Trade Tensions Are Brewing........
Würde noch zum perfektem Sturm fehlen...... Wie bereits letzte Woche befürchtet verbessen die die "Rahmenbedingungen" für den immer noch in der Reha befindlichen Welthandel nicht wirklich. Die Spannungen zwischen einzelnen Ländern und der Ruf nach Protektionismus wird doch deutlich vernehmbarer. Bleibt nur zu hoffen das diese nicht wirklich eskalieren....... Update: China to request WTO consultations with US over tyre dispute - Commerce Ministry China says: - US tyre decision violates WTO rules. - Wants dialogue with US on tyre tariffs.Source: RTRS )
A Tale of Two Depressions VOX
The downward spiral in global trade volumes has abated, and the most recent month for which we have data (June) shows a modest uptick. Nonetheless, the collapse of global trade, even now, remains dramatic by the standards of the Great Depression.
China Probes ‘Unfair Trade’ in U.S. Chicken and Auto Products
Sept. 14 (Bloomberg) -- China announced dumping and subsidy probes of chicken and auto products from the U.S., two days after President Barack Obama imposed tariffs on tires from the Asian nation.
Chinese industries complain that they’re being hurt by “unfair trade practices,” the nation’s Ministry of Commerce said on its Web site yesterday. The dumping investigation relates to poultry alone, a spokesman said in Beijing today. The ministry didn’t specify the value of imports of the products.
Rising protectionism may hamper world trade and undermine the global economy’s recovery from recession, the European Central Bank ( see end of the post for details )said last week.
The U.S. placed tariffs starting at 35 percent on $1.8 billion of tire imports from China, backing a United Steelworkers union complaint against the second-largest U.S. trading partner.
China Reacts Quickly and Badly to Tire Tariffs Naked Capitalism
It would be better if we were not proven correct on this one, but when the US imposed stiff tariffs on imported tires from China late on Friday, we noted, “This could get interesting in a bad way.” The Chinese responded quickly over the weekend to announce they were investigating US auto parts and chicken, which together account for roughly as much as the disputed tires ($1.2 billion versus $1.3 billion for tires).
But protectionism is driven by the desire to protect jobs. Unemployment has not peaked in the US, and some analysts suggest that China’s job losses are far worse than the 20 million often bandied about, more on the order of 30 to 50 million. So political pressure is set to intensify.
The New York Times treats the Chinese reaction as a surprise. But the tire tariffs relied upon a special provision in the WTO agreement for China’s entry that set a lower bar for trade violations than the normal anti-dumping sort. This is the first time that rule has been used as the basis for an action against China, and China may feel it important to fight that precedent.
Not a single job will return to the US as a result of these tariffs. Imports from China will drop but imports from elsewhere will rise.Thus, the unfortunate tragedy in this mess is that Obama's kowtowing to the unions is going to cost union jobs. The ultimate irony is misguided unions are cheering every step of the way.To date, Obama is repeating the same mistakes Roosevelt and Hoover made during the Great Depression
Now, Obama's tire and steel tariffs will strongly encourage more unions and labor groups to seek relief under "Section 421" of U.S. trade law. That misguided law does not require petitioners to prove unfair trade practices.
If Obama keeps this foolishness up, which right now seems highly likely, he risks a global trade war similar to the global trade crash kicked off by the Smoot-Hawley Tariff Act signed by President Hoover in the early stages of Great Depression.
Citing a jump in Chinese imports, the Obama administration said Friday it would impose stiff tariffs on Chinese-made tires for the next three years, invoking a section of trade law that China agreed to as a condition for its joining the World Trade Organization in 2001. The move essentially would cut off the source of nearly 17% of all tires sold in the U.S. last year and hit cost-conscious consumers particularly hard, as retailers will have to find alternative sources for the lower-end tires that make up much of what China sends to the U.S.
Beijing responded quickly. Sunday, its Ministry of Commerce said it was starting antidumping procedures against U.S. exporters into China of chicken and auto products. It said it had received complaints from local producers that the U.S. products were being dumped in China at below-market prices. The ministry denied that the move, which could lead to sanctions, was protectionist.
Both chicken and auto products have been part of a battle between China and the U.S. in which both sides have already instituted trade-restricting measures. China has already effectively blocked U.S. exports of poultry products in retaliation for a similar U.S. block of Chinese poultry. And earlier this year, China raised tariffs on imported auto parts.
Foreign businesses operating in China have also argued that China is itself engaging in protectionism. The European Union Chamber of Commerce in China recently released a catalog of business complaints chronicling a deteriorating atmosphere for foreign enterprises operating in China. The country's recent stimulus package, for example, in some cases favored domestic manufacturers, the EU Chamber said.
Chinese President Hu Jintao is set to meet Mr. Obama this month at an economic summit in Pittsburgh. Mr. Obama is to visit China in mid-November.
Chinese officials "are definitely going to do something to express their dissatisfaction, but it won't be serious," Mr. Yan said. "The two sides need each other."
A few months ago I wrote about an HKMA paper that suggested that the implicit interest-rate subsidy to SOEs ( State Owned Enterprises)– not relative to the “right” interest rate in China (whatever that may be but which is certainly many percentage points higher than the official lending rates) but relative to the borrowing cost of large Chinese private corporations – accounted for 100% of SOE profitability. If China had reasonable interest rates, in other words, (and in fact there were negative real rates for much of the recent past), SOEs would on average be value destroyers.
Most of the press focus is on US-China disputes, and the truth is that these matter a lot because this is the most important trade relationship, but trade-surplus countries are in disputes almost everywhere. This, in my opinion, is only likely to continue. I suspect that we will make a concerted effort to coordinate the adjustment process only after things have gotten much worse for everybody.
>Here is the comment from the ECB.....
>Hier der oben angesprochene Kommentar der EZB......
Protektionismus : EZB sieht "Spirale der Vergeltung" FTD
The ECB is pointing to a study that after the G-20 Summit in November 2008 17 of the 20 states have been implementing protectionist measures.... This is in stark contrast to what they have promised ( my translation )
Sie verweist auf eine Studie, nach der nach dem G-20-Gipfel im November 2008 17 der 20 Staaten protektionistische Maßnahmen angekündigt hatten - obwohl sich die Staats- und Regierungschefs dort klar gegen jeden Protektionismus ausgesprochen hatten