your consumers seem to desire.

And the effect of quotas is?

The same reasoning could apply to your use of tariff's, but you did.

And does the US accept product from countries with agricultural diseases and pests that would harm your producers if they got established?. One of our comparative advantages is that we don't have many of the diseases and pests that reduce production in other countries. Asking us to risk that status is like expecting you to reduce your standard of living to match your trading partners. We have tried to accomodate overseas suppliers, check out the problems with Californian grapes. They were exempted fumigation because they assured they could supply clean product. After spiders were repeatedly found when unpacking in supermarkets, even after renewed assurances they would do better, the inevitable happened.

And because there is a continuing process to eliminate them.

Nah. The big boys in the gang put us up to it and now they're nowhere to be seen.

Because at the moment it is cheaper to buy from the US than Germany because your dollar has "fallen", or the rest of the world's currencies have risen (ours included). That's how come the US equipment that was in my workshop last week came to be there.

There seem to be quite a few in rcm that have concerns. I did get the distinct impression that you were concerned about a deficit.

In which case you should have no concerns whether people buy your exports or not, it seems to be of trifling concern to you??

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Well, we tried as a constructive way of avoiding lamb tariff's but your farmers weren't interested!! Remember.

As above, I did note the tariff's had ended.

Chuckle, the big daddy argument!

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It well may be on borrowed time. Maybe the rules are intentionally weak because measures such as Sec. 201 are seen as counter productive.

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regards Malcolm.

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