Tag Archives: tariffs

Abbott’s foreign investment policy

This is the sen­tence that makes me feel most uncom­fort­able: Vot­ers are like­ly to be less hos­tile to for­eign invest­ment if they think that the gov­ern­ment is pre­serv­ing a well-bal­anced econ­o­my.Extract from We are pledged to real reform | The Aus­tralian Most of the Abbott state­ments about man­u­fac­tur­ing assis­tance, trans­ac­tion costs and “eco­nom­ic diver­si­ty” that […]

Ingredients of trade success

OK, so I read World Bank doc­u­ments for the pic­tures. It’s true…I’m not ashamed to admit it. The prose in these tomes is often gluti­nous but the graphs are great! The chart shows why there’s much less inter­est, now, in tar­iff bind­ings, the cur­ren­cy of WTO agree­ments. The last big reces­sion (2007–9), unlike those of […]

The falling value of tariff bindings

The strongest argu­ment for com­plet­ing the WTO’s bare­ly endur­ing Doha round of trade nego­ti­a­tions is that it will fur­ther nar­row the legal right of WTO mem­bers to adopt high­er pro­tec­tive trade bar­ri­ers in the future. But that argu­ment doesn’t seem to sway any­one much: cer­tain­ly not busi­ness­es who have large­ly lost inter­est in the WTO’s […]

PC to consider protection for retailers

Retail­er Ger­ry Har­vey had to eat crow ear­li­er this year when his angry cus­tomers (and scorn­ful com­peti­tors) trashed his cam­paign to elim­i­nate the GST con­ces­sion on imports pur­chased on-line. Now, if you read only the report in today’s Aus­tralian news­pa­per, it seems that the Pro­duc­tiv­i­ty Com­mis­sion may be giv­ing com­fort to Harvey’s attack on house­hold […]

Good idea or insidious threat?

When an econ­o­my has trade lever­age, the threat of dis­crim­i­na­to­ry duties need not be sim­ple pro­tec­tion­ism.

The US can help Chi­na make the nec­es­sary adjust­ments toward a reduc­tion in imbal­ances by adopt­ing a uni­form tar­iff of 10 per cent on all Chi­nese imports, based on their val­ues when they enter the US. Six months after the estab­lish­ment of this tar­iff, the rate would increase by one per­cent­age point a month until the Chi­nese trade sur­plus with the US declines to $5bn a month.” Extract from FT.com / Com­ment / Opin­ion — Tar­iffs can per­suade Bei­jing to free the ren­min­bi

But who, oth­er than Chi­na, would loose if this idea worked and the Ren­min­bi was reval­ued? Most of the rest of the world. Espe­cial­ly economies with a com­par­a­tive advan­tage in agri­cul­tur­al pro­duc­tion (Aus­tralia, New Zealand, Latin Amer­i­ca) for whom import­ed Chi­nese defla­tion of man­u­fac­tures prices off­sets the EU’s depres­sion of agri­cul­tur­al prices (and infla­tion of man­u­fac­tures prices).

In prin­ci­ple, too, every­one would loose from anoth­er U.S. defec­tion from the core mul­ti­lat­er­al trade rules. But per­haps you could make the case that this kind of extra­or­di­nary action (like the 1980’s Nixon Admin­is­tra­tion ‘shocku’ blow against Japan) doesn’t real­ly impact the rules.

What explains tariff levels?

It’s not eco­nom­ic pol­i­cy (or even neces­si­ty) as much as the polit­i­cal econ­o­my that dri­ves trade poli­cies.

“The rela­tion­ship between the over­all tar­iff pol­i­cy (con­sid­er­ing all prod­uct groups togeth­er) and the socio-eco­nom­ic vari­ables is even more dif­fuse, and no strong rela­tion­ship emerges between tar­iff pol­i­cy clus­ters and the socio-eco­nom­ic con­text. Con­se­quent­ly, we can con­clude that trade pol­i­cy is not over-deter­mined by eco­nom­ic con­sid­er­a­tions: the deci­sion-mak­ing process defin­ing a pre­cise trade pol­i­cy is the result of more com­plex inter­ac­tions.” Extract from Map­ping the Tar­iff Waters by Diakan­toni and Escaith (WTO Eco­nom­ic Research Divi­sion)
A plau­si­ble, even unex­cit­ing, con­clu­sion. But an inter­est­ing map­ping of glob­al tar­iff data.

China worries about U.S. carbon tariffs

In a speech in the U.S. yes­ter­day, Tung Chee-hwa, vice-chair­man of the Chi­nese People’s Polit­i­cal Con­sul­ta­tive Con­fer­ence (CPPCC) hit out at plans for car­bon tar­iffs in the Democ­rats’ bill for emis­sion con­trols

A top advis­er to the Chi­nese gov­ern­ment on Tues­day warned that a pro­posed US bor­der tax on car­bon sen­si­tive mate­ri­als ‘smells of pro­tec­tion­ism’ and could spark retal­i­a­tion from devel­op­ing coun­tries.” Extract from a report in the Finan­cial Times

Tung, the for­mer Chief Exec­u­tive of Hong Kong, was talk­ing about the Wax­man-Markey bill that pro­vides for ‘bor­der adjust­ments’ should cap-and-trade costs for ener­gy-inten­sive indus­tries not be ful­ly off­set by U.S. gov­ern­ment sub­si­dies. Chi­na has been cam­paign­ing against this draft leg­is­la­tion since it’s intro­duc­tion.

They are obvi­ous­ly trou­bled by the appar­ent deci­sion of the Oba­ma Admin­is­tra­tion not to oppose the use of car­bon tar­iffs.