An exercise for the libertarians

"China Raw Material Exports Broke Trade Rules, WTO Says

(Industry Week – Agence France-Presse)

Ruling affects bauxite, coking coal, fluorspar, magnesium, manganese, silicon metal, silicon carbide, yellow phosphorus and zinc

The World Trade Organization on Jan 30. upheld its ruling that Chinese restrictions on key raw material exports broke trade rules following an appeal by Beijing. China must bring its duty and export quota measures on elements including magnesium and zinc into line with its WTO obligations, an appeal body said.

The WTO found in favor of the United States, European Union and Mexico in July following a complaint that China had failed to meet the promises it made when joining the body.

The ruling applies to bauxite, coking coal, fluorspar, magnesium, manganese, silicon metal, silicon carbide, yellow phosphorus and zinc – many of them vital to the chemical and metal industries for producing things like medicines, fridges and juice cans.

Both the United States and the European Union claimed victory after the publication of the appeal body's report.

"Today's report is a tremendous victory for the United States – particularly its manufacturers and workers," U.S. trade ambassador Ron Kirk said. "Today's decision ensures that core manufacturing industries in this country can get the materials they need to produce and compete on a level playing field."

EU trade commissioner Karel De Gucht said the ruling represented a success in efforts to ensure fair access to "much needed" raw materials for EU industry. "China now must comply by removing these export restrictions swiftly and furthermore, I expect China to bring its overall export regime – including for rare earths – in line with WTO rules," the commissioner said."

The question is this, what's the higher value, the free market principle China agreed to when they acceded to the WTO, or the private property principle China has by way of territorial sovereignty?

 

I'm interested in knowing what Dave101010101 has to say about the matter.

 

He's banned, but I don't believe he was a libertarian anyway.

 

Im interested in finding out from DasTrader if he is going to send in the drones, like he suggested we do to India. .

 

So what exactly is a level playing field?

If a certain country is rich in a particular resource, are they required divide it evenly to the rest of the world? For example, it seems that China (which is far and away the largest iron producer) would like to maintain an advantage for itself in terms of steel production.

Is it only a level playing field if they are forced to supply Europe with steel at similar prices to what domestic manufacturers get? It seems to me that Europe is free to enter into trade agreements with whomever they wish. China is also free to pursue their own interests. If Europe doesn't have something of comparative value that China needs, then why should China be forced to supply steel at a discount?

 

Chinese government interference in this market 1) restricts the producer's right to sell all that they would like to sell, 2) reduces world supply of these commodities, which raises their price and so that of the goods requiring them, 3) makes non-Chinese manufactured goods more expensive than Chinese manufactured goods, because Chinese manufacturers are not paying the higher input costs.

 

I understand that. But what is the difference between this and the US government subsidizing farmers for underproduction?

 

As far as I know those days are gone, the government is subsidizing farmers to overproduce food. That's also market interference, yes, but which results in artificially low food prices, which would fall under "dumping". Countries can and do bring complaints against other countries to the WTO, and if the defendant loses, countervailing duties can be imposed by the plaintiff. Now, should China refuse to lower their export quotas (they may still have to make reparations), the plaintiffs can impose their own tariffs, but I'm not sure if they would be called anti-dumping duties, or countervailing duties. Probably the latter, unless there is a third form of punitive tariff I'm not aware of.

 

Well, I think it depends on which crops we are talking about and also whether we are referring to realized effect or the intended effect.

As I understand it, the subsidies have always been based on the premise of price control. There has always been a goal of keeping prices high so that small farms could afford to compete with higher margins.

Like most things in politics, the actual mechanism is a mess and actually rewards overproduction many times, and a disproportionate amount of the subsidies go to large farms. So just like rent control, it hurts the very people it was intended to help. But the goal was to keep prices high, which is very similar to what we are talking about in the China example.

Also, I would ask for people to make up their minds. We hear constant complaint that China has manipulated their currency to make their products so cheap that we can't compete. Now we hear complaints that they are intentionally driving prices higher. Right now the group complaining of high prices is relatively small. It makes me wonder how the situation would change if we forced China into a floating currency and suddenly all Chinese exports were drastically more expensive.

Food for thought.

 

But, which is the greater good... private property, or a free market? I thought this was an interesting article because it seems to show the two at odds with one another.