Posted on 10/18/2005 3:46:50 PM PDT by RWR8189
PRESIDENT BUSH decided to turn the protectionist tide that has been rising for some months, during which time the protectionists have had a good run. They have forced the United States and the European Union to restrict apparel and textile imports from China, and managed to stall progress in reaching key trade-opening agreements before the crucial December meeting of the World Trade Organization in Hong Kong.
So the president decided to make a dramatic offer--a major reduction in trade-distorting agricultural subsidies. America has offered to cut by 60 percent the $19.1 billion it spends on agricultural subsidies if the E.U. will cut its $75 billion of permitted subsidies by 80 percent. Moreover, America is proposing sharp reductions in tariffs on imported agricultural products, with the aim of eventually eliminating these tariffs and, indeed, all trade-distorting measures.
This took some political courage by Bush, who risks antagonizing still another voting block--farmers and large agribusinesses--at a time when his support seems to be seeping away because of events in Iraq, hurricanes in the Gulf Coast, and the unfortunate nomination of an unqualified crony to the Supreme Court. Already, Saxby Chambliss, the Georgia Republican who chairs the Senate Agriculture Committee, has warned the president that he will rally his colleagues to deny approval to any deal that bargains away farm subsidies. This, despite that fact that most of the benefits accrue to a handful of non-needy corporate farmers.
Worse still, from the president's point of view, was the coincidence of two reports late last week. First, the government reported that the trade deficit for August had widened to over $59 billion, its third highest level on record. The deficit with China hit a record of $18.5 billion, as consumers snapped up made-in-China cell phones, videos, and toys.
Second, as if to pour gasoline on the flames, Treasury Secretary John Snow announced from Shanghai that Bush will be patient with the Chinese even though they have only revalued their massively undervalued currency by a mere two percent. This disappointed many in Congress who think that a 27.5 percent upward valuation is needed to bring China's yuan more in line with what a free market would produce. Led by New York Senator Chuck Schumer, they will undoubtedly make their voices heard when the Treasury files its mandated report next month, in which it is determined to find some reason not to label China a currency "manipulator."
Bush may have lost his gamble. Unfortunately for the cause of freer trade, E.U. Trade Commissioner Peter Mandelson, who had managed to start what is now known as the "bra wars" when his restrictions on Chinese imports resulted in the embargoing of bras designed to match panties already in European warehouses, was in no position to respond in kind to the U.S. offer. According to the Economist, the cuts he offered were "less deep, and their scope less wide," and the exemptions sought by the European Union (180 products would be treated as too "sensitive" to be opened to competition from imports) would wipe our more than 75 percent of a successful trade negotiating round. Pascal Lamy, director-general of the WTO, is reported by the press to have reckoned that the U.S. proposal is five times as ambitious as the E.U. response
To make matters worse, the so-called Group of Ten, which includes Switzerland, Japan and Taiwan, made an even more niggardly counter-offer. Accepting the U.S. proposal, said Switzerland's economy minister, Joseph Deiss, would "wipe agriculture out of our landscapes."
Mandelson has two problems, one at home, one in the United States. The French think that even his ungenerous offer goes a step too far in exposing their farmers to competition. For all their talk about helping the undeveloped world, France is unwilling to do the one thing that will help the poorer countries most: open Europe's richer farmers to competition from the developing world's poorer ones.
France is not alone: half of the E.U. member states share its protectionist bent. Certainly, a shaky coalition government in Germany, with a vice chancellor (Franz Müntefering) whose lack of dedication to free markets was recorded when he called financial investors "locusts," is not in any position to blaze a path to reform of the E.U.'s protectionist agricultural policies.
The E.U. Trade commissioner's problem in the United States is that he is not considered a trustworthy negotiating partner. Ever since he broke tradition by threatening to go over the head of then-U.S. Trade Representative Bob Zoellick and have Prime Minister Tony Blair ask Bush to overrule his own Trade representative, and then took to the U.S. media to denounce America's position, rather than keeping the negotiations private, the American team has regarded Mandelson with less than the respect they accorded Lamy, his predecessor. Rob Portman, who succeeded Zoellick when the latter went on to become Condoleezza Rice's second-in-command at the State Department, is said to have healed some of the old breach, but at best hostility has been replaced with wariness--very different from trust.
If no agreement can be reached by the time of the WTO meeting in December, the round of talks, which began in Doha, Qatar, in 2001, will probably end in failure. The president's authority to negotiate a deal, and then put it to an up-or-down vote in Congress, precluding special interests from picking it apart, expires in mid-2007. Bill Clinton couldn't get his trade-negotiating authority renewed during his second term, and it is not likely that Bush, by then an increasingly lame duck, would be able to do any better, barring some amazing reversal of his political fortunes.
President Bush told the United Nations earlier this year that "the surest path to greater wealth is greater trade." It doesn't seem as if he will have much company as he takes a stroll down that path. Had Britain not surrendered its right to determine its own trade policy to the European Union, Tony Blair might have kept Bush company. But that is not to be.
Irwin M. Stelzer is director of economic policy studies at the Hudson Institute, a columnist for the Sunday Times (London), a contributing editor to The Weekly Standard, and a contributing writer to The Daily Standard.
"Had Britain not surrendered its right to determine its own trade policy"
As we're slowly, but surely, surrendering our own?
Reciprocity is what we need.
to heck with the Europeans, let their citizens pay 20 bucks for a loaf of bread. We need to eliminate farm subsidies for OUR citizens. It is theft:
http://www.neoperspectives.com/farmsubsidies.htm
You must be specific when you talk of farm subsidies. There are many areas of agriculture where the farmer is not allowed to sell their product themselves.
For example raw milk. Many states do not allow the sale of raw milk. When I sell it I have to post it as 'raw milk, ungraded, unpasturized, not for human consumption, pet food only'. I can not put a sign at my mailbox like some do with fresh eggs. Which that is also being outlawed in some areas.
This is just a small example but why not help promote the enterprise of farming as a small business to your legislature instead of flying a finger at farming.
From what you've said we share the same goal of reducing the power of government. Why should government 'regulate' what you sell out of your home. If you poison someone then you can be sued in a criminal court for breach of contract (you did not offer to sell someone poison, but milk).
Big Government is causing the problem with farm subsidies and big government seems to be causing you're problem with milk. Why doesn't government get off your back? (If I had to guess I'd guess wealthy farming milk interests are behind this sort of regulation)
Just because I am against thieving politicians stealing from the populace to give to farmers doesn't mean I am agaisnt farmers. It is the politicians, not the farmers doing the stealing.
FYI:
http://www.freerepublic.com/focus/news/1414369/posts?page=1
More Federal meddling in teh dairy industry...
No, we're not. The U.S. has clearly shown that feels no obligation to abide by trade agreements if it does not want to.
If you need any evidence of that, look no further than the ongoing softwood lumber dispute with Canada -- in which the U.S. refuses to eliminate a 27% tariff on Canadian lumber despite the fact that every single WTO and NAFTA decision on the matter has come down on the side of Canada.
"every single WTO and NAFTA decision on the matter has come down on the side of Canada."
Canada is preparing to sue, in US courts, and has every right to do so under the auspices of NAFTA, to my understanding.
Thanx! Kudos, Dittos, Agree-os..
Can we start by dismantling the usda or is that too big an apple for the first bite?
Oh, I look forward to that. I imagine the Canadians are totally unprepared for what happens when they find out that we are governed by "living, breathing" documents in this country -- documents that mean whatever the hell a judge or judicial panel says they mean on any given day of the week.
I strongly suspect that there are legally binding aspects of NAFTA, that will come to the fore in any trial, myself.
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