Posted by Alex G ..on Zeevs thread..
by Sy Harding
December 12, 2003
Comedian Jay Leno joked that Washington D.C. won’t have a Nativity scene because they couldn’t find three wise men and a virgin.
I don’t know about the virgins, but I do wonder about the wise men.
A few weeks ago I ranted that the U.S. was risking an all-out trade war by imposing quotas and tariffs on foreign goods in an effort to protect U.S. jobs in selected industries. My point was that foreign governments are not weaponless in such a battle. U.S. tariffs on foreign steel were declared illegal by the World Trade Organization. European countries threatened tariffs of up to 30% on several billion dollars worth of products that U.S. corporations export to Europe .
Even as that brouhaha was heating up, the Administration announced it would impose a quota on certain textile products from China , and higher import duties on TV sets from China . Also not weaponless, China responded by canceling a trade mission to the U.S. that was scheduled to place large orders for American products, and threatened to raise tariffs on the growing amount of American products being exported to China .
My concern was that a trade war to artificially protect the jobs of workers in some U.S. industries, for instance the steel and textile industries, would probably result in the loss of even more, and better paying jobs in other areas, like high-tech and medical products.
This week the White House seemed to reach the same conclusion. Not admitting they were a mistake, or illegal, or that European countries had threatened to retaliate with large tariffs on U.S. products, the Administration announced it was ending the quotas on steel imports.
But the wise men of Washington seem to have only stumbled out of one fire and into another that threatens similar embarrassment.
This week the U.S. banned those countries that did not support its invasion of Iraq , from bidding on contracts that will be required over the next few years for the rebuilding of Iraq .
Sounds fair. But is it wise? I think not.
As with the impulsive approach to the international trade situation, this one also seems not to have been very well thought out, and is likely also headed for a collision with the law of unintended consequences.
Rather than creating even more animosity with its former allies, perhaps a wiser course would be to use this as an opportunity to begin the badly needed international healing process. Maybe the U.S. doesn’t care any more what other nations think of it. But even from a purely self-interested perspective, the antagonistic feelings that have built up against the U.S. in recent years, primarily over the preparation for the Iraq invasion, the handling of its aftermath, and this year’s trade and currency disagreements, are not good for the long term prosperity of the U.S.
For instance, the U.S. black-listing of foreign corporations from the re-building process could well result in more financial harm to U.S. corporations than the U.S. is handing out to foreign corporations. Will foreign countries be as willing to buy Boeing airplanes rather than those of say, Airbus International? Airbus is a consortium of French, German, Spanish and U.K. manufacturers, and France and Germany are among the countries the U.S. is banning from the Iraq contracts. (Airbus already provides Boeing with competition. Of the 4,850 Airbus jetliners sold worldwide, 2,000 were sold to North American carriers and leasing companies). Will the people of the many snubbed countries be as willing to buy U.S. autos, computers, clothing, and food products? We can at least be sure that the snubbing won’t make them more inclined to do so.
Looked at from yet another direction, it’s projected that the value of the contracts to rebuild Iraq will amount to $18.6 billion. That is dwarfed by the $141 billion of foreign debt owed by Iraq , and which the Bush Administration wants foreign countries to write off as their financial contribution to the rebuilding. Yet Russia , France , Germany , and Canada hold substantial amounts of that debt, and are among the countries that have now been banned from bidding on the rebuilding contracts? Does that make sense?
Already Russia has said if its corporations are excluded from bidding on the contracts it will not forgive the $8 billion of Iraqi debt that it holds.
Washington is sending special envoy James Baker to Russia , France , and Germany next week to try to persuade those countries to write off the debts Iraq owes them. This week’s ill-timed announcement that they are on the contract black list sure won’t make his task easy. Nor will the news that Halliburton, Vice President Cheney’s former company, which was handed a huge Iraq re-building contract last year without even going through a bidding process, is now being investigated for fraud involving some $63 million in the handling of those contracts.
As I said a few weeks ago about the threatening trade war, I will say about the U.S. attempt to exclude major countries from the rebuilding process in Iraq .
This clumsy rumpus will also run into the law of unintended consequences. If left unchanged, it will significantly increase the cost of rebuilding Iraq , due to higher contract costs, as well as significant amounts of Iraq debts that will not be forgiven by the offended foreign countries. U.S. taxpayers will pick up the difference. And it’s likely to also result in even more reluctance on the part of the populations of the offended countries, to buy the products of U.S. corporations.
And all this just for a childish payback strut that is of no benefit to anyone? |
