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View Diary: What the polls say about free trade (219 comments)

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  •  they won't even notice. The tax breaks cost less (1+ / 0-)
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    than what the corporations pay for toilet paper in the executive bathrooms.  (shrug)

    •  What they would notice... reciprocal tariffs (8+ / 0-)

      China puts a 25% tariff on all goods we export there... while the US puts a 2.5% tariff in return.

      If you want to see US manufacturing jobs come back that would be a good start.

      Now lets hear it from the "Oh... that would start a trade war" jackasses and their attempt to label what is in reality "self defense."

      Germany levels the playing field with China by using a VAT tax and we should do the same.

      All of this of course says nothing about China's currency manipulation.

      •  we'd notice too, when the WTO charges come down (2+ / 0-)
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        marty marty, HeyMikey

        WTO takes a dim view of trade tariffs of any sort.

        But then it would never happen anyway--the US corporations simply would not allow it.  They don't want to impede the flow of cheap imported goods---they're usually the ones manufacturing them. Look what happened when Obama tried to include a "Buy American" provision in the stimulus bill . . . . . .

        China's currency manipulations are actually an interesting situation, though. They are taking advantage of the fact that WTO currently has no jurisdiction over international finance, and therefore can't do a damned thing about it. The US and Europe have already tried to change that--they began the Dohan Round to try to expand WTO's authority into areas including international finance, which would indeed give them the tool to stop China's shenanigans.  Alas, the Dohan Process was stopped dead in its tracks by the G20+ bloc, who objected to unrelated provisions concerning agricultural subsidies. But it's a near-certainty that Obama will try to re-start the stalled Dohan talks and gain WTO jurisdiction over finance.  And then China's manipulations will come to an abrupt halt.

        Interestingly, China is also one of the nations calling for the establishment of a universal global currency. . . .

        •  Doesn't seem to bother the Chinese at all... (2+ / 0-)
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          J Orygun, j1j2j3j4
          How we pay Chinese taxes. 20% of their government revenue from import taxes


          The biggest difference in the way the Chinese and American governments raise revenue is that Beijing relies much more heavily on import taxes. More than 20% of Chinese central government revenue in 2009 was generated from import taxes, while the comparable figure for the US was just 1.4%.

          The Chinese impose three major taxes on most imported products: a value-added tax of 17% on imported goods destined for domestic consumption, a variety of consumption taxes and also tariffs which vary by import category and are generally higher on manufactured goods. For example, there is a 45% tariff on motorcycle imports, which is particularly damaging for the US given that the US consistently enjoys a large trade surplus in motorcycles.  Chinese value added tax and consumption taxes are typically waived for imported raw materials and inputs destined for goods to be exported.

          China’s import taxes generate a tremendous amount of revenue for Beijing, almost 825 billion RMB in 2009 (US $126 billion at current exchange rates). This was the equivalent of about 13.5% of the value of Chinese imports in 2009. If the US had imposed a comparable level of taxes on its $1.6 trillion worth of imports in 2009, the federal government would have raised $216 billion in customs revenue rather than the paltry $29.1 billion it did raise. For Washington to have depended on border taxes for 22% of its revenue in 2009, it would have had to raise $463 billion in import taxes, which could have reduced payroll and income taxes by almost a quarter.

          The difference in border taxation between the US and China is a major reason why American companies have difficulty competing. Chinese border taxes make it more difficult for American manufacturers to export to the Chinese market, even as Chinese companies enter into the US market essentially tax-free.

          Neo-classical economists in particular should champion reforming the US system of border taxes to match those of our trading partners, especially China. From the perspective of orthodox economics, the lack of US border taxes significantly distorts private sector incentives. A long-standing principle of public finance holds that differing tax rates on close substitutes, say different sales taxes on varieties of beer, introduce efficiency-damaging distortions to the free market. If one brand of beer is taxed at twice the rate of another variety, consumers may switch to the cheaper, more lightly taxed beer — conceivably, even if they thought the heavily taxed alternative tasted somewhat better. This difference in taxation creates major market inefficiencies. In this context, efficiency can be improved by equalizing the tax rates applied to both kinds of beer.

          More... (including comparative tax tables)

          •  those are taxes. they're not trade tariffs. (1+ / 0-)
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            Everybody pays them--us, the Germans the Japanese, and even the Chinese.

            That is quite a different thing than a tariff.

            •  Okay... reciprocal taxes then. (0+ / 0-)

              Call'em what you want and Obama is calling for tax reform which makes me wonder what he has in mind.

            •  BS Lenny (0+ / 0-)

              you seem to gloss right over this statement in the article above:

              For example, there is a 45% tariff on motorcycle imports, which is particularly damaging for the US given that the US consistently enjoys a large trade surplus in motorcycles.

              China uses tariffs and internal tax policy to inflate the costs of US imports into China to protect domestic production.

              Senators urge China to reduce trade barriers for US products

              Senate Finance Chairman Max Baucus (D-Mont.), Finance ranking member Orrin Hatch (R-Utah) and Sen. Chuck Grassley (R-Iowa) cited findings in a U.S. International Trade Commission (ITC) report they requested, outlining the tariff-based and non-tariff barriers that China puts on U.S. agricultural products, reducing exports between an estimated $3.9 billion and $5.2 billion.

              “China is our number one market for U.S. agricultural product exports, but China’s unjustified trade barriers are blocking some of our goods such as wheat and beef and hurting job growth in the U.S,” Baucus said in a statement. “We need to hold China accountable to its international agreements so American ranchers and farmers can compete on a level playing with their world-class, safe agricultural products.”

              The ITC report found that U.S. exports to China are concentrated in just a few commodities — primarily soybeans and cotton.

              The report found that Chinese government support for the agriculture sector boosts the competitiveness of Chinese agricultural products relative to U.S. products, putting restrictions on exports including pork, beef and corn.  

              That and other non-tariff barriers effectively prohibit imports of certain products, including meat products along with strawberries, apples and fresh potatoes.  


              Yet China’s restrictive and non-transparent tariff rate quotas significantly limit imports of U.S. rice, wheat and other products.

              “In joining the World Trade Organization, China committed to adhering to international trade rules,” Grassley said. “These rules include eliminating non-tariff trade barriers that have no basis in science or that exist just to prop up a domestic industry at the exclusion of trade partners."


              Whether you call it a tariff or a tax and apply it unfairly so it functions as what is known in financial circles as a "non-transparent tariff" makes little difference.

              It still gives that Chinese domestic producers an unfair price advantage... a tariff by any other name is still a tariff.

              •  PS... you'll love this one (0+ / 0-)
                The Real Problem With China


                For the United States, the No. 1 problem with China’s economy is probably intellectual property theft. Technology companies, for example, continue to notice Chinese government agencies downloading software updates for programs they have never bought, at least not legally.

                No wonder China has become the world’s second-largest market for computer hardware sales — but is only the eighth-largest for software sales.

                Next on the list, say people who work in China or do business there, is the myriad protectionist barriers China has put up. These barriers make this country’s recent efforts at “buy American” protectionism look minor league. In some cases, Beijing has insisted that products sold in China must not only be made there but be conceived and designed there. The policy goes by the name “indigenous innovation.”


                I love it... "indigenous innovation" of products that can be sold into China.

                •  If you want to see the full list... (0+ / 0-)

                  The list of Chinese trade barrier abuses is quite extensive and ranges from outright intellectual property theft... unequal application of the VAT tax making it a defacto tariff... to non-compliance with WTO rulings against China and their refusal to verify compliance.

                  15 April 2011

                  Annual Trade Barrier Reports Detail Complaints Against China

                  The Office of the U.S. Trade Representative issued three reports on 30 March that highlight the administration’s efforts in addressing key trade barriers to U.S. exports.

                  The first report, entitled 2011 National Trade Estimate Report on Foreign Trade Barriers, documents foreign restrictions on U.S. exports of goods and services, foreign direct investment and protection of intellectual property rights in 62 major trading partners in each region of the world.

                  Issues raised in the NTE report are usually brought up during bi-lateral talks with concerned countries and may serve as the basis for future investigations of unfair trade practices. The second report, 2011 Report on Technical Barriers to Trade, focuses on non-tariff barriers to U.S. exports such as product standards, testing requirements and other technical requirements.

                  Lastly, the 2011 Report on Sanitary and Phytosanitary Measures identifies SPS barriers to U.S. agricultural exports and outlines on-going efforts to remove those barriers.

      •  Just an FYI, (1+ / 0-)
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        There is no one import duty rate for goods that are made in China.

        If you look through the Harmonized Tariff Scheule of the U.S., you'll see China is a MFN country, and the tariffs of Chinese goods range from duty free to ... whatever.

        One of my clients import manganese flakes from China, and they pay 14% of the entered value (fob value).

        Furthermore, German VAT was not imposed as a punitive measure against China.  VAT is a consumer tax assessed on all goods, domestic and foreign (regardless of country of origin).  It's used as sort of a sales tax throughout the EU, not just Germany.  I have a client who manufactures automotive sprockets in Arkansas that I ship to Italy on a DDP basis (shipper pays all costs to door), and they pay a VAT rate in Italy of 20%.

        This same client sent a replacement shipment of sprockets to China, and they paid 8% rate there.  There was also Chinese VAT, if I'm remembering correctly, at 17%.  That's for all imports, regardless of origin.

        •  as I note elsewhere, WTO has no objection to taxes (2+ / 0-)
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          HeyMikey, j1j2j3j4

          that fall on both imports and domestics.

          What it DOES object to are taxes solely on imports--especially if they are directed at particular countries.

          •  A closer look at their taxes... (2+ / 0-)
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            HeyMikey, j1j2j3j4

            Shows that they seem to apply the taxes to all imports and domestic products but then give reductions of those taxes or offsetting tax benefits to their domestic products.

            Both China and Germany have been playing the same game.

            The question is will the US do the same thing or continue to get bled dry and let what remains of their manufacturing sector die?

          •  Only if the US is the actor. It visciously protect (0+ / 0-)

            the import duties other countries levy on imported American products, and does not recognize state controlled or supported companies as different from ordinary commercial companies.

            The WTO is so slanted against the US that I consider it a corrupt and criminal organization. It's said that the US was a leading instigator in its formation.

            One thing the US can do unilaterally is suspend China's most favored nation status until its exports are no longer subsidized by the government.

            "Free Trade" is another of those ideals that's great in theory but lousy in the real world. and it only enjoys the support of our politicians because their class benefits, while 98% of Americans suffer for it.

            •  not really. (1+ / 0-)
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              The US is both the nation with the largest number of complaints filed against it, and the nation with the largest number of complaints it itself has filed. Like other nations, we have won about 85% of our complaints.

              I've not seen any indication anywhere that the US is discriminated against in any way in WTO rulings, nor have I seen any indication that the WTO is protecting anyone's tariffs or trade barriers; quite the opposite, in fact--nobody's tariffs or trade barriers are safe, and they have been ruled against in a wide variety of nations including China.

              •  Winning against China in the WTO means little (0+ / 0-)

                Since China has continued to ignore WTO requirements that they verify compliance after losing a complaint made against them.

                They just go happily on their way applying a VAT tax to US imports but not their Chinese competitors making it a defacto tariff... as detailed in the full list of complaints by the Office of US Trade representative in 2011:

                Annual Trade Barrier Reports Detail Complaints Against China


                •  we shall see (0+ / 0-)

                  Every other nation that has attempted to defy the WTO has surrendered abjectly--including the US. I doubt China will be any different.

                  But I'm a little puzzled why you seem to expect me to defend either the WTO or China.  Are you under the delusion that I am a fan of either one?

                  •  I wouldn't hold your breath (0+ / 0-)
                    Every other nation that has attempted to defy the WTO has surrendered abjectly--including the US. I doubt China will be any different.

                    I worked in China for many years and I know how their system works. I love the Chinese people and culture, but doing business there is extremely difficult and agreements are etched in jello.

                    Further, they have economic leverage now and they know it. The US economy is stalling and so is Europe, which makes them the only game in town... I would bet on the WTO being to aggressive about their non-compliance with their rulings. They will only go around them anyway.

                    But I'm a little puzzled why you seem to expect me to defend either the WTO or China.  Are you under the delusion that I am a fan of either one?

                    Actually I am responding to the content of your posts, although various industries and countries have been known to send employees to this site to shape arguments and frame debates through their posts.

                    You never know who you are talking to on this site and as a matter of attitude it is best to assume nothing.

                    •  typo (0+ / 0-)

                      I meant to say:

                      I would Not bet on the WTO being to aggressive about their non-compliance with their rulings.
                    •  one advantage China has (1+ / 0-)
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                      is that no matter how much economic pain the WTO inflicts, China's police-state government doesn't care.  It's not like the EU or US, where the WTO simply ratcheted up the pain level until they gave in and cried uncle.

                      And another advantage that China has is that it has an internal market that is large enough to support its own economy, and unlike the USSR or North Korea, China CAN successfully cut itself off economically from the rest of the world and depend solely on its own internal economic resources. whether that would be politically survivable may be debatable.

                      But in the end, I am still of the view that China can hold out longer than most, but in the end they will not want to piss off their global market any more than anyone else does, and they'll do what they have to do to accomodate. They may be a national corporation with an army, but they are not stupid.

                      The international trade system is set up deliberately to make it impossible for any single country to defy it forever (which is why both the EU and US tried and failed).  China will inevitably be forced to either surrender like everyone else did, or break completely and go it alone.

                      I think only one of those options is viable in the long term, and I think the police state is smart enough to see that too.

        •  Germany and China (2+ / 0-)
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          VigilantLiberal, HeyMikey

          Use a mix of border taxation and consumption taxes to discourage imports.

          How Did Germany Keep Position as the World’s Top Exporter for so Long?


          Germany’s tax structure contributes to their success as an exporter and puts a barrier on imports. Germany’s corporate tax rate is 15 %, but they also have a solidarity surcharge (5.5 % of corporate tax) and a trade tax charged by local authorities.  As of 2008, the rate averaged 14 % of profits subject to trade tax.   In addition, all services and products generated in Germany by a business entity are subject to value-added tax (VAT) of 19%. Certain goods and services are exempted from value-added tax by law.  Value-added taxes are added in paid for all along the supply chain, and then are rebated for exports. A VAT is added at the border to imports as a balancing trade strategy to discourage imports.

          I had heard a rumor that one of the factors in Germany’s success is that they don’t tax revenue on exports, but was unable to confirm this by diligent research.  I did learn that Germany practices a “national jurisdiction” on taxes wherein they tax national consumption in contrast to the “unitary jurisdiction” of the United States wherein companies are taxed on revenues from worldwide sales (with a deduction for taxes paid to foreign countries).  This taxing practice may be the source of the rumor or the source may be confusing it with the value-added taxes that are rebated for exports.

          In a June 28, 2010, economist Ian Fletcher, commented, “Germany, like the U. S., is nominally a free-trading country.  The difference is that while the U. S. genuinely believes n free trade, Germany quietly follows a contrary tradition that goes back to the 19th-century Germany economist Friedrich List… So despite Germany’s nominal policy of free trade, in reality a huge key to its trading success is a vast and half-hidden thicket of de facto non-tariff trade barriers.”


      •  I Thought The Oligarchs Likes Wars! :-) nt (0+ / 0-)

        "The problem with posting quotes off the Internet is you never know if they're genuine."--Gen. George Washington at the Battle of Gettysburg, February 30, 1908

        by Aspe4 on Mon Sep 05, 2011 at 04:10:42 AM PDT

        [ Parent ]

        •  The Oligarchs like money best of all... (0+ / 0-)

          Wars make millionaires and billionaires but once they have their stack wars in major industrialized nations gets messy and is bad for business... they do so like to supply arms to emerging nations willing to bleed their people dry to get the latest killing toy but having little impact on the much larger international finance scene.

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