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

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  •  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.”


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