Moving the temporal argument aside, the second article claims that various European governments have stated they won't stop their investments into Airbus despite the ruling. Obviously if this were actually a concern than the WTO would long ago have been ruled obsolete as an international organization (like the UN has become), but we do have recourse that our good Canadian media friends fail to take into account. If a the Dispute body rules against a country(ies) and they continue to defy the ruling after all appeals have been conducted than the offended party is allowed to pursue reciprocal tariffs on the offending countries goods to equal the "damages" that have been set by the WTO ruling. This is how the WTO "collects" and brings its members in line (far more effective, in my opinion, than any other international body). A similar situation happened before the elections in 2004 when the US was found to have illegal tariffs on steel. When the ruling came out, Bush refused to lift the tariffs and the various EU members involved in the dispute put high tariffs on specific electoral goods (Ohio's Harley Davidson's and Florida Oranges) that swiftly resulted in the US lifting it's tariffs (see WTO DS248-9, 251-4, 274).
All of this background is merely to say, that some media outlets may resort to the "countries will ignore it, big whoop" (general argument in IR) but this doesn't apply to the WTO. The real question is how the the 3 month appeal process will work out. Since I doubt that Airbus can stand on its own without being propped up by the Europeans, especially when they are in such dire competition with the Boeing Dreamliner, the real question is how will Obama choose to respond. Since we are the world's largest consumer, there is considerable amount of room for US to threaten European goods (a situation made even more opportune due to the precarious economic situation) and bring Airbus to heal.
Propping up a company or industry with government subsidies is not in keeping in line with free market principles. In the end, propping up a less effective product does harm to everybody involved. It is a waste of resources that could have gone towards a product that does the job more efficiently. I am not all that familiar with the WTO; so I can't say if this organization is a good thing, but from this development the WTO seems to be performing its necessary function of regulating and enforcing international law trade agreements.
ReplyDeleteI seems like the second article is comparing the U.S. government's pumping of money into the banking and auto industries as with what the EU did with Airbus. Of course these American industries are not directly competing with an international businesses, maybe the auto sector.
I don't know if President Obama will stick it to the Europeans since he seems to ascribe to pleasing them and the world. He does need their support on several international issues and he might let this pass or ignore it to keep them happy unless people here demand something be done. He might use this as a bargaining chip to gain their support on something. I don't know how this plays into foreign affairs.
It is interesting that comrade Van Jones got booted because he was a 911 truther and said mean things about the Republicans, not for the fact that he was a self described communist and all of the other radical things he said about transforming this country. The fact that he was put there by Obama reveals a lot about who Obama is.
ReplyDeleteI am trying to do a lot of research to debunk this Afro Centrist racist crap my teacher is shoving down our throats. I am going to try to bring him up to the administration. It is supposed to be a world history class but he focuses solely on Egypt, and he presents everything from an African viewpoint. Greek culture came from Africa? White man is the great evil of the world?
Welcome to college Jeff. You are now in the vanguard, hold that shield high and plunge deep with your spear my friend.
ReplyDeleteYeah, the second article is close to retarded as far as the WTO is concerned. There have been a few touchy aspects about who is getting what subsidies amidst the stimulus plan (mostly concerning auto-industries). But due to the fact that the entire G-20 is pursuing some form of stimulus or another, it will be the economic paradigm of the moment. In addition, a violation of a trade law has to be brought up by the individual country not by the WTO, the WTO is merely an arbiter during the complaint process. Thus, since our governments already have this understanding, it's unlikely that we will lodge such a complaint and since there has been relatively little protest (trade wise) over these plans, I don't think there are that many people that are crying foul because one countries subsides driving another countries goods out of the market. The article should've proved that such an occurrence is happening not merely assert that it will happen. Since the stimulus plans have been in effect for a while now, there would be ample time for us to determine if such a development is beginning to occur.
Secondly, I disagree that Obama will instantly want to cater to the Europeans on this issue. His poll numbers have been steadily dropping with the economy being one of the key factors facilitating this drop. Since Boeing is such a big company (with an extremely large union, the electoral base Obama needs to remain strong to), and the damages may be in excess of 4 billion, he can't simply walk away from this and not be further blasted by both the right and the left. Keep in mind, that the major politicians that have been paying attention to this have been democrats. It would be a political wet dream if he caters to European interests at the expense of our own on this issue.
As far as the WTO "as an organization is concerned," for any capitalist, it is the premier organization breaking down the barriers to free trade around the world. We might get pissy over it because it has, does, and will continue to rule against us, it also has, does and will rule against other countries when they choose to throw up barriers to free trade. If you're ever suspicious, if there are long haired losers who gather against organization "x," than it's highly likely that "x" makes sense (see Seattle protests 1999).
Good article. I was unaware of this. I agree. I agree with Melkor, Obama can't afford to back down to the Europeans on this.
ReplyDeleteI was merely stating a possibility. I don't know much about this foreign affairs businesses.
ReplyDeleteBreaking down barriers to free trade is a good thing in my view point.
"But due to the fact that the entire G-20 is pursuing some form of stimulus or another, it will be the economic paradigm of the moment."
I don't know how much good the stimulus did here in America except to rack up some debt and create some problems associated with this that will be felt latter down the road. It it turns out to be a bad thing, then the negative effects could be felt around the world, assuming that conditions in other countries are similar to what it is in America. It seems like this government stimulus is not a good thing from an economic point of view. The belief that these policies will lead to inflation lead the German female president, or whatever they call her, to have some reservations about it.
The only thing I can say is to let the free market work and for governments to get out of the way.
Hmmm...now there's a good debate.
ReplyDeleteThe verdict is still out on the stimulus but the economy has shown signs of some rebound. We'll have to wait and see. Not all blame for the stimulus can be put on Obama however, it was Bush that initially proposed the 750billion dollar stimulus....
The economy is still in bad shape. Job looses have continued, it is at 9.7%. Just about every economic forecast I read or hear, including the White House's, the economy will be in bad shape for the next couple of years.
ReplyDeleteBush did start the government bailout which some say was necessary to prevent a total economic collapse. I don't know about that. But you have to remember that this was caused by government policies. If and when most of the stimulus money gets spent, it will create major deficits and the problems associated with it.
I don't know how spending money you don't have is supposed to stimulate the economy. Cutting taxes would increase government revenue and put money in the pockets of individuals. Can't do that because it gives power to individuals. Having the government spend the money it doesn't have gives power to the government by making us and future generations, in effect, slaves to the state by having to repay all of this money back through higher taxes, including inflation.
Only a small portion of the stimulus money has been spent, around 10% I think, so the slight economic rebound, if any, can not really be credited to the stimulus bill. The economy would have corrected itself much faster without all of this government intervention.