American Economics Thread

[B.I.B.]

that is not true, the USA can not force people to buy american goods any where in the world, if the USA tax goods, the other nations can do the same, in fact once Mexico forced the US to give up they did not want the Mexican trucks to pass to the USA to delivered goods, the Mexican government taxed US goods and the Americans allowed the Mexican trucks to pass

Buyer preferences is not the issue.The U.S. cotton subsidy program had been distorting/reducing global cotton prices. The subsidy makes it attractive for U.S. cotton growers to continue growing cotton at the expense of other crops.


"...........The United States is the second-largest producer and world’s largest exporter of cotton. In recent years, the United States has been exporting an increasing share of its annual production, due in large part to a decline in domestic mill use.

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On August 31, 2009, after a series of recourses by both United States and Brazil, WTO issued a decision on the dispute DS267.

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The implications of the ruling are that it shows that the US and European Union have used loopholes and

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to continue dumping products on developing markets, hurting impoverished developing country farmers. The WTO dispute settlement panel also found that the USA misreported certain programmes as ‘non trade-distorting’, when in fact they were trade-distorting................

The

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(ICAC) estimates that subsidies reduce cotton prices by 10% and the World Bank estimates this number at 12.9%.

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This amounts to an annual revenue loss of $147 million to African countries.

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estimates that the removal of U.S. cotton subsidies alone would increase prices 6-14% and thus increase the average household income in West Africa 2-9%-- enough to support food expenditure for 1 million people.

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According to the ICAC, even though the United States may be the leading exporter of cotton, the cost of production is significantly higher than that of other countries.

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The average cost of production of a pound of cotton is $0.80 per pound in comparison to $0.35 in the West African country of

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.

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According to agricultural economics at the

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, the removal of American subsidies would cause a permanent upward shift of the price of cotton.

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As a result, prices would fluctuate around a higher average price.

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Furthermore, farm prices are usually set prior to the marketing season each year, which means that farmers do not always feel the full volatility of the price fluctuations.

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.............

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[SanWenYu]

If trade deficit and surplus doesn't matter, why are people in China so determined to continuously sell more than they buy?

Trade imbalance does matter and is a big issue that has to be addressed one way or other.

But you cannot just blame China for not buying enough. The US, and the EU as well, attach too many polical strings to their trade with China. It has even gone to the point of discriminating.

Trade must be free and fair in both directions.

It'd be rdiculous to demand Chinese to buy more from the US while all Chinese are allowed to get are just soy beans, chicken feets and Boeing jets.

 

[b787]

Buyer preferences is not the issue.The U.S. cotton subsidy program had been distorting/reducing global cotton prices. The subsidy makes it attractive for U.S. cotton growers to continue growing cotton at the expense of other crops.

In terms of production, the USA does not offer any advantage, Brazil has Mercosur, the USA had NAFTA, these trade agreements are designed to avoid tariffs and sell their goods, if the USA wants to sell to Brazil oranges, Brazil impose tariffs taxes to USA grown Oranges.

Trump plans is bilateral agreement in order to select different trade deals that do not include the same goods. However Brazil having Mercosur can work as a Block with Argentina, basically blocking the USA from gaining advantage, if NAFTA is abandoned by the USA, Mexico will buy Beef from Argentina or Brazil why? if the USA imposes taxes of 20% on Mexican goods Mexico will retaliate, so the Beef or Maize the USA exports to the Mexico will get a tax of 20%, since he wants to tax remittances, Mexican workers will not be able to buy goods from the USA and will need to cheaper goods from somewhere else.

So no you forget free trade agreements are both ways, you gain but you have to let gain, Trump will sink the USA economy and will reduce its ability to sell, there is always a response to protectionism, and that is the other side also applies taxes.

Mexico: Government Exploring Trade With Brazil, Argentina

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FEBRUARY 7, 2017 | 15:09 GMT

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Ministers from Mexico and Brazil will meet Feb. 20 in Brasilia to discuss agricultural trade, Brazilian Agriculture Minister Blairo Maggi said Feb. 7, Valor reported. Maggi said that Mexico is now willing to open its market to Brazilian soybeans, pork and beef. There has also been contact between Mexico and Argentina to increase Argentine agricultural exports to Mexico. Mexico is facing

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(NAFTA) and is beginning to explore some new avenues for trade,

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.

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Presidents also boost trade deal with EU
Friday, February 10, 2017
Mercosur partners hope Trump’s protectionism will make Mexico closer to South America
President Mauricio Macri and Brazilian President Michel Temer didn’t sign any significant trade deals in the state visit held in Brasilia last Tuesday but indicated that they would begin to expand beyond Mercosur to find trade partners, taking advantage of the United States’ increasing protectionism.

US President Donad Trump’s moves against Mexico were hailed by Macri, who came to power in 2015 on a business-friendly programme. “This change in scenario will make Mexico turn to the South with more conviction,” Macri said in a statement, after inking a series of small deals with Temer, an unpopular politician deeply implicated in corruption probes in his country.

Macri said he spoke with Mexican President Enrique Peña Nieto to discuss deepening cooperation between Mexico and Mercosur and wished him good luck in his dealings with the United States.

“Mexico represents a great opportunity for Brazil and the region,” said Welber Barral, the former international trade secretary for Brazil from 2007 to 2011. “Mexico is a huge importer of agricultural products and its car industry could complement that of Brazil.”

The trade flow between Latin America’s biggest economies has dropped nearly 10 percent between 2012 and 2016 to US$7.3 billion, roughly the size of commerce between Brazil and Chile.

Both Macri and Temer — who assumed the presidency last year after the impeachment of Dilma Rousseff — also hope that the Mercosur can close a free trade deal with the European Union in talks that have dragged on for more than a decade.

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[tphuang]

Trade imbalance does matter and is a big issue that has to be addressed one way or other.

But you cannot just blame China for not buying enough. The US, and the EU as well, attach too many polical strings to their trade with China. It has even gone to the point of discriminating.

Trade must be free and fair in both directions.

It'd be rdiculous to demand Chinese to buy more from the US while all Chinese are allowed to get are just soy beans, chicken feets and Boeing jets.

i didn't blame China. If you read carefully what I wrote, US has massive deficit with multiple countries. And if they think trade in the current format is not working out and China is taking advantage of situation, then they can try to renegotiate it or have protectionist measure. I personally think they are wrong on the entire currency manipulation debate, but I'm not in the power base.

btw, if you've ever worked at a company that has to do business inside China, you'd see how difficult it is to do business there for a foreign enterprise

 

[antiterror13]

i didn't blame China. If you read carefully what I wrote, US has massive deficit with multiple countries. And if they think trade in the current format is not working out and China is taking advantage of situation, then they can try to renegotiate it or have protectionist measure. I personally think they are wrong on the entire currency manipulation debate, but I'm not in the power base.

btw, if you've ever worked at a company that has to do business inside China, you'd see how difficult it is to do business there for a foreign enterprise

yes it is not easy for foreign enterprise to do a business in China, not only in China ... in most countries honestly.

And I agree that there is alot of improvement opportunity for China, in some ways China is still a developing country (huge) ... China has't utilised the full potential ... imagine if it had (perhaps in 20 years?).

Last year (end of Nov to Dec) we (me, wife and son) had a 3 week holiday in China in a group of 31 people from NZ, USA, Canada, Portugal and Belgium .... China is so impressive and the people looked very happy and in general helpful and polite. I only experienced bad smog in my 1st day in Beijing (cold and no wind), but the following 3 days in Beijing the air is not that bad (windy) ... perhaps is not fair comparing the air quality in China with NZ which is super clean. In other cities (Xian, Chongqing, Jingzhou, Wuhan, Shanghai, Suzhou, Guilin, Yangshuo, Guangzhou, Zhongshan, Zhuhai, Macau and Hongkong) I found the air quality were not bad ... much better than I expected after hearing and reading how bad China air quality was in media.

We also took Yangtze river cruise (4 days) from Chongqing to Jingzhou ... big ship, about 300 ppl, 5 star rating and the service and food are just world class .... it is so amazing that the water quality in Yangtze is clean in most part (over 95%), I would say the water quality in Yangtze is better than in a few rivers in NZ and definitely cleaner than Brisbane river ... it is true based on my own experience .. and I have seen most rivers in NZ. Also Three Gorges dam is so amazing, huge, the capacity of electricity produced there (22,500 MW) is almost 3x the total generation capacity of the whole NZ! We also experienced "ship lock" down 175m... in 5 stages .... amazing experience!

We also visited rural area in China and I can see still huge opportunity there

Comparing people in China, Macau and Hongkong ... very interesting. I see that in general people in China looked happy and helpful even not as rich as the one in Macau and Hongkong, many people in Macau looked depressed and unhappy and people in Hongkong looked so busy and walk very fast, sometime without considering others

Thats my experience ... sorry if a bit OT ... mods, feel free to move it

 

[B.I.B.]

I would say the water quality in Yangtze is better than in a few rivers in NZ and definitely cleaner than Brisbane river ... i

OT
The dirty brown of the Brisbane river. stops people jumping in for a swim on a 40C day as it is infested with the very aggressive Bull Shark. Its not unusual to see people fishing for sharks from river banks and overhead bridges.They put up a fantastic fight when hooked.

 

[delft]

One factor in US trade imbalance is that the US is able to create dollars out of hot air. The huge budget deficits over many years create dollars and banks create dollars and remains of the Bretton Woods system make it necessary for central banks to maintain a reserve in dollars. So those dollars made out of hot air flow to other countries when US use them to import goods and services and to pay for fuel for its navy and air force.

 

[antiterror13]

One factor in US trade imbalance is that the US is able to create dollars out of hot air. The huge budget deficits over many years create dollars and banks create dollars and remains of the Bretton Woods system make it necessary for central banks to maintain a reserve in dollars. So those dollars made out of hot air flow to other countries when US use them to import goods and services and to pay for fuel for its navy and air force.

because oil is priced in US$ ..... so you will need US$ to buy oil.

Huge benefit for the US to have its currency (US$) as the world currency ... when it is over, it would be a disaster for the Americans (most, Trump and his friends won't be) .... very high interest rate and inflation

 

[SanWenYu]

i didn't blame China.

But your words do sound like saying that China have been trying to not import.

If you read carefully what I wrote, US has massive deficit with multiple countries. And if they think trade in the current format is not working out and China is taking advantage of situation, then they can try to renegotiate it or have protectionist measure.

I know, China is not the only target in Trump's crosshairs.

What is "the current format" not working, WTO? I don't know of any bilateral FTA between China and the US. I have not heard that China rejects requests, from any country, for negotiating or renegotiating trade agreements. Chinese would be more than happy to start talking about FTA with Americans. But the political atomsphere in the US has made such hope slim and remote.

In the past decade or so, there have been multiple "Sino-US Economy Summits" (I believe that is the name) where top level officials from both government discuss economical topics. While the summits are not specifically for the trade imbalance issue, it is definitely covered.

There is also the WTO of which both countries are member. The WTO is meant to be a platform for members to resolve disputes. In fact, both Chinese and Americans are no stranger to the WTO's arbitrators.

Before all the communication channels are shut off, I don't know on what legal ground the US can take protectionist measures unilaterally.

It is not that China hasn't suggested that the US lifts up embargoes on hi-tech products to balance the trade. If the US doesn't have much to offer for trade with China, what China can do about it? The American importers are not under gun point when they buy goods made in China.

I cannot figure out what you meant exactly by "China is taking advantage of situation". Can you elaborate?

btw, if you've ever worked at a company that has to do business inside China, you'd see how difficult it is to do business there for a foreign enterprise

Can you be more specific about the difficulties? Are you saying that foreign companies are being pushed out of China by non-business means? I certainly don't think that's the overall picture of the Chinese market to foreign companies.

I worked for American companies for a few years when I was in China. Those companies were enjoying big market shares in China. That might have been due to their unique products and/or the specific sections they were in. And perhaps timings of entering China, too.

That was almost 20 years ago. Now Chinese companies have grown up. Many more foreign companies have entered China since. I wouldn't be surprised that there are some foreign companies, including American ones, started feeling stronger competions from both Chinese and international rivals in the Chinese market.

China has also been tightening up laws and regulations. Doing business in China now has to bear more environmental and social responsibilities. Preferential terms towards foreign companies such as tax breaks and regulation exemptions are disappearing, too.

The Chinese market is maturing. It's no longer the virgin territory. Easy money is a thing of past. Even so, China remains one of the top FDI destinations in the world. I think China got over 100B USD FDI each year for the last few years. A decade or so ago, that number was tens of billions per year. There are also numerous polls of the business leaders recently showing that most of the foreign companies will stay in China.

 

[B.I.B.]

because oil is priced in US$ ..... so you will need US$ to buy oil.

Huge benefit for the US to have its currency (US$) as the world currency ... when it is over, it would be a disaster for the Americans (most, Trump and his friends won't be) .... very high interest rate and inflation

No..... its changing

".......To summarize: Western economic sanctions on Russia have pushed domestic oil producers to settle crude exports to China in yuan just as Russian oil is rising as a percentage of total Chinese crude imports. Meanwhile, the collapse in crude prices led to the first net outflow of petrodollars from financial markets in 18 years, and if Goldman's projections prove correct, the net supply of petrodollars could fall by nearly $900 billion over the next three years. All of this comes as China is making a concerted push to settle loans from its newly-created infrastructure funds in renminbi.

Putting it all together, the PetroYuan represents the intersection of a dying petrodollar and an ascendant renminbi.

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The PetroYuan Is Born: Gazprom Now Settling All Crude Sales To China In Renminbi