W.T.O. Rules Against U.S. on Steel Tariff

[Davros]

Originally posted by Timber Loftis: Just like we pay taxes to buy tanks, it is smart to keep enough farms operating that we can say "F-U" to other nations if we need to.

Yes - it would be fair to say that one of your coalition partners is quite worried at the moment on this front. Australia has had long standing and mature grain markets with the Iraqii's. No government subsidies here to prop up business. The Iraqii market has been a prime source of income to our grain growers, and indeed many families are still owed upwards of 30 grand each for shipments that were sent back in 1991 and paid for back in 1991 (money was paid into a US account), with the money being seized and frozen by the UN/US in the Gulf War days. This money is still rotting in bank accounts in the US, and many farmers who are feeling the pinch are frustrated that not enough is being done in terms of them recieving due payment.

To many grain farmers in OZ the perfectly normal paranoia is that :
1) Those seized funds for trade payment of goods recieved (figure was upwards of $100m OZ) will never be seen, and now be diverted to the "let's rebuild Iraq" fund.
2) That same fund the money went into could be used by the US to let grain contracts after the war to subsidised US grain farmers and kill their best trade market.

Many Australian farmers see themselves going to the wall if those things happen - would be ironic if the grain payments rightly owed our farmers were used to pay the grain contracts of our competitors.

I may be a Chemical Engineer, but I come from an unsubsidised farming backgound, so I know how free trade nations are getting squeezed from both the US and EU sides.

[Timber Loftis]

Sadly, Davros, President Bush recently freed up all that frozen Iraqi money - to do exactly what you've contemplated.

[Azred]

Originally posted by Timber Loftis: Azred, my point is that you describe how treaties have worked since ancient Greece. That's just not good enough for trying to build true international systems for addressing specific, complicated international concerns such as humanitarianism, human rights, trade, communications, labor, and the environment.

I quite agree. The problem is not with the nature of agreements, though, rather that many nations will not want to willingly submit to the potential judgements of other nations. There are too many people governing too many nations who have a long memory and old wrongs are sometimes rather difficult to forget....
I fear that it will be a really long time before enough nations decide that righting wrongs is more important than maintaining complete autonomy at all times. Perhaps this is because paranoia is much more widespread among circles of national leaders than the general population. [img]graemlins/beigesmilewinkgrin.gif[/img]

[Thorfinn]

I guess it depends on whether or not you believe you have the right to force all others to submit to your vision of "improved society". After all, the idea behind one world government is that everyone, with no exceptions, must go along with the dictates of the leaders.

Today, you have at least a few options. If you don't like the government under which you live, you can usually attempt to emigrate to a country more agreeable to your worldview. If we implement one world government before coming up with private spacecraft able to leave earth, the only way to opt out of being bossed about by others is cyanide.

Davros, US ag subsidies will not harm your markets one bit -- in fact they help you. You see, the US subsidies are paying farmers not to grow food. This decreases food on the market, which jacks up the prices. Despite all the negative press we get worldwide about farm supports, in truth, the US program, and to a limited extent, CAP, both actually force taxpayers in EU and US to subsidize your farmers.

This is all basic economics, but unfortunately, economics is not taught to any extent, and as a result, most people are poorly equipped to see through the propaganda.

[Thorfinn]

(Sorry for two in a row, but my reply to Timber seemed just too different to lump into the same post. That, and I forgot. )

Thorfinn: Seriously, if the Japanese people want to pay for a part of the structural steel that goes into my new home, why should my government tell them they cannot? Timber Loftis: Simple. Startup costs are much greater than maintaining an existing industry.

Exactly!

But in order to dump steel, you have to increase your production. If the Japanese did not build new mills, they cannot depress the world price -- they can just give some people better deals than other people. After all, what difference does it make to 3M's economic justification if its new building costs $100 million, while Exxon can build an identical structure for $80 million?

But in order to affect world supply and drive out the competition, the Japanese will have to build new mills, and supply more steel than the world needs. Otherwise, people will still be buying un-dumped steel. And as you already pointed out, building those plants will be much more expensive than maintaining the existing industry, and even if they do increase production enough to drive out all existing competition, they cannot raise the price much without making it cost-efffective to bring those mills back on-line.

From an economic point of view, the important figure is not the average price of a good, or the low price of a good, but the marginal price -- the price that the very last good sells for. It is that price that determines whether any given project goes forward, and that price that determines whether any given supplier is able to stay in business.

Seriously, if Japanese dumping were that bad, there would be plenty of venture capital to keep the US plants running at as low a level as possible to avoid mothballing costs, then once the Japanese mills go into bankruptcy from selling below cost, those same venture capitalists could buy up the Japanese mills.

[Timber Loftis]

Thorfinn, I see your points on Japanese dumping. I think, however, I have a further factor which may poke a hole in your theory: over-supply. IIRC, where structural steel is concerned, there is the capability among existing plants, in both Japan and the US, to make more steel than is demanded. Inland Steel, for instance, once employed 80,000 people on-site, but now operates at what would have once been considered a skeleton crew. So, there is no need for new mills.

[Thorfinn]

I'll reply tomorrow. That shaking thing is just too annoying.

[EDIT]
Thought I'd pop back in and clarify. I have those Invisiline bifocals, so every time the screen shakes vertically, it puts the text at a different focal length, so my eyes have to refocus, and my eyes don't refocus as rapidly as they used to. About half the time, I am just able to read the screen about the time it bounces again.

So, see you tomorrow.
[/EDIT]

[ 04-01-2003, 10:50 AM: Message edited by: Thorfinn ]