commodities
quinta-feira, novembro 13, 2003
wsp 13nov03
Repeal the Tariffs on Steel
By Jim Hoagland
Thursday, November 13, 2003; Page A31
Good politics, good economics and good sense: That is the case that should move President Bush to lift the patchwork tariffs on imported steel that he imposed 20 months ago. Steel is where the United States should declare victory and get out of a lose-lose conflict with the European Union and other major U.S. trading partners.
To the extent that the Bush administration has a foreign economic policy, it lies in trade. Bush's special trade representative, Robert B. Zoellick, has quietly and deftly constructed a series of bilateral and regional trade agreements while working for a new global accord on commerce in the World Trade Organization.
The steel tariffs are a blot on Bush's foreign policy and on his frequent protestations that he is an advocate of fair trade. Removing these marginal import restrictions would let him solidify the midcourse correction toward increased pragmatism in foreign policy (which I described in a recent column) while making campaign hay.
To many, the nine Democrats vying to run against Bush are much more protectionist in their promises and worldview than is the president. In 2004 Bush will not be able to out-tariff them on the campaign trail, especially if the Democratic nominee is the candidate White House aides most fear -- Dick Gephardt.
Instead, Bush should be aiming for the middle ground of carefully continuing the more expansionist trade agendas of the administrations of his father and Bill Clinton while daring his rival to disown them.
Bush had his eye on the battleground states of the Midwest and West Virginia in March 2002 when he imposed duties of as much as 30 percent on steel imports for a three-year period. The president said the restrictions would let the steel industry restructure. He can now argue that his policies helped the industry make enough progress to justify dropping the tariffs, which the White House has in any event shredded with myriad waivers.
That case has, as Henry Kissinger used to say at the State Department, the extra advantage of being (largely) true. Mergers and new union contracts have put the steel industry on a more competitive footing, the International Trade Commission reported in September. Companies have not done all they could or should have, but they did move.
The trick for Bush is to paint this step as an intended result of his policy, rather than a retreat in the face of the retaliatory sanctions that the World Trade Organization has authorized the European Union to take before the end of the year. On this front, Bush got a helping hand from a Frenchman just after the WTO decision was issued on Monday.
"Serious restructuring in the U.S. steel industry has taken place, real negotiations have taken place with unions," said Pascal Lamy, the EU's chief trade negotiator, in an interview with Dow Jones Newswires. "We are at a stage now where removing safeguards will accelerate the process."
This effort to appeal to Bush's better instincts rather than confronting him is characteristic of the sophistication that Lamy and Zoellick have used to keep global trade negotiations afloat despite the pressures and animosities generated by the Sept. 11 attacks, the war in Iraq, faltering economies and rising social protest over the unintended consequences of free trade.
Both negotiators have broad experience in government and politics. Zoellick, who was Jim Baker's right arm at the State Department and the White House, did not originally oppose the steel tariffs, I am told. He felt that the political time and space they would buy the president were worth the dislocation they would cause.
The president has a golden opportunity to validate this reasoning now. Lifting the sanctions might also give impetus to the efforts by Zoellick and Lamy to pick up the Doha round of negotiations at the point they broke down in Cancun, Mexico, two months ago. Zoellick's relentless pursuit of bilateral and regional negotiations with Central American nations, Morocco, Australia, Singapore and other countries is intended in part to prod the global talks along.
Worried members of Congress constantly remind Zoellick that his job is to concentrate on the dollars and cents of trade, not to pursue foreign policy strategy by other means. He just as constantly reassures them on that score.
But in an administration that is widely viewed as having "geopolitical tin ears," to borrow one senior Republican's well-turned phrase, Zoellick's quiet initiatives have kept alive a pragmatic, centrist approach to dealing with the rest of world in difficult times. Ditching the steel tariffs would give a presidential imprimatur to that common-sense approach.
hoaglandj@washpost.com
terça-feira, novembro 11, 2003
ft 11nov03
ft series on impact of china growth on latam. on brz trade with china, focusses on our exports.
INTERNATIONAL ECONOMY: China fever drives Brazil's exporters to frenzied activity
By Raymond Colitt
Financial Times; Nov 11, 2003
During the peak of this year's soya bean harvest, 2,600 lorries and 400 rail wagons lined up each day to deliver their cargoes at Paraguaná port in southern Brazil.
With demand from China stretching capacity to its limits, authorities at the world's largest public grain port are planning to double its processing capacity to 100,000 tonnes a day.
Paraguaná is the most visible symptom of a "China fever" that is sweeping through Brazil's export industries. Sales, led by iron ore and soy beans, have grown at breakneck speed from about $1.08bn in 2001 to $2.52bn (€2.2bn, £1.5bn) last year and nearly $4bn during the last 10 months.
Word of Brazilian companies doubling and tripling their sales in China is spreading through South America's largest economy like Marco Polo's first reports of wealth in the Far East. Everybody wants to be on the boat to China. Seminars, trade missions and cultural exchanges are flourishing. Translators have never been so busy.
"All of Brazil's exporters are eyeing China," says Manoel Cintra, president of Brazil's commodity and futures market (BM&F), who was in Shanghai last week to prepare for the opening of the market's office there, which will be only its second foreign presence after its office in New York.
He expects demand from Chinese importers seeking hedges on currency and price fluctuations on Brazilian commodities to generate an annual turnover of between $1bn and $1.5bn for the BM&F.
This year five Chinese trade missions will have visited the BM&F in São Paulo.
"The Chinese government wants every child to drink milk. Do you know what 1.3bn glasses of milk could mean for Brazil's dairy farmers?" says Charles Tang, who is head of the Brazilian-Chinese chamber of commerce, which has grown to include 11 offices in Brazil and five in China.
Indeed, the chamber is carrying out feasibility studies for bilateral trade products from dairy products and orange juice to vehicle parts. One potential market it has identified is China's growing demand for instant coffee, currently supplied by Kraft of the US and Nestlé of Switzerland.
The Cacique group from southern Paraná state has launched its Café Pelé brand in a direct challenge to the two multinationals.
"Brazil is trying to make up lost time in the Chinese market," says Mr Tang.
So far the focus of exports to China has been on agriculture, where Brazil boasts some of the world's most competitive advantages. This year, for instance, the China Animal Husbandry Group signed an agreement to import beef, chicken and pork worth $100m directly.
"China still pays less for beef than other countries," says Pedro Bourdon, commercial director of MBM, a trading company, "but in five years it will be a huge market for us."
Brazil has the world's largest commercial herd of cattle.
Critics warn that Brazil's export boom to China could collapse once China's supply capacity catches up to domestic demand. But Edmar Cid Ferreira, president of Banco Santos, a local bank, strongly disagrees.
"The Chinese are looking for long-term suppliers of food and technology and we have both. They're coming to us to set up joint ventures." Brazil has also nearly trebled its exports of soybean oil to China this year. While China is gradually modernising its outdated soybean crushing industry, Abiove, the Brazilian vegetable oil association, forecasts it will be a net importer of soybean oil for at least a decade.
The Chinese consume about 14 litres of soybean oil per capita, compared to 20 litres in Brazil and 45 litres in the US. "There is still quite a bit of room for growth," says Carlos Lovatelli, head of Abiove.
Exports are not limited to commodities. Mr Ferreira cites Chinese steel, textile and computer companies investing in Brazil for re-export to China. While Chinese investors are eyeing slaughterhouses and soybean processing plants, Brazilian companies are beginning to sell software, bovine genetic material, as well as fashion to China.
"We sell them designs and they stitch them together over there," says Lucio Pinheiro, a Fortaleza-based textile trader. He says that numerous Brazilian fashion brands already have stores in China.
Embraer, the Brazilian jet manufacturer, entered into a joint venture with China Aviation Industry Corp in December last year. Its plant in Harbin, capital of Heilongjiang province, is to roll out its first aircraft before the end of the year.
The opening of China as an important export market, some analysts suggest, may already be influencing Brazil's position in trade negotiations with the US and Europe, both of which it accuses of unfair subsidies and barriers to farm trade.
This article is one of a series about the impact of China's growth on Latin America
ft editorial 10nov03
on trade: just do it bush, warns o eu retaliation if the us does not repeal the tariffs on steel imports
Comment & analysis / Editorial comment Print article | Email
Bush caught in a steel trap
Published: November 10 2003 4:00 | Last Updated: November 10 2003 4:00
George W. Bush is about to discover that trade protection is not a cost-free option. The World Trade Organisation is due to issue a final ruling today on the tariffs of as much as 30 per cent that Mr Bush imposed on steel imports in March last year. Even US officials do not seriously doubt that the WTO will confirm an earlier finding that the tariffs flagrantly violate world trade rules.
The expected ruling will place Mr Bush in a quandary. If he removes the tariffs, he will antagonise opinion in rust-belt states where he and Republican candidates for Congress need votes to be sure of victory at next year's elections. He also risks weakening already tenuous support on Capitol Hill for trade liberalisation initiatives, such as a planned agreement with several central American countries.
However, if Mr Bush leaves the tariffs in place, the consequences look even more unpalatable. The most immediate will be to prompt the European Union to implement from next month its threat to impose punitive sanctions on as much as $2.2bn of annual US exports. That would harm economies on both sides of the Atlantic. But, politically, it would hurt Mr Bush and fellow Republicans most, because the EU would target exports, such as citrus fruit and Harley-Davidson motorcycles, that are produced in critical electoral districts.
Second, keeping the tariffs would perpetuate the damage they have already done to the US economy. Any short-term gains from higher domestic prices for steel producers have been greatly outweighed by the costs to steel users, which are far more numerous and economically important. That is no way to stem the recent sharp decline in US manufacturing employment.
Third, ignoring the expected WTO ruling would poison relations with the EU. It could make Brussels even more determined to press ahead with plans to impose as much as $4.1bn in sanctions against American exports, if the Congress fails by March to repeal a US corporate tax law also ruled illegal by the WTO. That could remove any possibility of achieving the US-EU co-operation essential to revive the Doha world trade round.
Finally, flouting multilateral trade rules would undermine Washington's international authority and weaken its influence in bilateral trade relations. As Mr Bush's trade negotiators recognise, the WTO and its disputes settlement procedures offer the most effective means to ensure other countries keep their markets open. They are the US's most powerful tool in its efforts to accelerate removal of trade barriers in China, its fastest-growing export market. But it will swiftly lose its potency if the US rejects the rule of law.
The US president faces unenviable choices, albeit ones that were entirely predictable and of his own making. But in terms of US economic welfare and foreign policy, the arguments point overwhelmingly to one conclusion: the steel tariffs must be scrapped. Just do it, Mr Bush, and do it now.
nyt editorial on steel
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November 11, 2003
The White House Steel Trap
o no one's surprise, the World Trade Organization issued a final ruling yesterday that the Bush administration violated trade laws when it slapped onerous tariffs on an array of steel imports last year. The tariffs, as harmful to the American economy as they were to foreign exporters, were a political gambit, aimed at scoring points in such key electoral battlegrounds as Pennsylvania.
The W.T.O. ruled against the tariffs last July, rightly finding that Washington had failed to make its case for the "safeguard" action. The Bush administration could not prove that an unexpected surge of imports had hurt the American steel industry. It did not help that the industry had been suffering from self-inflicted woes for years and that imports were actually declining in the immediate two years before the tariffs. Yesterday's ruling was against the appeal of that judgment. The Bush economic team reportedly opposed the tariffs from the start — as had the Clinton administration — but was overruled by White House political operatives.
The European Union, Japan, Brazil and others will now be free to retaliate against American imports if the administration does not lift the tariffs. The European Union is compiling a list of tariff-worthy goods — from Harley-Davidson motorcycles to farm equipment and Florida citrus juices — that would maximize the punitive bang, politically speaking, for the buck.
President Bush should cut his losses, abide by the W.T.O. decision and lift the tariffs, even if it means angering the very steel workers he set out to woo. Continued defiance would be disastrously timed. Frayed trade relations have already jeopardized important efforts to liberalize global trade.
Despite being a Republican ostensibly committed to free markets, Mr. Bush has abdicated America's leadership role in championing them. The same set of muddled calculations that led to the steel tariffs last year prompted Mr. Bush to sign an outrageously protectionist farm bill.
Congressional Democrats' complaints about the W.T.O. decision will only make matters worse. What the world will read into Washington's bipartisan protectionist rant is the unwillingness of a bully to abide by the rules it expects others to follow.
wsj editorial on steel and wto
Bush's Steel Opening
The World Trade Organization surprised no one yesterday when it once again ruled that the 30% steel tariffs the Bush Administration imposed in 2002 are a violation of global trade rules. Now the question is whether the Administration will use the verdict as a convenient way to extricate itself from the tariffs. The other option is to sit by as the world levies billions in retaliatory duties.
The U.S. appeal to the July WTO ruling against the tariffs never had a snowball's chance in a steel furnace of success. It was, however, a way to delay global trade retaliation until at least September. That marked the midway point of the three-year tariff span and the first opportunity for President Bush to decide whether to dump them. This second WTO ruling gives him another opening, and we can only hope he's realized that this protectionist ploy has been a bust from every angle.
The industry argues that the tariffs gave it the breathing space to do the restructuring it had avoided for decades, and there's no doubt the levies have padded U.S. steel margins. But they haven't stopped the inevitable process of bankruptcy (and walking away from pension and retirement obligations) as well as labor re-negotiation. All of this would have had to happen even if the Administration hadn't abandoned its free-trade principles.
Meanwhile, the tariffs imposed a toll on the rest of the economy -- in particular on steel users. U.S. manufacturers that consume steel for products ranging from cars to toasters watched domestic steel prices jump by more than 30%. The International Trade Commission, which released a report at the tariffs' September midpoint, found that in their first year the levies inflicted a $680 million hit on the U.S. economy.
A study done earlier this year for the Consuming Industries Trade Action Coalition went further. It found that higher steel prices cost 200,000 American jobs and $4 billion in lost wages from February to November 2002. Those 200,000 jobs were more than the total number of people employed by the U.S. steel industry itself. That's one reason more than 200 companies and organizations representing steel-consuming and related industries sent Mr. Bush a letter last month begging for relief.
Meanwhile, the strategy of using the tariffs to score political points has backfired. The tariffs have done nothing to win over protectionists, as evidenced by the growing number of blue-collar union endorsements of Democrat Presidential contender (and anti-free-trader) Dick Gephardt. Karl Rove might also note that a disproportionate number of the steel-consuming jobs that have been lost are in key battleground states like Florida and Pennsylvania, which Mr. Bush needs if he is to win re-election.
If the tariffs don't go, all this will only get worse. The European Union, Japan, China, Norway and others are already busy polishing their lists of U.S. goods on which they could impose big retaliatory tariffs. The lists are designed to inflict maximum economic and political pain, hitting popular products from key electoral states. The EU's short list includes T-shirts, fruit juices, toilet paper, pantyhose, notebooks, watches, ballpoint pens, rowboats and apples. EU Trade Commissioner Pascal Lamy made clear that within 35 days Europe would impose tariffs that could reach $2.2 billion. This would dwarf the ITC's $680 million estimate of damage already done.
The best solution is for the Administration to recognize the WTO decision for what it is: a golden opportunity. The U.S. economy is showing signs of recovery, but nothing is certain. By citing the verdict and dropping the tariffs now, Mr. Bush can further aid the economy, in particular one sector that is still struggling to get on board the recovery train: manufacturing. Along the way, he'll save other industries from big hits to their exports. And by complying with global trade rules, the U.S. will gain needed credibility in its attempts to get free-trade talks back on track.
The WTO verdict also offers the best hope for some political cover. The Administration might take its cue from Republican Representative Pat Toomey, who is fighting a tough Senate primary battle in the steel-sensitive state of Pennsylvania and who has been supporting the tariffs. A few weeks back, however, Mr. Toomey noted that the economy was stronger and that the steel industry had gone through consolidation. He suggested that now was a good time to "re-evaluate" and reminded his constituents that "tariffs have a cost; tariffs have a downside."
We'd call that the understatement of the Bush Administration's tenure. Mr. Bush is now perfectly positioned to put aside these costs and downsides and instead provide a further boost to the economy in the run-up to Election Day. Let's hope he grabs that chance while he can.
Updated November 11, 2003
