The Flow of Trade Disputes Are as Solid as Steel - They Aren't Going Away Anytime Soon

Some things are worth protecting they say, and one could argue that the steel industry in the US is one of them, and the history to back up that argument is far and wide - trust me. Still, there is a difference between protecting something and protectionism. Okay so, let's talk about this because the politics here in the US when it comes to such things are also quite complex and serious.

It seems we are our own worst enemy 75% of the time, especially when it comes to steel. We've destroyed our mining industry and made it jump through almost impossible environmental hoops, many are way over the top and out of line when it comes to iron ore. But it also takes a special kind of coal to make steel, and that coal comes from many places where over regulation has made mining that coal completely unmanageable.

Now we are worried about foreign nations dumping steel on our markets, often steel which isn't even close to our real needs, mostly because our iron ore in the US is much more pure, but also our standards in manufacturing are higher as well. Nothing new, we went through this before with Japan also. Reuters had a piece recently justifying the tariffs we've put on Chinese steel pipes imported to the US; " U.S. Steel warns imports threatening pipe market," by Matt Daily posted on June 19, 2012. The article stated;

"Steel imports have jumped nearly 28% this year. U.S. Steel has been among the most vocal in the industry in pointing to potential trade violations, and DC has increased pressure on both China and India. It had determined that Indian companies were selling circular welded carbon-quality steel pipe in the US nearly 50% percent below fair market value. Cheap Chinese steel imports have also attracted punitive duties in the US. China made those US duties the subject of a trade complaint at the WTO."

We ought to also talk about the quality of that steel, and its long-term survival rate from corrosion and rust in this debate. Still, cheap pipe is a good thing. Maybe we need fewer regulations here at home so we can compete head to head - and insist that other nations also implement similar restrictions on coking coal soot and CO2 and if they won't maybe we need to add that cost in tariff and give that money to the oil and gas industry. That would solve the problem.

And a big problem it is too, in fact, as I was almost completed with this article another ominous piece appeared in the same business newspaper "Steelmakers Gird for a Downturn" by John W. Miller and Mathew Day on June 20, 2012 which cited a perfect storm - increased US regulations, increased employee costs (ObamaCare), slaughtering of the coking coal industry, vanishing of European steel demand, and a slow growth US economy with very little construction going on plus the Chinese and Indian dumping of below cost steel.

Maybe we need to invest in some innovation for our old industries to keep them clean, and at a low cost, not just new high-tech (perceived eco-friendly) sectors - next maybe, just maybe we need to consider the unintended consequences of attacking our major supply chains from raw materials forward with insane over regulation. And lastly, let's keep investing in pure research for carbon nano-tube construction to eventually replace steel - once it can compete efficiently on its own, and let the free-market entrepreneurs and their Wall Street Investors decide when that is, not some Washington DC crony that wants to score points with left-winger constituents.

Oh, and further more on this topic let's invest in clean coal fired electrical plants and capturing that CO2 for its carbon value to make the carbon nano-tubes. Let's allow these technologies to come together in a Singularity sort of way, with industrial capitalists seeing the value and re-designing that supply chain to compete rather than protectionism of older industries. We seem to be doing everything wrong, and we've completely taken our eye off the ball of free-market capitalism. Please consider all this and think on it.

Lance Winslow has launched a new provocative series of eBooks on Politics and Economics. Lance Winslow is a retired Founder of a Nationwide Franchise Chain, and now runs the Online Think Tank; http://www.worldthinktank.net/

View the original article here

The Flow of Trade Disputes Are as Solid as Steel - They Aren't Going Away Anytime Soon

Some things are worth protecting they say, and one could argue that the steel industry in the US is one of them, and the history to back up that argument is far and wide - trust me. Still, there is a difference between protecting something and protectionism. Okay so, let's talk about this because the politics here in the US when it comes to such things are also quite complex and serious.

It seems we are our own worst enemy 75% of the time, especially when it comes to steel. We've destroyed our mining industry and made it jump through almost impossible environmental hoops, many are way over the top and out of line when it comes to iron ore. But it also takes a special kind of coal to make steel, and that coal comes from many places where over regulation has made mining that coal completely unmanageable.

Now we are worried about foreign nations dumping steel on our markets, often steel which isn't even close to our real needs, mostly because our iron ore in the US is much more pure, but also our standards in manufacturing are higher as well. Nothing new, we went through this before with Japan also. Reuters had a piece recently justifying the tariffs we've put on Chinese steel pipes imported to the US; " U.S. Steel warns imports threatening pipe market," by Matt Daily posted on June 19, 2012. The article stated;

"Steel imports have jumped nearly 28% this year. U.S. Steel has been among the most vocal in the industry in pointing to potential trade violations, and DC has increased pressure on both China and India. It had determined that Indian companies were selling circular welded carbon-quality steel pipe in the US nearly 50% percent below fair market value. Cheap Chinese steel imports have also attracted punitive duties in the US. China made those US duties the subject of a trade complaint at the WTO."

We ought to also talk about the quality of that steel, and its long-term survival rate from corrosion and rust in this debate. Still, cheap pipe is a good thing. Maybe we need fewer regulations here at home so we can compete head to head - and insist that other nations also implement similar restrictions on coking coal soot and CO2 and if they won't maybe we need to add that cost in tariff and give that money to the oil and gas industry. That would solve the problem.

And a big problem it is too, in fact, as I was almost completed with this article another ominous piece appeared in the same business newspaper "Steelmakers Gird for a Downturn" by John W. Miller and Mathew Day on June 20, 2012 which cited a perfect storm - increased US regulations, increased employee costs (ObamaCare), slaughtering of the coking coal industry, vanishing of European steel demand, and a slow growth US economy with very little construction going on plus the Chinese and Indian dumping of below cost steel.

Maybe we need to invest in some innovation for our old industries to keep them clean, and at a low cost, not just new high-tech (perceived eco-friendly) sectors - next maybe, just maybe we need to consider the unintended consequences of attacking our major supply chains from raw materials forward with insane over regulation. And lastly, let's keep investing in pure research for carbon nano-tube construction to eventually replace steel - once it can compete efficiently on its own, and let the free-market entrepreneurs and their Wall Street Investors decide when that is, not some Washington DC crony that wants to score points with left-winger constituents.

Oh, and further more on this topic let's invest in clean coal fired electrical plants and capturing that CO2 for its carbon value to make the carbon nano-tubes. Let's allow these technologies to come together in a Singularity sort of way, with industrial capitalists seeing the value and re-designing that supply chain to compete rather than protectionism of older industries. We seem to be doing everything wrong, and we've completely taken our eye off the ball of free-market capitalism. Please consider all this and think on it.

Lance Winslow has launched a new provocative series of eBooks on Politics and Economics. Lance Winslow is a retired Founder of a Nationwide Franchise Chain, and now runs the Online Think Tank; http://www.worldthinktank.net/

View the original article here

Conflict or Cooperation? The Role of the WTO in the Natural Resources Trade

At a value of $3.7 trillion, or 25% world merchandise trade, natural resources is accounting for a greater percentage of world trade and, as a result, politicians have elevated its position on trade policy agendas. Given the economic, political and environmental implications of natural resources, this article addresses the issue of maximising mutual gains from resources trade from a WTO perspective.

The WTO defines natural resources as "stocks of materials that exist in the natural environment that are both scarce and economically useful in production or consumption, either in their raw state or after a minimal amount of processing". The extraction and use of natural resources should balance the competing needs of current and future generations. The manner in which they are managed has important environmental and sustainability implications.

Economists have viewed natural resources as a blessing for economic development. On the other hand, sceptics have coined the term "the natural resources curse", arguing that dependency on natural resource exports can trap countries, especially those with corrupt institutions, in a state of perpetual under-development.

There is growing tension between rising demand for natural resources, e.g. forestry, fuels, fish, mining products, and their increasing scarcity. In a troubled economic backdrop that is still much affected by the recent global recession, fears of inadequate supplies in resource-scarce countries and consequent exploitation of resource-rich countries are likely to lead to growing trade conflict. Market forces are a key contributing factor to price volatility in natural resources, particularly when influenced by speculative activities.

The WTO encourages governments to implement resource conserving policies that reduce the negative environmental externalities linked to the consumption of resources, stimulate diversity in exports trade, and stabilise prices in response to demand or supply shocks. In reality however, there are copious problems associated with trade policy measures that face distortion at its source. This includes the emergence of beggar-thy neighbour effects from trade restrictions and poor domestic regulation of a multi-lateral trading system.

WIDS speaker Dr. Hancock elucidates on WTO recommendations for export policy, conservation policy, and domestic policy:

1) Export policy - Commitments on export taxes could be exchanged either among exporters or for concessions on import tariffs in downstream sectors to reduce tariff escalation.

2) Conservation policy - Rules on subsidies that encourage exploitation of a resource must be reinforced. Subsidies that encourage the conservation of resources should encompass greater flexibility.

3) Domestic policy - A production quota is equivalent to an export quota when the resource-rich country has little domestic consumption. Similarly, a consumption tax imposed by an importer with no domestic production of the resource is not different from a tariff. In these cases, regulating only one of the equivalent measures may be insufficient to achieve undistorted trade.

In terms of policy objectives, governments apply export restrictions including fiscal revenue, development and social policies. Specifically, several governments have applied export restrictions on metals and minerals for objectives such as environmental protection and the conservation of natural resources. Governments justify their interventions on the basis that they must guarantee resources for future generations.

Not all countries, however, rely on such measures to achieve these objectives and there are alternative policy options with different trade impacts. This leads to two questions: how do the effectiveness and the cost of export restrictions compare to the alternatives? How can coordinated responses that minimize economic distortions be encouraged?

Where the consumption or extraction of a natural resource adversely affects the environment, the WTO advises governments to make producers and consumers take account of the social costs of their activities. A stumbling block revealed by studies regarding the political economy of trade policy concludes that the socially optimal rate of resource extraction can often be excessive due to the influence of interest groups, or other forms of lobbying activities, that face strong incentives to exploit large natural resources rent.

Provisions of multilateral WTO agreements to improve the natural resources trade system have succeeded in recent decades, but the extent of their success is largely dependent on the commitment to, implementation of, and challenges to these trade policy treaties. Regional trade cooperation can assist in mitigating or resolving potential frictions but at an international level, WTO rules are often met with a significant level of resistance.

View the original article here