With regard to international trade, it’s currently rather a bad time for supporters of free trade. According to a recent World Trade Organization (WTO) report, between mid-October 2015 and mid-May 2016, G20 nations applied 145 new trade-restrictive measures, or an average of almost 21 new measures a month, up from 17 in the preceding period. This is the highest monthly average of new trade restrictive measures registered since the WTO began its monitoring exercise in 2009. In addition, G20 states initiated 96 anti-dumping investigations in the most recent period for which data is available (June-December 2015), while 80 were initiated during the previous six months.
Nevertheless, there have still been some glimmers of hope for free traders recently. One of them was confirmation by the South African Department of Trade and Industry that tariff-free access to the United States market … Read More »
The Miscellaneous Tariff Bill (MTB), passed by the United States Senate on May 10, is unlikely to be grabbing any headlines in an increasingly uncertain and volatile world. But it deserves a mention, if only because it shows that Democrats and Republicans can come together on tax-related issues. It’s also refreshing to see a piece of legislation that will, hopefully, reduce trade taxes for US businesses, amid all the hubbub created by rumblings around raising barriers to trade with certain countries from some quarters of the presidential campaign.
This is a highly-charged political debate of course, involving as it does patriotism and economics, but mixing nationalism with economic policy is rarely a recipe for success, and can often come back to bite the Governments that carry them out (not to mention the people who suffer economically as result).
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In the parlance of global trade, “dumping” occurs when products are exported to one or more countries at below the price they are sold in their home market, or at below cost price. It is generally perceived that such pricing practices are deliberate and predatory: producers of widgets in country A slash prices to the point where producers of widgets in country B simply can’t compete, enabling the former to grab a larger share of country B’s market for widgets. To protect domestic industry, the remedy that country B’s government will most likely use, after much lobbying from said injured industry, is anti-dumping duties. These force up the price of widgets imported from country A, thereby leveling the competitive playing field. Simple but ingenious, no? Well, no. Where do we consumers of widgets stand in all this? Nowhere, is the … Read More »
I never thought I’d see the day, at least in the remainder of President Barack Obama’s second term, when Democrats and Republicans would agree on a piece of legislation vital to the United States’ economic interests. But there was an uncharacteristic bout of bipartisanship in Washington last week as Congress passed the long-awaited renewal of trade promotion authority (TPA) legislation. Without TPA, also known as fast-track, contentious free trade agreements could be filibustered in Congress, so there would probably be no Trans-Pacific Partnership. Actually, it is stretching the truth somewhat to suggest that TPA was approved in a spirit of total political harmony. For many months, senior Democrats in the Senate put up a good fight against a bill they argued would allow unbalanced free trade deals to be rammed through Congress without adequate scrutiny. Indeed, the real acrimony here … Read More »
It’s not easy to find positives where Greece is concerned, but this benighted country, which could be teetering on the brink of economic oblivion once again, came out surprisingly well in a recent report on the taxation of ICT goods and services – computers, cell phones, tablets, internet access and an array of other digitally-delivered services – around the world. While other industries continue to contribute more taxes to help pull Greece out of its fiscal Slough of Despond, the ICT sector is getting away rather lightly according to the report by the Information Technology and Innovation Foundation, which found that Greece is the only OECD country to feature in the top-20 of its league table, with an overall tax and tariff burden of less than 10 percent. Tragically, but at the same time unsurprisingly, the countries with the highest … Read More »
Maybe it’s time for negotiating teams attempting to expand the Trans-Pacific Partnership free trade agreement to say “sayonara” to the Japanese delegation, with Tokyo seemingly refusing to budge from its entrenched position on protections for its agricultural and automotive sectors. Of all the world’s major economies, Japan remains something of an enigma. It achieved phenomenal growth in the decades succeeding World War Two, but it remains distrustful of foreign participation in its economy, and barriers to entry to Japan’s market for foreign investors are still high, despite free trade being the global norm rather than the exception these days. Indeed, foreign direct investment inflows as a percentage of the Japanese economy stand at a meager 4 percent, while the percentages for other advanced economies are in double-digits. Even North Korea manages an FDI-to-GDP ratio of 12.5 percent. As we know … Read More »
It used to be known as the bread basket of the Soviet Union. Now Ukraine is more like the economic basket case of Europe. What’s happening in the east of Ukraine right now is truly tragic. But leaving aside that ethnic conflict, the other tragedy is that things ought to have turned out so much better. When Ukraine gained independence from the Soviet Union, it was generating one-quarter of the USSR’s agricultural output while its diversified industrial sector was one of the bloc’s main workshops. But instead of building on this base, successive governments seem to have squandered Ukraine’s economic potential to the point where it has probably gone backwards rather than forwards. A huge problem is that corruption is rife and pervades the public and private sector at all levels. Surviving as a business very much depends on who … Read More »
In a week when international attention was focused, apart from the unavoidable World Cup, on the 25th anniversary of the Tiananmen Square massacre, commemorated this year as every year with a candlelight vigil in Hong Kong, it was praiseworthy of China to issue a “White Paper” lauding Hong Kong’s economic and financial achievements over the 17 years since it returned to Chinese rule. Of course, having Hong Kong on its doorstep is a massive advantage for China, which can use it as a free-market laboratory, as its own private “offshore” center, and as a source of investment funds via Hong Kong stock exchange listings. A slightly more cavalier commentator might wonder about the extent to which Chinese officials and quasi-state business operators might use Hong Kong as a laundry-basket for their wealth: without Hong Kong, they would find it far … Read More »
I don’t apologize for returning to the long-running craziness of anti-dumping duties, which can have no result but to hurt consumers. This week, it is serial offender the US Department of Commerce that is in the spotlight over specialty steels. There are a lot of numbers and a lot of countries involved, but we’ll just focus on one pair: the DoC is proposing an anti-dumping duty of 407 percent (no, there are no decimal points missing, it’s four hundred plus percent) on non-oriented electrical steel (NOES), whatever that might be, from China. And in case you think this is just an anti-Chinese rant, there is a 200 percent duty on Swedish companies, for good measure. To be clear, that means that if a Chinese company sells NOES to a Chicago manufacturer for USD2,000 a tonne, it will actually cost the … Read More »
There is a welcome announcement that an international pro-FTZ organization will set itself up in low-tax Dubai. As any regular reader of this column will know, Free Trade Zones (or their equivalents) are a Good Thing, while governments that exclude or limit them are a Bad Thing. It’s not immediately clear whether the new organization has support from the great and good of the world economic order, or whether it has any kind of reasonable financial footing; but it is welcome nonetheless, and Dubai, which is already home to a large collection of free trade zones, gets a large bouquet for supporting it. At the risk of becoming boring (just move on) let me rehearse some of the reasons why most governments dislike and discourage free trade zones, if they don’t ban them outright like the dinosaur European Union. We … Read More »