From: nelson_p@apollo.hp.com (Peter Nelson)
Subject: Re: Trade War?
Date: Wed, 18 Nov 1992 12:45:07 GMT
Organization: Hewlett-Packard Corporation, Chelmsford, MA

In article <1992Nov16.095601.9143@edinboro.edu> s462075d@edinboro.edu writes:
>In article <BxB4ME.9BC@apollo.hp.com>, nelson_p@apollo.hp.com (Peter Nelson) writes:
>>   
>>   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.
>> 
>   The problem is everyone wants to increase it by EXPORTING and not
>   buying anything in return.

  Evidence?   US imports from Japan have increased in 1992.   Trade
  is not a zero-sum game.   I can sell more to you; you can sell more
  to me.  



>>   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.
>> 
>   Can you say "special intrests", "farm lobby?"  These are just two
>   of the groups that restrict various AMERICAN imports/production
>   Examples include: sugar, tobacco, peanuts.  Is there no reason to
>   believe France has the same "farm lobby" type problem in their
>   country.  Do you live in the USA?  If so, you pay 10X the world
>   price for sugar.  Do you, as a voter, want it that way?

  But pressure groups are part of a democracy, so I don't see how
  this affects my claim.   Anyway, there was an interesting article
  in the New York Times last week about the role of the farmer
  in French culture.  The support for farmers is broad and wide
  there; they cited several polls and other evidence in the article.
  Also note that a far higher % of the population in France engages
  in farming than in the US.   As usual, we should not make the mistake
  of thinking the whole world is like the US.



>>   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.    
>
>Yeah, like the Japanese subsidised Americans who purchased Toyotas,
>Hondas, Nissans, etc.  Look at what happened to the auto industry.

  What are you talking about?   The Japanese government pays no
  "car subsidy" like France pays a subsidy to its farmers.  Japanese
  cars did well in the US market because they were *better* (see
  _Consumer Reports_ or JD Powers) and are more efficient -- Toyota
  requires half as many workers to build a car as Ford, America's
  most efficient producer (source: last week's _Fortune_).


>Local farms, no matter how big, will not withstand subsidation like
>that.  How can they compete with the resources of a whole nation?

  They can't.  But is this worth having a trade war over?  According to
  the current issue of _The Economist_ the US has already drawn up
  a list of *industrial* products that will be covered by new tariffs
  if the wine tariff doesn't do the trick.  This can escalate very
  fast!

  Also, as I pointed out before, subsidies are only one of a *whole
  constellation* of factors that determine competitiveness.  There
  is NO SUCH THING as a level playing field and never will be.

  


---peter





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