September 01, 2003

Bush Plays the "Fair Trade" Card

Last week I said the Trade Wars are coming, and that after them, the shooting ones might start. Hyperbole? You tell me. Bush is already outflanking pro-labor Democrats. Look at this excerpt from his speech to the Union of International Operating Engineers, as reported by Reuters. "One way to make sure the manufacturing sector does well is to send the message overseas ... We expect there to be a fair playing field when it comes to trade. See, we in America believe we can compete with anybody just so long as the rules are fair, and we intend to keep the rules fair." Hmm. Keeping the rules fair. What might that mean? Would fair be, for example, forcing domestic steel consumers to pay the highest steel prices in the world? High Steel Prices: Good for Steel, Bad For Everyone Else Source, Consuming Industries Trade Action Coalition Steel Task Force The article goes on... "He did not single out any countries for increased scrutiny, but U.S. manufacturers are pressuring the Bush administration to protect American jobs against what many see as unfair Japanese and Chinese currency policies. "U.S. companies complain Japan keeps its yen currency artificially low by intervening in currency markets to prevent its appreciation, while China's fixed currency peg has the same effect of giving its products an unfair trade advantage. "Major U.S. business and labor groups said on Friday they might ask the White House for an investigation of alleged currency manipulation by China, a move that could trigger trade sanctions if a negotiated settlement cannot be reached. "The trade complaint by the National Association of Manufacturers and some 80 other groups would be the first of its kind based on currency intervention, experts said. "The so-called Section 301 complaint, if filed, could markedly escalate the bilateral dispute, which U.S. Treasury Secretary John Snow plans to raise with Chinese officials in meetings in Beijing this week." Shame on those Chinese for manipulating the value of their currency. The nerve. They must pay. But how can we make them pay without, you know, causing them to invest their dollars elsewhere? After all, we kind of need those dollars to, you know, finance our, mmmph, you know, out of control spending habits. One reader repsponded last week with a three-point theoretical plan. (1) Crank up the rhetoric. Blame China, Japan et al for the C/A issue. "China and Japan refuse to allow their currencies to appreciate, which is costing Americans jobs." This phase has already begun. (ED NOTE, MY READERS ARE PROPHETS) (2) Raise the tariff walls sky high. This will anger Asia a great deal. (SOUNDS RIGHT AND YES, IT WILL ANGER THEM) (3) IF Asian reaction is to dump US bonds, impose capital controls (temporary) such that foreign capital cannot leave the USA. Then negotiate an orderly solution multilaterally with trade partners. This could take a number of months or years. Ah orderly solution with trading partners....that's the question isn't it? The orderly solution could take years, assuming we could get anyone to go along. The DIS-orderly solution, after a late-fall and early-winter rally against the Swedish-spurned euro and yen: the greenback falls victim to the politics of the Presidential election. Who can promise the most punitive tarrifs? And who really IS more to blame, those over-producing Chinese or those over-saving Japanese? Or both? AND those UNDER CONSUMING Europeans!! By the way, has anyone ever complained that the Chinese currency rigging gives the U.S. consumer and unfair consumption advantage? Is it really fair that we can actually trade paper dollars for real things? Someone should do something about this. Immediately.


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