What gave Rome it’s preeminent power in the ancient world? No doubt its legionnaires were feared from Iberia to Galcantray. To fund military might the descendants of Romulus engaged in prolific international trade. Today, as globalization and international trade spark heated debates in capitals around the world, it is important to remember the long history of trade. From the Chinese to the Phoenicians, the Spaniards and the Dutch, the mighty British empire and the American industrial powerhouse, trade has been at the center of every great power in history. Great powers can either take that which they need by force, or buy it away. To most, trade is clearly preferable.
The US recently announced it would levy anti-dumping penalties against Canada. These actions specifically target softwood timber, dairy, and steel. While the full effects are yet to be fully assessed, and opposition has been raised by an unexpected source: Florida.
President Trump announced a new executive order aimed at pushing forward his trade agenda. Targeting the US trade deficit, the order directs the Commerce Department and the US Trade Representative to lead an interagency investigation and produce a “comprehensive report” on the causes of the US trade deficit. They are to do so by looking at specific industries and trade policies by foreign countries that contribute to the continuing gap between US exports and imports.
According to the US Census data on trade, the US ran about a $500 billion net trade deficit in Goods and Services with the rest of the world in 2016. The US runs a larger deficit when looking only at Goods (such as manufactures, agriculture, etc.), at $750 billion, while the county runs a surplus of about $250 billion in Services (such as business services, finance, information technology, etc.). Broken down by country, the largest Goods deficits are with China (over $54 billion in the first two months of 2017) and Mexico, as well as Saudi Arabia (petroleum imports) and the European Union. In Services, it is noteworthy that the US runs sizable surpluses with all of these same countries. (Data from US Census) Continue reading
A new international trade agreement is good news for exporters whose products are held up at borders but will make little difference for consumers, experts say.
Trade Minister Tim Groser said the WTO Bali package approved by 159 ministers in Indonesia yesterday was a “modest deal” with limited direct benefits to New Zealand.
But the cost of failing to reach an agreement would have been “very significant” for international trade.
The talks mostly centred on food security, and the deal would enable developing countries to get around rules on farm subsidies if they were trying to stockpile food to feed their poor.
The most important progress for New Zealand businesses were changes which could cut red tape and ease bottlenecks at overseas ports.
NZ International Business Forum executive director Stephen Jacobi said effects of the deal would not be felt by consumers because New Zealand’s customs service was already very efficient.
But it could be valuable to exporters and manufacturers because it would speed clearance of their goods at foreign companies’ customs services.
New Zealand companies lost millions each year through exports being stalled at borders.
Mr Jacobi said: “Goods are being held up in customs every day, which adds quite significantly to the cost of the transaction. For countries like New Zealand that are distant from major markets, if you can narrow down time … then you’re going to have some greater efficiencies.”
New Zealand had streamlined customs agreements with the United States and Japan, but products were often held up in other countries, including China.
Mr Groser said the agreement did little to advance the main objectives of the Doha Development Round, which aimed to create a level playing field by removing subsidies on agriculture and other markets.
Wealthy countries such as the United States subsidised local agricultural production, which made it more difficult for other countries to break into their markets.
Labour trade spokesman Phil Goff said the agreement breathed life into the bigger negotiations the WTO was involved in.
It was the WTO’s first global trade agreement since its inception in 1995.
Read more by Isaac Davison, Source: http://www.nzherald.co.nz, Image: Trade Minister Tim Groser. Photo / NZPA
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Despite repeated calls by heads of government to fend off protectionism and ensure the free flow of global trade, companies with operations on foreign soil may find themselves in a new situation, where protectionism no longer manifests itself in terms of tariffs, but in subsidies, local content requirements and capital controls.
A chief editor from Economist Magazine even commented that policymakers have become choosier about whom they trade with, how much access they grant foreign investors and banks and what sort of capital they admit. Sadly, that is still part of picture; for Chinese companies, the biggest challenges facing their foreign operations might be the murky politics that threaten to shut them out of the local market. Chinese companies like Huawei and Sanyi have found the US market impenetrable, as the US federal government shut them out, citing national security concerns.
In what way are these new forms of protectionism affecting global trade? How can we deal with them?
Ni Hao, you’re listening to People In the Know, bringing you insights into the headlines in China, and around the World; I’m Zheng Chenguang in Beijing.
We speak to Professor Simon J. Evenett, Academic Director of the MBA Programme at the University of St. Gallen in Switzerland, Prof. Michael R. Czinkota from the McDonough School of Business at Georgetown University in Washington, DC, and He Weiwen, Co-Director of the China/US-EU Study Center at the China Association of International Trade.