US plans tariff-free world

BBC ^ | 11/26/02

[nypokerface]

The US government is expected to announce bold new proposals to expand free trade later on Tuesday. The plan would lead to the elimination of all tariffs on industrial and consumer goods by 2015 in an attempt to jump-start global trade talks.

"A world of no trade and tariff barriers is the north star," Paul O'Neill, the US Treasury Secretary told business leaders in the UK, ahead of the official announcement.

Mr O'Neill said that world economic output would increase by $2 trillion (£1,3,00bn) if all trade barriers were removed.

"There's a very important reason to do it, the whole world will be better for it," he said.

The proposals will be put to the members of the World Trade Organisation (WTO) who are in the midst of talks aimed at lowering global trade barriers.

These talks, launched in Doha in the Gulf Arab state of Qatar one year ago, have stalled amid increasing signs of trade tension between the US and the rest of the world.

The US has imposed high tariffs on imported steel and passed legislation increasing subsidies to its farmers - both of which have angered developing countries.

Many analysts think the new proposal is designed to recapture the moral high ground, after a year in which the US commitment to free trade has come under question.

Deep cuts

However, some developing countries may have difficulties with the plans, especially in relation to their manufacturing sector.

Developing countries tend to have higher tariffs on manufacturing goods, so it will be easier for the US to meet the proposals than for poorer countries.

And the timing and speed of the cuts could pose a threat to the so-called "infant industries" in countries like Brazil and India, which have flourished behind tariff barriers.

The Brazilian car market, for example, would be thrown open to international competition.

But the US will vow to cut its high tariffs on textiles and clothing, an area of particular concern for developing countries.

Recently US manufacturers have begun lobbying for further restrictions on the import of clothing from China, despite the formal expiry of all quotas and tariffs on textile and clothing on 1 January 2005.

Poorer countries are also pressing for access to rich country markets for their agricultural products, but these are not included in the proposals.

The US, however, has already proposed the elimination of agricultural subsidies - a proposal certain to be opposed by the European Union and Japan.

Bold plan

According to press reports, the plan will include a reduction of high tariffs on non-agricultural products to a ceiling of 8% by 2010.

These would then be progressively cut to zero by 2015.

Existing tariffs of less than 5% would also be eliminated by no later than 2010.

And a parallel scheme to cut tariffs in many industrial sectors - such as chemicals, paper, wood and construction equipment - would also be tabled.

The plan parallels some of the US approaches to regional trade liberalisation.

For example, in negotiations with the Pacific Basin countries in Apec, the US hoped for the gradual elimination of all industrial trade barriers by 2015, with an earlier target for industrial countries.

Smaller developing countries may argue a delay in the full implementation of the proposals, just as they have already asked for the provisions of the trade agreement regarding intellectual property to be postponed.

Inconsistent policy?

Experts say the proposals are the boldest ever put out in the fifty year history of the post-war trading system.

They come at a time when the world trading system is under unprecedented strain - and when world trade is failing to grow for the first time in a generation.

The new boss of the World Trade Organisation has recently warned that the global trade talks may be running out of steam.

And there have been fears that the global talks would be supplanted by a series of regional and bilateral free trade deals.

The US has been pursuing regional and bilateral trade agreements in the past months, while China and Japan have both been making bilateral deals with other Asian countries.

The US has also been pushing its plans for a Free Trade Areas of the Americas, which would encompass all the countries from Alaska to Chile.

[lavaroise]

This is an Oslo type peace treaty with terrorists. We are being set up by Bush son like Bush father set Israel up or what?

---

http://www.thejewishpress.com/news_article.asp?article=1708

Zionism Without Judaism (Part II)


But into this picture of near-pastoral tranquility came the Oslo ``peace process`` to snatch defeat out of the jaws of victory. It was based on the proposition that economic interests and consumerism had replaced military power as the determinants of international relations in the post-modern world. It sought to reduce tensions with the Palestinian Arabs who had just been defeated in their intifada by importing the PLO`s leadership into the ``occupied territories`` and then allowing it to arm itself and build up an army in the suburbs of Tel Aviv and Jerusalem.

[nypokerface]

I have plenty of faith in the American farmer. But agricultural goods are produced in every country and it will come to America. They will dump every fruit and vegetable they can produce right into our so called borders. This will drive the prices way down and drive our farmers out of work. Of course other parts of our economy will benefit but is it worth the price.

[azhenfud]

"Paul O'Neill, the US Treasury Secretary told business leaders in the UK, ahead of the official announcement."

When O'Neill speaks, the markets fall prostrate....

[Thane_Banquo]

The U.S. has a comparative advantage in the manufacture of jumbo jets, arms technology, and other high-tech production.

How about the general welfare of the nation?

It is an economic fact that free trade benefits the general welfare. This is not a normative question. With free trade, the gain in value for consumers will always be greater than the loss in value to producers. It is a mathematical certainty. Any undergraduate-level Microeconomics book will show you the graphs.

Do you seriously believe that Europe will accept the notion that we build better aircraft, so they should just deep six Airbus? Free trade is not about us, we have free trade. Free trade is about everyone else. They are not going to give up their sovereignty, so why should we?

I fail to see how we give up sovereignty by lowering our tariffs. Please explain how this happens.

As for other nations, even if they don't accept free trade, we will still benefit when we lower our own tariffs.

And a final point, please show us where products are actually getting cheaper. What happened to all those cheap Japanese cars?

Most of those cheap Japanese cars are produced in the U.S. now. But at any rate, the point isn't that prices get cheaper over time with free trade (no one would want deflation anyway). The point is that they are cheaper at any given moment with free trade than they would be without it. That is extra money in the consumer's pocket to buy even more goods. And the extra domestic resources no longer devoted to car production will be allocated by the market to a usage that grants greater wealth to society.

[A. Pole]

Most of those cheap Japanese cars are produced in the U.S. now.

This fact is not a result of free trade but of government intervention a number year ago, when American government forced Japanese to relocate this production to America.

[BJClinton]

Odd--We recently raised the tariff on steel.

Bush was playing politics for the 2002 election, it seems to have worked.

[Revel]

"I have been screamed at many times on this board because it's a CONSERVATIVE forum! If you don't like FREE TRADE
the go to DU where you belong!!!"

It sounds more like you are the one who belongs there. If you had any idea of how free trade is stripping our nation of its wealth and the middle class(manufacturing) then you would know just how bad all of this is. In this age we don't don't make much in this country anymore. Most of it comes from China. Under this system those who live with the poorest wage get the manufacturing. That is not the USA. We are going to be in a pickle if we have another global War or if some country like China decides that they are big enough to dictate to us. We won't have the ability to make a refrigerator by our selves anymore. I also read into some comments the other day about how easy it would be to smuggle bombs and such into this country because of the massive inflow of goods from other country's. All the way around we have stripped the country of its heart under free trade. We have sold out the inventory sort of say. We are now like baby's dependent on the work of others. Why would this be done? Well only one thing does make sense. And the rest of news supports it. We are rushing into a one world everything. Just the environment needed for the rule of the antichrist.

[Revel]

For the sake of
argument, let's not immediately assume that it would be a liberal-socialist government, but something more democratic.

I would bet it would be more of a dictatorship. Our founders went to great pains to protect that. But they could not protect us from our own ignorance. I don't know if you have religious convictions or not. But if one wants to know is the very idea of a world government a good thing....Then just remember what God thought about the tower of babble.

[Slewfoot]

For the sake of argument, let's not immediately assume that it would be a liberal-socialist government, but something more democratic.

We could put it to a vote, wonder how many Republican are in China, and the middle east.

[Principled]

bttt

[sam_paine]

In this age we don't don't make much in this country anymore. Most of it comes from China.

That's just wrong, and it really does nicely introduce your bizarre leap from Chinese trade to the antichrist!!! Wowsers. I'll have whatever you're having. LOL!!!

Look, China was making rice and drink umbrellas 50 years ago when we were developing nukes...it should be no surprise that they are making huge percentage gains on those fuly industrialized countries which they have been following. (See the last para. quote) Sure they will continue to pull themselves up, but they too will hit an asymptotic development wall and a communist central planning regime will never be able to match the continued innovation that keeps American Manufacturing at the forefront. And the antichrist may show up for other reasons such as Islam, but he ain't coming because of a trade deficit!!!!!

---

Here's an interesting Indian perspective on world trade "The Continuing Paradox of World Manufacturing Employment"

-SNIP-

Of course, within this, the shift in location of manufacturing production from developed to developing countries can be exaggerated. As Chart 2b indicates, even in 2000, certain developed countries dominated world trade in manufactured goods. Indeed, the United States, the European Union and Japan together still accounted for more than 60 per cent of manufactured exports in 2000. But what is evident is that the share of the major developed country exporters had come down even over the decade of the 1990s, continuing a process that had begun earlier and was clearly evident in the 1980s.

Thus, as is clear from a comparison of Charts 2a and 2b, the share of Germany in world manufacturing exports fell quite sharply from 16 per cent to 10 per cent over the decade, and most other major developed country exporters experienced declines in their shares of at least one percentage point or more. Only the United States increased its share, from 12 to 14 per cent, contrary to the widely held perception that it dominated world manufactured goods trade only by virtue of its huge capacity for manufactured imports. In contrast to this, countries like the People's Republic of China and Mexico managed to nearly triple their shares (albeit from relatively low bases) over this period.

Chart 2a >>

Chart 2b >>

These trends are confirmed by the rates of growth of manufacturing exports of the major exporters, as shown in Chart 3. Among the major developed industrial countries, the US experienced by far the fastest rate of manufactured export expansion. However, a number of developing countries showed dramatically high rates of export growth of nearly 20 per cent annual average over the decade. It should be noted that this cover the period from 1990 to 2000, and so includes periods like the East Asian crisis and the subsequent world economic recession, during which such export growth could be expected to have slowed down somewhat.

Chart 3 >>

With such rapid rates of manufacturing export growth, fears of de-industrialisation would appear to be misplaced. In any case, such high rates would suggest that employment in manufacturing would also have grown at reasonably high, or at least positive, rates, over this period. However, the UNIDO data on aggregate employment in manufacturing over the period 1985-99, as described for some countries in Chart 4, suggest a very different tendency. In fact, it turns out that in most of the countries, aggregate manufacturing employment has actually fallen, in some cases quite substantially. Chart 4 >>

Among major developed countries, only the United States shows a positive rate of employment growth for aggregate manufacturing, and that too only the very low rate of 0.1 per cent per annum, which is akin to stagnation. Other developed countries show declines in manufacturing employment. But the real shock comes with the developing countries which are major manufactured exporters. Some countries like Mexico, with manufactured exports growing at nearly 20 per cent per annum, have nevertheless experienced actual declines in aggregate manufacturing employment.

[beavus]

Great idea. One less option for politicians to cheat their fellow citizens. Now protectionism and other forms of factionalism will be more and more concentrated in the income tax-subsidy axis.

It would be better for everyone if all government larceny were in the form of an income tax, and all favoritism in the form of direct cash subsidies, b/c then you always know how much they're cheating you and to whose benefit.

[Maximum Leader]

Good post.

The average US income is in the neighborhood of $30,000 a year. The average worlwide income is around $600 a year. We forgot that poor countries have just as much God given intelligence as we have and what had been our strong advantages--- an excellent education system and a high savings rate--- are a shadow of what they were even 30 years ago.
Free trade means that their is one global market for labor, and if your job can shipped overseas, it will be. Manufacturing is headed to Mexico or Asia, even service jobs are being shipped abroad (abig trend now is shipping call centers and software programming to India).

If you make your income by the return on your investments, then free trade is great. If you feed your children by the wages of your job, then free trade isn't such a great thing.

There is a great website by the Tokyo-based journalist Eamonn Fingleton that lays out the problem much more eloquently and learnedly than I can... http://www.unsustainable.org/

[Mulder]

If you don't like FREE TRADE the go to DU where you belong!!!

In a world without governments, free trade is a great idea. But we do not live in such a world. Since we have a government, there must be a mechanism to fund it. Something is terribly wrong when labor is taxed at 40%, capital at 20%, but goods crossing borders are taxed at 0%.

Why aren't our "leaders" pushing for abolishing the income tax first, then tariffs once we do that? Or abolishing taxes on investments first? And notice that the same line is coming from leaders of both parties. No one wants to address our massive internal taxes, beyond minor tinkering and lip service, but they are all for the TOTAL abolition of international tariffs. No one wants to repeal any of the insane, outdated, or contradictory laws that WE Americans live under, but the politicians can't repeal the laws governing our borders quickly enough. Why do you think this is?

The only reason I can think of is that they want a global government, where the elites rule over peasants, who are their slaves. Since such a proposal won't fly yet, they have to go incrementally. By tearing down economic boundaries, political boundaries become easier to remove. If you need evidence, just look at what has happened in Europe. First the European Common Market, now the European Union. Same thing with NAFTA, although we are a few years behind the EU.

BTW, none of these "agreements" are really Free trade. They are complex agreements designed to erode US sovereignty, redistribute American wealth, and destroy American industry.

[Mulder]

We could put it to a vote, wonder how many Republican are in China

Don't worry, we have Prescott Bush as head of the US Chamber of Commerce in China looking out for our interests.

China is our friend, according to our "leaders".

[sixmil]

The U.S. has a comparative advantage in the manufacture of jumbo jets, arms technology, and other high-tech production.

Then why is Boeing shipping manufacturing to China? And why is JDSUniphase shipping fabs to China?

It is an economic fact that free trade benefits the general welfare. This is not a normative question. With free trade, the gain in value for consumers will always be greater than the loss in value to producers. It is a mathematical certainty. Any undergraduate-level Microeconomics book will show you the graphs.

Even if those consumers now have lower paying service sector jobs? Those econ books were pretty convincing back when regurgitation assured an A grade, but now that reality has set in it seems to be mostly theory.

I fail to see how we give up sovereignty by lowering our tariffs. Please explain how this happens.

When we lower tarrifs even though we run a trade deficit, we are letting other countries determine our future. I hope you remember what oil cartels did to us in the 70's. Free trade is also done in large part through the WTO, which often crosses the line by determining what our economic policies should be. By the same token, we are trying to tell other economies what to do, which is really none of our business.

As for other nations, even if they don't accept free trade, we will still benefit when we lower our own tariffs.

Please explain how this happens.

Most of those cheap Japanese cars are produced in the U.S. now.

And guess why that is.

But at any rate, the point isn't that prices get cheaper over time with free trade (no one would want deflation anyway). The point is that they are cheaper at any given moment with free trade than they would be without it.

That sounds like a Jedi mind trick.

That is extra money in the consumer's pocket to buy even more goods. And the extra domestic resources no longer devoted to car production will be allocated by the market to a usage that grants greater wealth to society.

What?

[sixmil]

In a world without governments, free trade is a great idea. But we do not live in such a world. Since we have a government, there must be a mechanism to fund it. Something is terribly wrong when labor is taxed at 40%, capital at 20%, but goods crossing borders are taxed at 0%.

This is a very important point. Tarriffs are now an average of 4-5% so the only place to go now is zero. Somehow the drop from as high as 70% was not enough to bring the riches promised, so we are supposed to go along with more. If I didn't know better I'd swear some liberal were tring to nickle and dime me. I also find it hard to believe that such import is put on eliminating a small, indirect tax, while the income tax, property tax, capital gains, etc. get nothing but constant tiny decreases while democrats wait in the wings to reverse those pathetic 'cuts'. Seriously, tarriff-free traders, who are you trying to fool?

[sixmil]

Korean cars are cheaper and Japanese cars are better without being too expensive.

So as long as we keep finding a cheaper place to produce things as they replace American products that didn't need replacement then we are OK? What happens when there are no more places with cheap labor? Will we then be the source of cheap labor for the rest of the world? Are Europeans just too stupid to drive Japanese cars?

[Einigkeit_Recht_Freiheit]

We could put it to a vote, wonder how many Republican are in China, and the middle east.

Actually, I think the Arabs would be much more apt to vote Republican or its equivalent. They are really into social conservatism.

Regardless, it would be a tough thing to advocate a democratic world government when the other governments of the world are not democratic.

Since we are speculating grandly here,however, I am going to assume that such a move would take place at some time in the distant future when democracy is universal. I think conservative ideals, as we know them in the United States, would be attractive enough to hold sway on a global scale, so that is not what concerns me.

sixmil's point about the loss of local control is important. What type of powers would be necessary to retain locally and what would be appropriate to relinquish to a global entity? My intial impression is to say financial matters like currency, trade and tariffs and possibly even some regulations in terms of laws, the environment, etc. might benefit humanity if implemented on a global scale. Everything else (including taxes) would have to stay as local as possible. The toughest issues are things like immigration and wages. If income levels around the world are more similar, than the issue is irrelvant(We don't get many immigrants from Western Europe or Japan anymore). If the disparity remains great, what to do about working conditions, minimum wages and open borders is something that would absolutely have to remain local

Revel pointed out the Tower of Babel legend is relevant to this issue. He/She is right. Although I am not a literalist in terms of the Bible(not to mention that the story no scientific sense), this story is a warning that the combined energies of mankind will only lead to disaster and division. Would some "Grand Project" of humanity to engineer that planet or some ambitious space journey lead to the destruction of our civilization? Could be.

Good stuff. Thanks.

[steve50]

Funny how "democracy" has become the word of choice for promoting Western style governments, our founders hated the idea of a democracy.