From: ts2a+@andrew.cmu.edu (Thomas Omar Smith)
Newsgroups: sci.econ
Subject: Re: Trade War?
Date: 9 Nov 92 20:04:56 GMT
Article-I.D.: andrew.4ezp48a00Vp09h61BQ
	<BxB4ME.9BC@apollo.hp.com>
Organization: Carnegie Mellon, Pittsburgh, PA

Excerpts from netnews.sci.econ: 6-Nov-92 Trade War? Peter
Nelson@apollo.hp.c (1845)



>   Why haven't I seen any comments on sci.econ about the 
>   trade sanctions the US is imposing on the EC?  I mean
>   it's "economics", and it's got the usual elements of 
>   bluster, brinksmans  hip, etc, that would seem to appeal
>   to a Usenet crowd.     Too esoteric for you guys?

>   
>   I think US policy is stupid and indefensible on 3 counts:
>                                  
>   
>   1.  The entire world economy is very shaky just now; the last
>       thing it needs is a trade war.   We should all be trying 
>       to INCREASE the volume of world trade.

However, we can't increase trade if our opponents are allowed to erect
barriers and we are not.  Otherwise, they lock our products out, sell to
us, and force us into a trade deficit.  In the farming industry, this is
exactly what happened, and the U.S. is now responding to that.
>  

>  2.  France, et al, are democracies.  Their voters have made it
>       clear that they WANT some of their tax money to be used for
>       agricultural subsidies.   What the US is, in effect, saying
>       to the EC officials is that they should ignore the wishes of
>       their own voters and instead follow OUR dictates.  This
>       sounds "imperialistic" to me.  I don't see how we can 
>       morally justify this while at the same time allegedly trying
>       to promote democracy around the world.

No, this is the U.S. defending its voters from being controlled by a
French vote.  Just because a majority of French people want to keep up a
trade barrier doesn't mean that the U.S. has to quietly tolerate their
wishes.  We have the right to respond to their barriers with barriers of
our own if necessary, to protect the interests of our voters.  The
French can decide whether they want barriers on both sides of the
Atlantic or not.  They cannot unilaterally decide that they will have
barriers and we won't.

>   3.  If French taxpayers are willing to subsidize MY purchase
>       of canola oil, in effect taking money out of their own 
>       pockets and putting into mine, why should we/I object? 
>       In doing so they are conducting a transfer of wealth to
>       the US economy.   They are also providing the motivation
>       necessary to encourage US oil-seed makers to become more
>       efficient, lower their prices, and so forth.   It sounds
>       like a net win.    

There is a difference between providing an incentive and pursuing a
combative policy.  The French are subsidizing their industry to the
point that U.S. producers, no matter how efficient, cannot compete. 
Therefore, the French take all the business from the U.S. to France,
causing a net outflow of goods to France.  We lose jobs, and they gain
jobs.  Then, they can raise the prices on Canola oil and we won't have
> the domestic industry to counter it.   

> 3b.  While the US may be protecting some jobs in their oilseed 
>         industry, they are threatening jobs in other industries.
>         Specialty food and wine importers, restaurants, etc in
>         the immediate term, and just about any industry you can
>         name if this spins out of control.  

True there are risks, but there are also risks in not taking a stand. 
If the U.S. doesn't prove that it can effectively respond to unfair
barriers oversees, then other countries will believe they can get away
with it too, and the situation will deteriorate.  The whole point of the
barriers is not to destroy the French economy, its to push them back to
the bargaining table on agricultural issues, where they've been
stonewalling.

> ---peter

					Tom the non hacker
					Kemp in 96!
					"If patriotism is the last refuge
					of scoundrels,  Then environmentalism
					is the current refuge of totalitarians."
					Bob Jackson