The Obama administration offered $147.3 million in assistance to Brazilian cotton producers and suspended an export-credit program for American farmers, in a bid to end a trade dispute with the Latin American nation.
The government will also seek to ease sanitary barriers to Brazilian imports of pork and beef, U.S. Trade Representative Ron Kirk said in a statement today on the preliminary deal. The U.S., which lost a World Trade Organization ruling in August that said its cotton subsidies violate global trade rules, will work with Brazil to reach a comprehensive agreement by June.
“We now have a clear path forward, one that is in the best interest of both the United States and Brazil,” Kirk said. “As a result of our discussions with Brazil we have avoided imposition of higher tariffs.”
The U.S. for now dodges as much as $830 million in trade sanctions on 102 goods including ketchup, cars and boats that Brazil targeted. In addition to financial assistance for Brazilian farmers, the U.S. halted the GSM-102 program that guarantees the credit foreign customers use to by American cotton, and said it will be restarted with higher fees.
Any other changes to U.S. cotton programs are pushed back until at least 2012, when the U.S. Congress will have to revisit the broader issue of farm subsidies before existing legislation governing the nation’s agriculture policies expires.
Archive for the ‘Protectionism’ Category
Censorship as a trade barrier
Saturday, March 20th, 2010Gilbert Kaplan says that if Chinese censorship forces out US content companies like Google, the US should retaliate by erecting trade barriers to Chinese computer hardware exports. Nate Anderson at Ars Technica reports:
Dealing with censorship as a trade violation isn’t a new idea. Computer industry lobbying group CCIA was talking up trade complaints as a way to handle Chinese censorship back in January. CEO Ed Black said at the time, “It is increasingly apparent that censorship is a barrier to trade, and that China cannot limit the free flow of information and still comply with its international trade obligations. The Chinese government has said it is gathering more information before deciding how to proceed and we would urge that they look at the issue holistically with government, economic and trade officials involved in the decision.”
Of course, lobbyists aren’t the best source to describe trade law. I’d prefer to consult the folks at IELP, for example.
Banning the consumption of tradable goods and services isn’t a WTO violation per se; international trade law emphasizes non-discrimination in the treatment of foreign and domestic products. Consider Antigua’s online gambling case against the US at the WTO. The basis for its claims was not that the US was obliged to allow online gambling, but that if it allowed domestic online gambling (such as allowed by the Interstate Horseracing Act), it was obliged by its GATS commitments to also allow online gambling provided by foreign suppliers. Similarly, I suspect that censorship only constitutes a trade barrier if foreign sources of information are censored more heavily than domestic providers, i.e. a difference in national treatment.
If China censors both domestic and foreign internet sites, then it is unlikely that its WTO commitments oblige it to liberalize both. Thus, the line of thinking from folks like Dan Drezner and Simon Lester (1, 2) is that WTO law isn’t much of a tool to wield against Chinese censorship.
Discriminatory MFN tariffs: Specific tariffs in agriculture
Tuesday, February 2nd, 2010Sohini Chowdhury, on the job market this year from Purdue University, on the “The Discriminatory Nature of Specific Tariffs“:
This paper evaluates the distortions from specific tariffs levied on agricultural imports by rich countries. Through their non-MFN ad valorem equivalents (AVEs), specific tariffs discriminate against exports from poor countries because of the lower price of their exports. So the MFN specific tariffs levied by rich WTO member countries essentially translate into higher tariff barriers for the exporters of low price goods, suggesting that the benefits of preferential tariffs that poor countries enjoy might be offset by the specific tariffs they face. Our results show that specific tariffs levied by rich countries on their agricultural imports wash away 80% of the welfare benefits and 73% of the market access benefits enjoyed by poor countries from preferential tariffs. A policy implication of this paper is that the WTO should intensify efforts to eliminate specific tariffs.
Bill Watterson on steel protectionism
Monday, February 1st, 2010Bill Watterson, creator of the beloved Calvin and Hobbes comic strip, also did some editorial cartoons for Sun Newspapers in the early 1980s. This appeared in the Brunswick Sun Times on 2 Feb 1984:
Economists frequently compare trade to technology to explain how trade expands a country’s consumption possibility set (David Friedman’s The Iowa Car Crop, Greg Mankiw’s Isoland inventer) and argue that tariffs are akin to taxes on using a more efficient production technology. Perhaps Bill Watterson’s comic will appear in textbooks soon.
From the Cleveland Sun (via Radley Balko).
Measuring protectionist actions during the crisis: What’s the counterfactual?
Friday, January 15th, 2010The GTA’s latest report identifies no fewer than 192 separate protectionist actions since November 2008, with China as the most common target. This number has been widely quoted in the financial press. Taken at face value, it seems to suggest that governments have all but abandoned their commitments to the World Trade Organization and the multilateral trade regime.
But look more closely at those numbers and you will find much less cause for alarm. Few of those 192 measures are in fact more than a nuisance. The most common among them are the indirect (and often unintended) consequences of the bailouts that governments mounted as a consequence of the crisis. The most frequently affected sector is the financial industry.
Moreover, we do not even know whether these numbers are unusually high when compared to pre-crisis trends. The GTA report tells us how many measures have been imposed since November 2008, but says nothing about the analogous numbers prior to that date. In the absence of a benchmark for comparative assessment, we do not really know whether 192 “protectionist” measures is a big or small number.
Ecuador’s trade-restricting response to the crisis
Tuesday, October 27th, 2009Paul Krugman notes that Ecuador, which uses the US dollar, has adopted broad tariff increases to tackle its current account deficit amidst the current crisis, right in line with the Eichengreen-Irwin explanation of fixed rates and protectionism.
“The Roots of Protectionism in the Great Depression”
Saturday, October 3rd, 2009The NBER Digest provides a nice one-page summary of Eichengreen and Irwin’s paper on the gold standard and trade restrictions in the Great Depression.
Economist: “Barack Obama and free trade: Economic vandalism”
Saturday, September 19th, 2009Contra Doug Irwin, the Economist is quite pessimistic about President Obama’s tire tariffs: “A protectionist move that is bad politics, bad economics, bad diplomacy and hurts America. Did we miss anything?”
One might argue that these tariffs don’t matter much. They apply, after all, only to imports worth a couple of billion dollars last year, hardly the stuff of a great trade war… Presidents, after all, sometimes have to throw a bit of red meat to their supporters: Mr Obama needs to keep the unions on side to help his health-reform bill.
That view seems naive. It is not just that workers in all sorts of other industries that have suffered at the hands of Chinese competitors will now be emboldened to seek the same kind of protection from a president who has given in to the unions at the first opportunity. The tyre decision needs to be set into the context of a string of ominously protectionist policies which started within weeks of the inauguration with a nasty set of “Buy America” provisions for public-works contracts. The president watered these down a bit, but was not brave enough to veto. Next, the president stayed silent as Congress shut down a project that was meant to lead to the opening of the border to Mexican trucks, something promised in the NAFTA agreement of 1994. Besides these sins of commission sit the sins of omission: the president has done nothing at all to advance the three free-trade packages that are pending in Congress, with Colombia, Panama and South Korea, three solid American allies who deserve much better. And much more serious than that, because it affects the whole world, is his failure to put anything worthwhile on the table to help revive the moribund Doha round of trade talks. Mr Bush’s tariffs, like the Reagan-era export restraints on Japanese cars and semiconductors, came from a president who was fundamentally committed to free trade. Mr Obama’s, it seems, do not.
G20 nations breaking ‘no protectionism’ vow
Tuesday, September 15th, 2009Alan Beattie: “The world’s leading economies have continued to break their pledge of no protectionism with a raft of restrictions on trade and investment, say two authoritative reports.”
This is not about enforcing trade agreements
Tuesday, September 15th, 2009Simon Lester has lots of coverage of the Obama administration’s Chinese tire tariffs. The key point to remember is that China has not violated a trade agreement; the US government is electing to impose tariffs that are available thanks to a safeguard clause in China’s WTO accession agreement.
