A new form of trade war brews

[IDemo]

Outrage grows north of border over ‘buy American’ rules linked to stimulus

By Anthony Faiola and Lori Montgomery
updated 2 hours, 55 minutes ago

WASHINGTON - Is this what the first trade war of the global economic crisis looks like?

Ordered by Congress to "buy American" when spending money from the $787 billion stimulus package, the town of Peru, Ind., stunned its Canadian supplier by rejecting sewage pumps made outside of Toronto. After a Navy official spotted Canadian pipe fittings in a construction project at Camp Pendleton, Calif., they were hauled out of the ground and replaced with American versions. In recent weeks, other Canadian manufacturers doing business with U.S. state and local governments say they have been besieged with requests to sign affidavits pledging that they will only supply materials made in the USA.

Outrage spread in Canada, with the Toronto Star last week bemoaning "a plague of protectionist measures in the U.S." and Canadian companies openly fretting about having to shift jobs to the United States to meet made-in-the-USA requirements. This week, the Canadians fired back. A number of Ontario towns, with a collective population of nearly 500,000, retaliated with measures effectively barring U.S. companies from their municipal contracts — the first shot in a larger campaign that could shut U.S. companies out of billions of dollars worth of Canadian projects.

This is not your father's trade war, a tit-for-tat over champagne or cheese. With countries worldwide desperately trying to keep and create jobs in the midst of a global recession, the spat between the United States and its normally friendly northern neighbor underscores what is emerging as the biggest threat to open commerce during the economic crisis.

Unintended consequences?
Rather than merely raising taxes on imported goods — acts that are subject to international treaties — nations including the United States are finding creative ways to engage in protectionism through domestic policy decisions that are largely not governed by international law. Unlike a classic trade war, there is little chance of containment through, for example, arbitration at the World Trade Organization in Geneva. Additionally, such moves are more likely to have unintended consequences or even backfire on the stated desire to create domestic jobs.

http://www.msnbc.msn.com/id/30758018/

[SoCalDem]

1. No one is required to buy "foreign" or "American", BUT if there's already a contract in place

surely they should honor the contract. Going forward though, I can see how companies right here, who are struggling to stay viable, might be at the top of the list when it comes time to award contracts.

[RandomThoughts]

2. Well I would guess..

A protection system just to create jobs here not there, is a bit arbitrary. Since in the macro macro world of economics, each country would be selfish.

But protectionism with a purpose, to uphold a value held by a country, would make sense. So tariffs could be used based on the country of origins record with, worker rights, civil rights, pollution standards, or anything that the group of people in one country think is important in a society they support by buying there goods.

So if a country got cheap labor by outlawing unions, then a tariff could compensate for that, or if a country did not have health care for its citizens(like US) then a tariff could be added to equalize that.

Basically the unprotected trade full capitalism system is a 'race to the bottom', the worse a country treats its people, or environment, the more competitive it is. So tariffs could be used to counter that situation, not just a blanket tariff to create jobs in any one nation.

Since unprotected trade, full capitalism, only uses money to decide if a product should be imported, a society could balance that by adding social values into the cost of a good, based on the views of society, reflected by who they elect to make the determinations of which tariffs to put in place. This is of coarse is counter to the thought that money is all that matters.

The argued intent of free trade was to improve standard of living in 3rd world countries, but in many cases this did not happen because of some working conditions. The improvement of condition could create an ability for that society to spend, and create demand, there by increasing the need for production and making more jobs everywhere.

Basically creating or protecting the middle class, or even poor, in any country creates demand, that demand can stimulate jobs, and even end some need for transportation of goods as more areas become more locally self sufficient, again increasing production.

Now this is counter to the problem of production out stripping demand, or efficiency creating lack of work, but this thought, if there is a base of jobs well spread out, can be corrected by taking the 'wealth' created by that production and diverting it into other social projects to help each individual society.

Raw materials is a bit more of a problem, any raw material that is not well distributed, should be replaced by some other equally usable material, so again a localization is possible of gathering a resource. Since a monopoly on resource leads to things like cross system, or cross country control, and then even wars. (alternatively a balance could be found, with one system having one thing in equal value as what they need from other system. But that is still dicey since things tilt one way or the other, or things like embargoes start to happen.

For those that scream central planning, guess what, we already have central planning, but it is being done in secret by the capitalist in groups like the Bilderbergs. So why not also do it in the open by elected officials. And if the people are not smart enough to understand it, then you have to teach them, or accept a slightly simpler system, since without societal knowledge of systems, things corrupt quickly. If the goal is to maintain a feudal system, so deciders can be on top of that system, good luck with that. LOL However desire for being in an upper bracket is not bad(depending how one gets there), it is normal, but the distance from top to bottom, and the amount of middle is important.

Those that just argue for lowest cost / max production, forget that the most efficient system uses the least labor, and treats the labor the worst, creating less demand. So while allowing for more production it has the side effect of creating an environment where less production is needed.

So to meet the max capacity of production, and get the bonus of employment, taking care of lower classes everywhere is a sound idea. And production can also do far more then just make consumer throw away items, Which is production to create demand within the rule system of full capitalism. If 'thinking' people modify some of the forces of full capitalism things can be produced that better all of society, instead of just fulfilling a attribute that increased demand by making items quickly obsolete or needing replacement.

If just using unprotected trade, full capitalism, most production is wasted, while at the same time, people go without basic necessities.