"At a time of record farm income, Congress decided to further increase subsidy rates, qualify more people for taxpayer support and move programs toward more government control," Schafer told reporters today. "The president will veto this bill."

"Rural America is struggling in the face of skyrocketing energy prices, an economic downturn and rising food prices," Clinton said. "Saying no to the farm bill would be saying no to rural America."

Hillary is making good on her promise to not "put [her] lot in with economists."

HT: H&R

A proposal to sweeten government support for American sugar producers is emerging as a major sticking point between Congress and the White House in final negotiations on the farm bill.

The initiative is a priority for House Agriculture Committee Chairman Collin Peterson, a Democrat whose rural Minnesota district is among the nation's top producers of sugar beets.

Rep. Peterson is pushing a package of proposals that would bolster the industry, including a plan to commit imported sugar to ethanol production, rather than having it sold into the consumer market, where it would compete with U.S. producers.

We learn that the acceptance rate is around twenty percent, but falling fast. And non-native English speakers have more difficulty publishing. These interesting tidbits are scattered throughout the paper.

An obvious trend is the decrease in the share of submissions from the authors affiliated with the US universities from 50% in 1995 to 37% in 2004 and a corresponding increase in such number for researchers from the European universities from 12% to 28%, suggesting that at least in International Economics, the US may well be losing ground.

I should note that the bottom line is that the JIE does a pretty good job.

My reason for saying that the tax code is largely irrelevant to firms' decisions to move jobs overseas is that any tax preferences tend to be a very small factor in location decisions. Firms ship jobs overseas because they can pay workers $1 an hour, instead of $20 an hour in the U.S. They are some quirks here and there in the tax code that can provide frosting for firms that ship jobs overseas, but there are also quirks that encourage them to keep jobs here.

A method known as “zeroing” used by the US in anti-dumping investigations and reviews was slapped down on Wednesday by the top court of the World Trade Organisation.

In a case brought by Mexico against punitive US duties on imports of Mexican steel, the WTO’s appellate body ruled that zeroing was illegal in all types of anti-dumping action. It was the latest in a series of similar rulings against Washington.

The issue has set the US against the rest of the 151-strong WTO membership in the Doha global trade talks, where Washington is pushing for zeroing to be legitimised in changes to anti-dumping rules.

It has also sparked a debate over the role of the appellate body, which the US claims is making rather than interpreting WTO rules. Thus the dispute panel that first considered Mexico’s complaint argued that current rules did permit zeroing in some circumstances, flouting an earlier appeals ruling. The panel’s decision has now been struck down.

Washington on Tuesday responded angrily, accusing the appellate body of over-reach “by inventing new obligations” and of undermining the proper functioning of the dispute settlement system.

The middlemen cut out by the act, local smugglers and tea merchants, were not as happy... In November 1773, the East Indiamen Dartmouth, Beaver, and Eleanor entered Boston Harbor with the fisrt loads of the EIC's tea. The conspirators, probably led by Samuel Adams, were well prepared and highly disciplined: they cleaned the decks when they were finished and took no tea for personal use or later sale.

-- William Bernstein, A Splendid Exchange: How Trade Shaped the World, 2008, p.242

HT: EconTalk

Over the past three decades there has been a spectacular rise in income inequality as measured by official statistics. In this paper we revisit the distributional consequences of increased imports from China by looking at the compositional differences in the basket of goods consumed by the poor and the rich in America. Using household data on non-durable consumption between 1994 and 2005 we document that much of the rise of income inequality has been offset by a relative decline in the price index of the poor. By relaxing the standard assumptions underlying the representative agent framework we find that inflation for households in the lowest tenth percentile of income has been 6 percentage points smaller than inflation for the upper tenth percentile over this period. The lower inflation at low income levels can be explained by three factors: 1) The poor consume a higher share of non-durable goods —whose prices have fallen relative to services over this period; 2) the prices of the set of non-durable goods consumed by the poor has fallen relative to that of the rich; and 3) a higher proportion of the new goods are purchased by the poor. We examine the role played by Chinese exports in explaining the lower inflation of the poor. Since Chinese exports are concentrated in low-quality non-durable products that are heavily purchased by poorer Americans, we find that about one third of the relative price drops faced by the poor are associated with rising Chinese imports.

Erm, but that's "preliminary and incomplete," so "please don't circulate" it. (The internet is a funny place.)

[HT: MR]

U.S. Customs and Border Protection (CBP) has been unable to collect hundreds of millions of dollars in antidumping (AD) and countervailing (CV) duties. The Department of Commerce imposes these duties to remedy injurious unfair foreign trade practices (unfairly low prices or subsidies). The noncollection of AD/CV duties means that the U.S. government has not fully remedied the unfair trade practices and bears a substantial loss of revenue...

While over $600 million in AD/CV duties dating back to 2001 remain uncollected, they are highly concentrated among a few products, countries of origin, and importers... [A] relatively small number of importers owe the vast majority of these uncollected duties... According to CBP officials, prospects for collecting a sizeable portion of these bills are slim, because many of the importers have disappeared, have no assets, or have declared bankruptcy...

Four key factors contribute to uncollected AD/CV duties... First, because the U.S. AD/CV duty system involves the retrospective assessment of duties, the final amount of AD/CV duties an importer owes can significantly exceed the initial amount paid when the goods entered the country. Second, companies that did not previously export products subject to AD/CV duties, i.e., "new shippers," pose two types of risks for collections. For example, new shippers can be assigned an AD/CV duty rate based on as few as one shipment, which can significantly underestimate the final duty rate... Third, all importers must provide a general bond to secure the payment of all types of duties, but CBP's standard practice for setting the amount of this bond inadequately protects AD/CV duty revenue... Fourth, CBP collects minimal information regarding importers and does not conduct background or financial checks, which creates challenges to locating importers and collecting AD/CV duties.

What should we be paying more for? "Approximately 84 percent of the total amount of uncollected AD/CV duties is associated with four products, all from China: crawfish tail meat, garlic, honey, and mushrooms."

I can't say I'm too upset.

[HT: H&R]

Jeff Schott at the Peterson Institute of International Economics edited a volume on US-Colombian trade relations a few years ago. He wrote:

An FTA would provide contractual guarantees regarding the permanency of the trade preferences, in stark contrast to the uncertainty that surrounds whether the US Congress will reauthorize the ATPA [Andean Trade Preferences Act] before it expires at the end of 2006. Such uncertainty imposes costs on bilateral trade and investment and has contributed to the lackluster FDI in Colombia by US firms... To be sure, other factors — including Colombia’s macroeconomic policies, security environment, and domestic regulatory policies — may be of equal or greater importance in investment decisions.

Oh, that nasty uncertainty.

Reuters - Feb 14 - Expiring U.S. trade benefits for Colombia, Peru, Ecuador and Bolivia would be renewed through the end of this year... The 10-month extension is a compromise between Democrats who had favored renewing the program for two years and Republicans, who wanted a much shorter renewal to keep pressure on Congress to approve a free trade pact with Colombia.

So Republicans are injecting uncertainty into Colombia's export opportunities in order to use uncertainty as an argument for the PTA! Sick.

Back to Schott:

To an important extent, attracting investment is the key objective of the FTA. If implemented in conjunction with domestic policies that promote macroeconomic stability and enhance productivity, an FTA could make Colombia a much more attractive host for new investment not only by foreign companies but by Colombians as well...

In sum, the FTA should be seen as part of Colombia’s overall development strategy. Many of the reforms that will likely be required by FTA obligations may well parallel changes in domestic economic policies that were sought by the government but were blocked or diluted because there has been insufficient political support to gain legislative approval.

So the impact of the PTA will be largely contingent on domestic reforms in Colombia. And those reforms face political opposition. How is Colombia doing on those reforms?

Schott and Paul Grieco wrote:

In summary, 10 years ago, Colombia was the clear frontrunner in readiness for a free trade agreement, but today that is no longer the case. While Colombia has come through a turbulent decade without a huge decline in readiness, it has not moved up its readiness score to the levels of current US FTA partners such as Mexico and Chile. As is often the case, the political and economic domestic reforms that are essential to development are also required to leverage the benefits of a free trade agreement with the United States. While the indicators show that Colombia needs to increase gross savings and further reduce its external debt, promoting reforms that strengthen the political sustainability indicator will make the most important contribution to raising Colombia’s readiness score.

Political sustainability, huh? How is it going this week?

A political scandal that has engulfed Colombia's political class came a step closer to the president, Alvaro Uribe, after his cousin and close political companion was arrested on charges of colluding with rightwing paramilitary groups.

I doubt this pleases investors:

Uribe's allies are eager to see him serve a third four-year term, even though that is prohibited by the constitution. In 2005, the Constitutional Court approved an amendment that allowed him a single re-election in 2006. Many analysts here believe it is impractical for a tarnished Congress to try to amend the constitution or find other ways to spearhead another reelection effort...

Most of the politicians implicated in the scandal have had close ties to Uribe, and many of them supported the constitutional change that permitted him to run for reelection. Still, the "para-politics" scandal has touched politicians from nearly every party, including the opposition Liberal Party, which has more members linked to the paramilitary groups than any other.

I remain skeptical that this PTA will do much for Colombia in the near future.

Critics of the free-trade pact worry that it would hurt American workers. But Colombian goods already enter the U.S. duty-free; what would change is that American exporters would get access to the Colombian market.

(Colombia is pushing hard for the pact not because of any immediate trade benefit but because its duty-free access to the U.S. must be regularly renewed. Businesses are reluctant to invest in flower farms or garment factories unless they know that they will be able to export to the U.S. for many years to come.)

So US workers shouldn't worry because the PTA won't increase Colombian exports, but Colombia wants the PTA because it'll attract investments dedicated to exporting for many years? You can't have it both ways, Mr Kristof.