Trade War brewing? :-O

Discussion in 'Economics' started by Avalanche, Nov 11, 2003.

  1. US goods set to double in price as Europe plans huge trade war
    By Stephen Castle in Brussels
    11 November 2003

    American jeans, Florida orange juice and dozens of other US products could double in price from next month because of a growing transatlantic trade war.

    The World Trade Organisation gave the European Union permission yesterday to impose huge import tariffs, which will allow price increases of between 8 and 100 per cent on a range of goods.

    The row, which began when America imposed special duties of up to 30 per cent on European steel last year, reached a climax yesterday when the trade watchdog gave a final decision in favour of the EU. It said the US action was "inconsistent" with free trade commitments. Europe can now impose duties on products ranging from T-shirts and lavatory paper, to bras, pantyhose, suspenders, ballpoint pens, ski suits and bowling alley equipment. Harley Davidson motorcycles were included in an early draft of the sanctions list, but were not included yesterday.

    The EU says its sanctions, amounting to ¤2.2bn (£1.5bn) a year, will come into force on 15 December unless Washington drops its steel duties. The sanctions would be the biggest in the history of the WTO.

    Most of the affected imports face tariffs of 30 per cent on top of existing duties, though a small number will be set at 8 or 15 per cent and some at 100 per cent.

    President George Bush now faces a dilemma over whether to back down and remove the steel tariffs. The American government issued a statement yesterday saying that it disagreed with the ruling but would study it carefully.

    The WTO's decision comes at a sensitive time, with the US presidential campaign about to begin in earnest. In drawing up its list of sanctions, the EU has deliberately selected products from states which are crucial to President Bush's electoral hopes.

    The steel tariffs have proved controversial in the US, where they dented President Bush's credentials as an advocate of free trade and angered American-based car makers. They say that the tariffs have increased the price of their raw materials, causing job losses and making vehicles more expensive for consumers.

    But the White House is also facing heavy political pressure from "rust-belt" states such as Pennsylvania, West Virginia and Ohio to keep the steel import duties, which are due to continue until 2005.

    The steel row is only one of a number of trade disputes which threaten to poison relations between the EU and the US, and could help stymie prospects for economic recovery. The EU has threatened to impose another set of sanctions against Washington from next spring if it does not repeal tax breaks for American exporters. Meanwhile, the WTO is considering a complaint from the US that Europe is blocking the import of genetically modified products. Washington is already retaliating against an EU ban on beef from cattle which are given hormones to stimulate growth.

    A spokeswoman for the EU trade commissioner, Pascal Lamy, said the measures were "not there to punish the US but to focus the minds of the US administration". The EU did not need to use these sanctions, she said. A British official argued that the WTO ruling "backs our view that the decision by the US to impose these tariffs was wrong".

    Richard Mills, a spokesman for the US Trade Representative, said its tariff measures were designed to give the US steel industry "breathing space needed to restructure and consolidate thereby becoming stronger and more competitive". This, he said, was consistent with WTO rules which allow short-term measures to cover restructuring. He added: "We disagree with the overall Appellate Body Findings. We will be reviewing the WTO report carefully."

    The WTO's director general, Supachai Panitchpakdi, said he hoped the countries would be able to solve the problem without resorting to sanctions.

    "I'm sure there will be some way out," he said yesterday. "I expect the conciliatory approach that we have seen in the past, and I certainly recommend that approach."
  2. Wonder if I am the only one on earth that believes the March 15 2002 Dow high and reversal to slow bleed was caused by the steel tariff imposition?

  3. The DOW is going back up. You can bet your shirt on it. Bring it on EU...
  4. this gives bush the cover he needs to repeal the steel tariffs. the only reason he did it in the first place is because he needed the steel states support in the midterm elections. now he can say i tryed to protect steel jobs but the nasty wto is forcing me to repeal the tariffs.
  5. But then he will just put a quota or some other non-tariff barrier to trade in place...
  6. More Protectionism from the Bush Administration, got to protect those mill jobs against "unfair" competition.

    U.S. Announces Limits on Apparel Imports From China (Update3)
    Nov. 18 (Bloomberg) -- The Bush administration said it would restrict imports of knit fabric, robes and brassieres from China amid complaints from U.S. manufacturers and lawmakers that unfair competition is costing mill jobs in states such as North Carolina.

    The Commerce Department in Washington said it would limit import growth for those products to 7.5 percent over a year, helping companies such as Burlington Industries Inc. The action, on petitions by the U.S. textile industry, was opposed by the trade group for retailers including Gap Inc. and J.C. Penney Co., which says consumer prices will rise.

    ``What the administration is saying to textile and apparel makers in this country is that `We feel your pain,''' said Gary Hufbauer, a senior fellow at the Institute for International Economics, a Washington-based research group. Hufbauer said today's action may be the first in a series of actions against China that could take place over the next year.

    Commerce Secretary Donald Evans, Treasury Secretary John Snow and other officials have urged China to open its doors to more U.S. exports and investment. Some 2.6 million U.S. manufacturing jobs have been lost since Bush took office. Many lawmakers blame at least some of the decline on China's trade protections and a currency pegged to the dollar.

    ``This decision is based on politics, not facts,'' said Erik Autor, an attorney for the National Retail Federation, the retailers' trade group, in a statement. He said the ruling will ``create shortages that could lead to dramatic increases in prices for American consumers while doing nothing to protect American jobs.''

    Industry Losses

    The textile industry has closed more than 250 U.S. plants since 1997, including more than 50 in the last 18 months, the American Textile Manufacturers Institute says. More than 200,000 workers have lost their jobs in the industry in the past six years, including 30,000 since January 2002, the trade group says.

    The largest firing in the history of the domestic industry occurred in July, when Pillowtex Corp., of Kannapolis, North Carolina, closed operations and dismissed 6,450 workers. A bankruptcy judge ruled last month that the company's assets may be sold to closely held GGST LLC.

    A telephone message left at the Chinese Embassy in Washington was not immediately returned.

    The Commerce Department's announcement contributed to a plunge in the dollar to a record low against the euro. As of 2:11 p.m. in New York, the dollar was at $1.1937 per euro, compared with $1.1749 yesterday. The previous low was $1.1933 per euro on May 27.

    `Big Risk'

    ``Every time the U.S. imposes more trade sanctions, it's a sign the dollar is going to weaken,'' said Kenneth Landon, senior currency strategist at Deutsche Bank AG in New York. ``At the same time, it's a sign of lower inflows into the country.''

    Steven Dunaway, the head of the International Monetary Fund's China team, said the U.S. action ``was a big risk.'' Dunaway said the move could prompt China to retaliate with similar measures. ``It's the kind of situation the IMF strongly discourages,'' he said.

    The limits, made possible through China's accession agreement to the World Trade Organization two years ago, would be imposed after consultations with Beijing, Grant Aldonas, the Commerce Department's undersecretary for international affairs, told reporters in Washington.

    The temporary restrictions on textiles are the first from the U.S. since China joined the global trade arbiter.

    `Good First Steps'

    ``This covers a very small amount of the industry,'' said Wilbur Ross, chief executive of WL Ross & Co. His company this month completed its purchase of Burlington, which filed for bankruptcy in 2001, and plans to buy Cone Mills Corp. Both textile companies are based in Greensboro, North Carolina.

    ``These are good first steps,'' Ross said in an interview. ``We need to take more dramatic steps.''

    Ross has also supported the steel tariffs that Bush imposed in March 2002. His International Steel Group Inc. became the second-largest U.S. steel maker by buying companies including Bethlehem Steel Co. and LTV Steel Co. out of bankruptcy.

    Those steel protections have been ruled illegal by the World Trade Organization. Prime Minister Tony Blair said Monday he will urge Bush, who is visiting the U.K., to scrap the duties.

    Bush is weighing the political costs and benefits of trade restrictions in the 2004 election year.

    Aldonas said the administration was trying to address the competitive advantage China has as a result of price controls set by state-owned industries.

    Trade Deficit

    ``There are distortions introduced by the heavy state economy'' in China, Aldonas told reporters.

    Aldonas also said the decision came in response to concerns expressed by Senator Elizabeth Dole, a North Carolina Republican, and other lawmakers in states that have lost jobs as a result of the surge in textile imports.

    Chinese sales of textiles to the U.S. rose 63 percent to $3.15 billion in 2002, data from the Commerce Department show. They are on the way to exceeding that total this year, and representatives of U.S. companies say that a worldwide agreement to end restrictions on textile trade in 2005 could leave China as the only producer of textiles in the world.

    The U.S. trade deficit widened in September to $41.3 billion, as the deficit with China reached a record $12.7 billion. The U.S. deficit with China this year may reach $130 billion, which would be the most with any country in U.S. history.
  7. What are you complaining about: WTO is just part of the New World Order where the nations won't decide any more but a supra (Future) World Government :

    Video of Congressman Ron Paul :

    "I think there are 25,000 individuals that have used offices of powers, and they are in our Universities and they are in our Congresses, and they believe in One World Government. And if you believe in One World Goverment, then you are talking about undermining National Sovereignty and you are talking about setting up something that you could well call a Dictatorship - and those plans are there!..."

  8. "If we do not follow the dictates of our inner moral compass and stand up for human life, then this lawlessness will threaten the peace and democracy of the emerging ‘New World Order’ we now see, this long dreamed-of vision we’ve all worked toward for so long."
    President George Bush (January 1991)

    “The ultimate aim of the Council on Foreign Relations [is] to create a one-world socialist system and make the United States an official part of it.”

    Dan Smoot, a former member of the FBI staff in Washington conducted an investigation of the aims of the Council on Foreign Relations [directed by Rockfeller]

    "All countries are basically social arrangements.… No matter how permanent and even sacred they may seem at any one time, in fact they are all artificial and temporary.… Within the next hundred years … nationhood as we know it will be obsolete; all states will recognize a single, global authority."

    Deputy Secretary of State Strobe Talbott, Clinton's roommate at Oxford, wrote this in Time magazine, July 20, 1992

    "Further global progress is now possible only through a quest for universal consensus in the movement towards a new world order."

    Mikhail Gorbachev, in an address at the United Nations (December 1988)
  9. Has protectionism ever helped an economy in the long run? Of course not. I hope we aren't going back to the 1930's. The american public as a whole would be better off with cheaper steel, rather than proping up a bunch of dying and decaying Pittsburg steel mills. There's not much incentive to innovate and compete under protectionist policies. China will retaliate back, and all of this will only hurt us in the long run.
  10. yep baby. i think the $/eu pit is the place to be for long time to come.
    #10     Nov 19, 2003