From: mccall@mksol.dseg.ti.com (fred j mccall 575-3539)
Newsgroups: tx.politics
Subject: Re: Protectionism and Japan
Date: 19 Nov 92 14:58:03 GMT
Distribution: usa,tx
Organization: Texas Instruments Inc

In <BxvoJ6.6Ko@NeoSoft.com> hari@NeoSoft.com (Doug Andersen) writes:

>In article <1992Nov15.225830.28623@mksol.dseg.ti.com>, mccall@mksol.dseg.ti.com (fred j mccall 575-3539) writes:
>> Well, assuming, of course, that those consumers in the U.S. have jobs
>> after the places they work are put out of business by foreign
>> competitors who are subsidized to export by their governments.
> 
>What about those U.S. consumers whose companies are unfortunate enough
>to be consumers themselves of protected products?  For example, companies
>that use steel and because of the artificially high price can't compete
>with their competitors.  Just because small steel users don't have as
>much political clout as steel makers doesn't mean they haven't lost jobs.

Isn't most of our steel imported these days?  Now, the Japanese and
Koreans have huge tariffs on foreign steel.  Do you have any evidence
for this sort of impact?  Oh, just by the way, the biggest user of
steel in this country is probably General Motors -- sure doesn't sound
like someone without economic or political clout, does it?

> 
>The problem is it's not just foreign companies who receive subsidies (more
>about that later).  The Commerce Dept can shut out companies who sell
>"below cost" based on their definition of what the foreign companies 
>costs are (and cost accounting can get pretty esoteric).  For example,
>they require (in their analysis) that foreign companies make an 8% 
>profit.  That's right, if you are a foreign company whose costs are
>exactly the same as a U.S. company, but you price so that you make 5%
>profit, that extra 3% is considered evidence of "selling below cost" and
>you're in trouble.

They 'can' -- how often is this done?  From the ones I've taken note
of (primarily DRAMs, first from Japan and now from Korea), it would
appear that a company has to be pretty blatant to draw any action.

> 
>They also go after companies who sell in U.S. markets cheaper than they
>do in their home market.  Great businesspeople, huh.  You price according
>to what the individual market will bear.  There are countries where you
>price higher and countries where you have to price lower.  That's a fact
>of business.  

Why sell into the 'low price' markets at all, then?  Why not just
produce enough for the high priced markets, since producing more costs
more and the profit margin you can make is so much smaller in those
other markets (or non-existent -- there are other reasons to want to
sell abroad than for monetary profit; little details of political
motivations (for countries where the government helps), hard currency,
etc. 

> 
>Finally, "subsidies" can be pretty broadly defined.  Imagine if you were
>applying that to a U.S. company.  What about technology transfers?  Those
>national labs turn out a lot of technology.  Should that be counted as a
>subsidy to companies that use that technology?  

Yes, it CAN be, but it isn't.  We don't penalize other companies in
other countries for using their 'publicly developed' technologies,
either.  

>How about tax breaks for
>settling in certain states (Arkansas, Mr. Haugh?).  

Of course those are subsidies -- but they are subsidies FROM THE
RECEIVING MARKET (for the jobs).  This isn't quite the same thing as
what we're discussion.  You seem to be reaching further and further to
try to justify your positions.

>What about companies
>that do business with the U.S. government and charge $400 for a hammer. 
>Is that a subsidy?

When the MAXIMUM profit they are allowed to make is 15%, and most are
closer to the 5% range?  No, it's not a subsidy -- I would suggest
that you examine what it costs to TEST that hammer (for instance).  If
you want someone to blame here, blame the FARS and MILSPEC rather than
the companies.

> 
>> Of course, if OTHER governments didn't provide an edge for their
>> companies, 'dumping' wouldn't be a problem, would it?  Oh, and let's
>> keep in mind the difference between 'hard' and 'soft' currencies, too
>> (which doesn't necessarily apply in this case, but certainly can help
>> explain part of why some other companies in foreign countries would
>> rather sell here at a 'loss', insofar as 'official exchange rates'
>> go.) 
> 
>Glad you brought that subject up.  The Commerce Dept regularly uses
>exchange rates to rule against foreign companies.   In plenty of countries
>there is a big difference between the "official rate" and the rate that
>companies actually use.  Guess which one the Commerce Dept uses? 

I don't have to guess -- they'd better be using the OFFICIAL rates.
That's what they are FOR, after all.  If the official rate and the
'real' rate aren't the same, then that's a problem for the government
of the country with the artificial 'official' rate.

> 
>Let me rephrase your signature line.  "A level playing field is for
>companies that don't have the balls to live in the real world".

Rephrase away -- it doesn't make your comments any truer.  So, what
you are really telling us is that U.S. companies should have to
operate on a whole different set of 'rules' than everyone they are
competing with, and if they can't compete with that disadvantage that
they should simply be allowed to go under.  Sorry, Doug, but that
position makes no sense at all.

-- 
"Insisting on perfect safety is for people who don't have the balls to live
 in the real world."   -- Mary Shafer, NASA Ames Dryden
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Fred.McCall@dseg.ti.com - I don't speak for others and they don't speak for me.