International trade


China to challenge Boeing and Airbus
By Richard McGregor in Beijing, Kevin Done in London
and Doug Cameron in Chicago
Financial Times, 2007-03-18
(This article is summarized, and linked to, at chinadigitaltimes.net.)

[Emphasis is added.]

China plans to mount a head-on challenge
to the dominance of Boeing and Airbus
in the global market for big passenger jets
by setting up a state-owned company to build the aircraft.
[The Commercial Aircraft Corporation of China (CACC).]

A statement on the government’s website issued late on Sunday said
the state council – the cabinet –
had taken an “important strategic decision”
to begin research and development to enter the market.

China is one of the biggest target markets globally for both Boeing and Airbus.
The European group’s latest forecast
places China in second place behind only the US
by both the number and value of jets needed between 2006 and 2025
with a market for 2,929 large aircraft worth $349bn.

The move, backed by technical know-how developed over
the industry’s 50-year history in the country,
reflected “the wish of the entire Chinese people for many years”,
said the statement.

It gave no details about the company or how it would be funded,
nor did it set out any timetable.
The decision was taken on February 26,
but there was no explanation for the delay in the announcement.

Boeing of the US and Europe’s Airbus have a duopoly in
the market for big jets of 100 seats or more.
Both manufacturers estimate the market
to be worth about $2,600bn over the next 20 years
with forecast deliveries of about 23,000 new jets
excluding regional jets of below 100 seats.

It would take decades for China
to develop a full range of big jets to compete fully with Airbus and Boeing,
but the US and European aerospace industries
take the long-term challenge seriously,
not least as the country will be able to draw on
the support of potentially huge demand from domestic carriers.
It has taken Airbus nearly 40 years to develop a complete family of large jets.

Steven Udvar-Hazy,
chairman and chief executive of International Lease Finance Corporation,
one of the world’s top two aircraft leasing companies
and one of the most influential purchasers of new aircraft,
said last week that
both China and Russia could develop
aircraft capable of competing with
the Boeing 737 and Airbus A320 families of single aisle jets
within 15 years
with government backing and technology gained from both companies.

He said
there was no reason why companies other than Boeing and Airbus
could not enter the business.

China has never hidden its ambition
to become a major force in the aviation and aerospace industries,
requiring foreign companies, which sell into its increasingly lucrative market,
also to manufacture parts there and transfer technology.

It is due to begin deliveries of its first home-made regional jet, the ARJ21,
in 2009,
and is also adding other joint ventures with foreign companies
to assemble aircraft in the country.

Airbus signed a framework agreement with the Chinese authorities last October
to build its first aircraft assembly plant outside Europe
at Tianjin in eastern China.


Globalism vs. Americanism
by Patrick J. Buchanan
The American Conservative, 2009-09-15

Down at the Chinese outlet store in Albany known as Wal-Mart,
Chinese tires have so successfully undercut U.S.-made tires
that the Cooper Tire factory in that south Georgia town had to shut down.

Twenty-one hundred Georgians lost their jobs.

The tale of Cooper Tire and what it portends
is told in last week’s Washington Post by Peter Whoriskey.

How could tires made on the other side of the world, then shipped to Albany,
be sold for less than tires made in Albany?

Here’s how.

At Cooper Tire, the wages were $18 to $21 per hour.
In China, they are a fraction of that.
The Albany factory is subject to
U.S. health-and-safety, wage-and-hour and civil rights laws
from which Chinese plants are exempt.
Environmental standards had to be met at Cooper Tire
or the plant would have been closed.
Chinese factories are notorious polluters.

China won the competition because
the 14th Amendment’s “equal protection of the laws”
does not apply to the People’s Republic.
While free trade laws grant China free and equal access to the U.S. market,
China can pay workers wages and force them to work hours
that would violate U.S. law,
and China can operate plants
whose health, safety and environmental standards
would have their U.S. competitors shut down as public nuisances.

Beijing also manipulates its currency to keep export prices low
and grants a rebate on its value-added tax on exports to the U.S.A.,
while imposing a value-added tax on goods coming from the U.S.A.

Thus did China, from 2004 to 2008,
triple her share of the U.S. tire market from 5 percent to 17 percent
and take down Cooper Tire of Albany.

But not to worry.
Cooper Tire has seen the light and is now opening and acquiring plants in China,
and sending Albany workers over to train the Chinese who took their jobs.

Welcome to 21st century America, where

globalism has replaced patriotism
as the civil religion of our corporate elites.

As Thomas Jefferson reminded us, “Merchants have no country.”

What has this meant to the republic that was once
the most self-sufficient and independent in all of history?

Since 2001, when George Bush took the oath,
the United States has run
$3.8 trillion in trade deficits in manufactured goods,
more than twice the
$1.68 trillion in trade deficits we ran for imported oil and gas.

Our trade deficit with China in manufactured goods alone,
$1.58 trillion over those eight years,
roughly equals the entire U.S. trade deficit for oil and gas.

U.S. politicians [and pundits] never cease to wail of
the need for “energy independence.”
But why is our dependence on
the oil of Saudi Arabia, the Gulf, Nigeria, Canada, Mexico and Venezuela
a greater concern than
our dependence on
a non-democratic rival great power
for computers and vital components of
our weapons systems and high-tech industries?

As Executive Director Auggie Tantillo
of the American Manufacturing Trade Action Committee
compellingly argues:

“Running a trade deficit
for natural resources that the United States lacks
is something that cannot be helped,
but running a massive deficit in manmade products
that America easily could produce itself is a choice —
a poor choice that is bankrupting the country
and responsible for the loss of millions of jobs.”

How many millions of jobs?

In the George W. Bush [43] years,
we lost 5.3 million manufacturing jobs,
one-fourth to one-third of all we had in 2001.

And our dependence on China is growing.

Where Beijing was responsible for
60 percent of the U.S. trade deficit in manufactured goods in 2008,
in the first six months of 2009,
China accounted for 79 percent of our trade deficit in manufactured goods.

How can we end this dependency
and begin building factories and creating jobs here,
rather than deepening our dependency on
a China that seeks to take our place in the sun?

The same way Alexander Hamilton did,
when we Americans produced almost nothing
and were even more dependent on Great Britain than we are on China today.

Let us do unto our trading partners as they have done unto us.

As they rebate value-added taxes on exports to us,
and impose a value-added tax on our exports to them,
let us reciprocate.
Impose a border tax equal to a VAT
on all their goods entering the United States,
and use the hundreds of billions to cut corporate taxes
on all manufacturing done here in the United States.

Where they have tilted the playing field against us,
let us tilt it back again.
Transnational companies are as amoral as sharks.
What is needed is simply to
cut their profits from moving factories and jobs abroad and
increase their profits for bringing them back to the U.S.A.

It’s not rocket science.
Hamilton, James Madison [4] and Abraham Lincoln [16] all did it.
Obama’s tariffs on Chinese tires are a good start.

[I am anything but an expert on the subject of international trade and taxation.
But I do know that
the United States used to run a sizable surplus in trade,
and that
for the United States to continue running deficits as it has in the recent past
will lead to a terrible future (note especially 2009-03-29-Lachman ff.),
one that will make future generations despise the current generation
for its short-sighted, self-serving, greedy policy choices.
Something needs to be done, now, to start reversing those deficits.

Whether Buchanan’s recommendation is the optimal choice, I do not know.
But something needs to be done.
I have no doubt whatsoever that reducing or reversing those deficits
will cause some domestic constituencies pain.
But we really must stop living so much for the present,
and we must reconsider the whole set of priorities
that have led to the present disastrous trade deficits.

(And I firmly believe that part of the policy change that is necessary
is not to increase spending on health care,
but to decrease it severely.
There is no way the U.S. can spend
the exorbitant amounts it currently does on health care
and be competitive internationally.
That is something that those pushing for more health care spending
seem to totally fail to acknowledge,
or possibly even be aware of or care about.)]

Fed Chief Cites Role of Trade Imbalances in Crisis
New York Times, 2009-10-20
[This is actually from the 10-19 draft;
note that the published title is the rather less pointed
“Asia Said to Be Leading the Globe Out of Crisis”;
the lead paragraph, at least, of the text also seems less pointed.
It looks like one or more editors
is trying to avoid giving the American public the full negative story.]


Ben S. Bernanke, the chairman of the Federal Reserve, said on Monday that
global trade imbalances played a central role in the global economic crisis
and warned that both the United States and fast-growing Asian nations
needed to do more to prevent them from recurring.

“We were smug,” Mr. Bernanke said of the United States
in a question and answer session following his speech.

In answer to another question, he said
the American financial regulatory system was “inadequate”
at managing the immense inflows of cheap money
from China and other countries that had huge trade surpluses.

In his prepared remarks, Mr. Bernanke acknowledged that
trade imbalances had declined sharply as a result of the crisis,
mainly because trade itself plunged,
but he warned that
American foreign indebtedness would aggravate the imbalances once again
unless the United States reduced its soaring federal budget deficit.

“The United States must increase its national saving rate,” he said.
“The most effective way to accomplish this goal
is by establishing a sustainable fiscal trajectory,
anchored by
a clear commitment to substantially reduce federal deficits over time.”

The federal deficit for the 2009 fiscal year soared to $1.4 trillion,
almost triple the deficit in 2008,
and budget analysts predict that
budget deficits will average almost $1 trillion a year over the next decade.

By the same token, he said,
Asian countries needed to rely less on exports
and more on their consumption at home for their economic growth.
One way to increase Asian household consumption, he said,
would be for countries like China to increase social insurance programs
and reduce the uncertainty that currently hangs over many consumers.



House Passes Bill to Impose Tariffs on Chinese Goods
New York Times, 2010-09-30

[This is a grab from the web edition on 2010-09-29.]

WASHINGTON — The House of Representatives sent a unusually confrontational signal to the Chinese leadership on Wednesday, voting overwhelmingly to give President Obama the authority to impose tariffs on all Chinese imports — more than $300 billion this year — in retaliation for Beijing’s refusal to revalue its currency.

The vote was 348 to 79.

The bill is unlikely to become law because
the prospects for Senate approval are dim.

Nonetheless, the action was intended to hand President Obama additional leverage in what has become a major flashpoint between the world’s two largest economies. While tariffs have been slapped on specific products, from steel to tires, because of evidence of unfair export subsidies, the threat to put sizable tariffs on a country’s entire line exports to the United States is highly unusual — and, some argue, of dubious legality under international trade law. It reflects both election-year politics over jobs and huge frustration over unfulfilled promises by China to allow its currency to rise in value, which would make Chinese goods less competitive in the United States.

The administration has been of two minds about the legislation. It has often used the rising public anger over China’s trade advantage to argue to Chinese leaders that the United States would no longer tolerate deliberate currency manipulation. That was a point Mr. Obama made repeatedly last week in a two-hour-long meeting with Wen Jiabao, China’s prime minister.

But in conversations with Congress, Treasury Secretary Timothy F. Geithner and other officials have warned of the danger of touching off a trade war, in which China blocks American goods in retaliation — a tit-for-tat feud that could hurt both economies.

[The U.S. imports over $300G from China,
while it exports well under $100G.
The Chinese are the ones who benefit monetarily from the current arrangement.]

The risks go beyond trade.
President Obama is pressing China for help on
cutting exports to Iran,
managing a dangerous leadership transition in North Korea and
coming to some kind of accord on curbing carbon outputs
that contribute to global warming.
He is also coming up with what one senior administration official called
“new rules of the road” over disputed maritime territory.

But in Beijing, and on Capitol Hill, all that has pales in comparison to the currency dispute, which is often portrayed in the Chinese press as an effort to curb China’s growth, and thus its power.


Trump Has A Sound Trade Policy,
But Where Will He Get Sound Trade Policy Aides?

by Eamonn Fingleton
The Unz Review, 2016-04-30


Here are a few other well-informed and reliable trade experts whom Trump should seek out at the first opportunity:

Dan DiMicco. In his former capacity as chief executive of the Nucor steel company, DiMicco fought many trade battles and is an expert on East Asian dumping.

Ralph Gomory. A noted applied mathematician and former head of research at IBM, he is the author, with William Baumol, of Global Trade and Conflicting National Interests. In this book and follow-up papers, Gomory has challenged the theoretical foundations of textbook free trade theory.

Kevin Kearns. Head of the U.S. Business and Industry Council, an organization representing domestic manufacturers, Kearns formerly served as a foreign service officer in Germany, Korea, and Japan, and in that capacity observed first-hand the obstacles faced by US companies in trying to export to key foreign markets. In Japan, he opposed the give-away of American taxpayer funded aerospace technology to the Japanese FSX program.

Robert Lighthizer. A partner in the Skadden Arps law firm and a former deputy United States Trade Representative (USTR), he divides his time between traditional trade litigation, policy advice, and legislative initiatives. He represents heavy manufacturing, agricultural and high-tech companies and has been lead counsel in countless antidumping and countervailing duty cases.

Richard McCormack. Publisher of Manufacturing & Technology News, a well-regarded newsletter, McCormack is an expert on the practical problems faced by U.S. industry in competing in rigged global markets.

Peter Morici. A professor of international business at the University of Maryland and a former advisor to the U.S. International Trade Commission, he is one of the few prominent academic economists who forthrightly challenges his colleagues’ ivory tower commitment to unilateral free trade.

Patrick A. Mulloy. A lawyer who served five two-year terms on the bipartisan United States-China Economic and Security Review Commission, he currently serves as a consultant to non-profit groups interested in reforming U.S. trade and economic policies.

Michael Sekora. A noted physicist, he founded Project Socrates,
a classified U.S. Defense Intelligence Agency program
established in 1983 within the Reagan administration. He holds that
the cause of U.S. industrial decline is that
U.S. decision-makers abandoned technology-based planning
and adopted economic-based planning
at the end of World War II.

Alan Tonelson. As research fellow at the U.S. Business and Industry Council Educational Foundation, he has written extensively on free trade and globalization and their role in U.S. industrial decline.


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