WTO to place sanctions on US
- Thread starter charrison
- Start date
Targeted tax breaks are illegal, because they are no different than subsidies.
Tax break to a specific corporation/industry is the same as keeping taxes same and giving a corporation a subsidy.
I don't think they are comlaining about the overall corporate tax rates in the US, but about tax breaks specifically targeted towards certain industries to make them more competitive.
P.S.
By illegal I mean against WTO rules. If US doesn't like WTO rules, it can quit WTO.
Tax break to a specific corporation/industry is the same as keeping taxes same and giving a corporation a subsidy.
I don't think they are comlaining about the overall corporate tax rates in the US, but about tax breaks specifically targeted towards certain industries to make them more competitive.
P.S.
By illegal I mean against WTO rules. If US doesn't like WTO rules, it can quit WTO.
It appears the Extraterritorial Income Act is not targeted. It is designed to keep us more competitive in foreign markets as US companies are subject to foreign taxes as well.
Seems to me that's exactly what they are targetting. Is it that hard for Americans to play by the rules? Free Trade usually means "free trade", not "free trade as long as it doesn't hurt us".
Tell me, when the WTO rules that US tarrifs on canadian lumber and foreign steel are illegal (most likely case), how will you spin it then? Another "commies want to hurt our freedoms" type of thread?
We have steel tarriffs for the same reason Canada has steel tarrifs.
We have lumber tarrifs for the same reason.
Do a little bit of research and you will see that the US is trying to protect its steel industry.
The fact is that the US steel industry can not compete with the European, Korean, Brazilian, ... steel industry so Bush decided to impose restrictions on the import of foreign steel etc ...
The US steel industy failed to modernize in recent decades so they are in big problems when they have to compete on the world market.
The US is a member of the WTO and has to follow the rules of the WTO. It's that simple.
As usual, some americans in this forum see this as another "anti-USA" thing but in reality the EU has also been slapped by the WTO. It's also funny that these members are also the same people who are yelling "free trade" and " free market" and "less govt" in other threads but they fail to see that their beloved Bush administration is imposing these restrictions. They are so blinded by the big american flag that is wrapped around their head that it's becoming pathetic.
The fact is that the US steel industry can not compete with the European, Korean, Brazilian, ... steel industry so Bush decided to impose restrictions on the import of foreign steel etc ...
The US steel industy failed to modernize in recent decades so they are in big problems when they have to compete on the world market.
The US is a member of the WTO and has to follow the rules of the WTO. It's that simple.
As usual, some americans in this forum see this as another "anti-USA" thing but in reality the EU has also been slapped by the WTO. It's also funny that these members are also the same people who are yelling "free trade" and " free market" and "less govt" in other threads but they fail to see that their beloved Bush administration is imposing these restrictions. They are so blinded by the big american flag that is wrapped around their head that it's becoming pathetic.
This is my pet hate - when free-trade only applies in one direction. The steel industry is the most public problem at the moment. What happens when an industry is uncompetative?
Most of the rampant capitalists out there would say - uncompetitive industries change or go under - such is the way of it - except it seems when it comes to the US steel industry. In that case it appears ok for the goverment to continually shore up that industry to make it competitive with the foreign markets. If we continually apply that logic then the EU governments could start throwing money at the aeronautical industry - that way maybe airbus could eventually become much cheaper than boeing. That would be fair don't you think?
Cheers,
Andy
Most of the rampant capitalists out there would say - uncompetitive industries change or go under - such is the way of it - except it seems when it comes to the US steel industry. In that case it appears ok for the goverment to continually shore up that industry to make it competitive with the foreign markets. If we continually apply that logic then the EU governments could start throwing money at the aeronautical industry - that way maybe airbus could eventually become much cheaper than boeing. That would be fair don't you think?
Cheers,
Andy
- Mar 20, 2000
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the US needs the steel industry for its own strategic interests. but the companies themselves can't modernize their plants, they don't have the money to do it. the feds can't modernize it for them (the same gov't that paid for the more modern steel mills built in europe and japan after wwii, btw) or they're in breech of WTO regs and get slapped with billions in trades sanctions. damned if you do, damn if you don't. subverting free trade when vital national interests are at stake is a perfectly valid idea.
Fine. I understand that perspective. Just remember to send the compensation cheque to the EU for the money its losing due to this "necessary" policy. Also, remember not to complain too hard when the same thing happens accross the pond in another industry.
For the whole steel industry to be both uncompetitive and unable to find enough money for any modernisation from within I find highly sceptical. Could some mills not close and use the money saved to modernise others? It's how all the other businesses manage?
Cheers,
Andy
you mean the help we procide to japan and europe 45 yrs ago is still consider modern compare to US mills? How old is US steel mills? and if it strategically important why doesn't the feds enforce the modernization?
yeah, just as long we don't complain when we get slap by sanction...we help create WTO, maybe we should have put your idea in one of the rules....
WTO rule xvii ch 21 part 1
- it's ok for member of WTO to subvert the foundation of free trade rules when their own vital national interest is at stake. It's even recommended that they break the rules
Well you are wrong. Those modern steel mills in Europe you are referring to are not the steel mills built with American money after wwii. The modernization of the European steel mills and the reorganization of the european steel industry as a whole happened mostly in the 7O's and 80's. There were massive strikes (especially in Germany) and violent clashes between union workers (IG Metal) and police. The whole reorganization coincided with the closure of the coal mines in western-europe. So the modernization of the european steel industry was not paid by the USA (because it happened in the 70's and 80's). The US failed to modernize during that period and are left with outdated, inefficient steel mills.
FACT: the US is not playing by the WTO rules
- Mar 20, 2000
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Originally posted by: cpumaster
you mean the help we procide to japan and europe 45 yrs ago is still consider modern compare to US mills? How old is US steel mills? and if it strategically important why doesn't the feds enforce the modernization?
yeah, just as long we don't complain when we get slap by sanction...we help create WTO, maybe we should have put your idea in one of the rules....
WTO rule xvii ch 21 part 1
- it's ok for member of WTO to subvert the foundation of free trade rules when their own vital national interest is at stake. It's even recommended that they break the rules
only 1 steel mill has been built in the us since wwii. all the steel mills in europe and japan were built after wwii. its not simply a question of modernizing the ones we have, its that most of them would need to be completely demolished and rebuilt. the feds can't force the steel mills in the us to modernize because no one can pay for it. the steel industry doesn't have enough money left anywhere to pay for it. 30 steel companies have gone bankrupt since 1997. its not simply mismanagement at a handful of companies. if a company isn't as competitve as others in its market its not going to have as much money as other companies in its market. so where would they get the money for new capital?
frankly having a sanction slapped on you is double punishment because it costs extra to support a non-competitive industry.
Their is yet another perspective. Why should the EU partially pay for this (as any tax subsidy the US steel industry gets will lead to loss of EU steel trade and therefore loss of EU money)? Why not just stop having large tax cuts in the US and use some of that money to help fund the modernisation of the essential steel industry? That way US taxpayers are paying for what the US finds essential.
Cheers,
Andy
Cheers,
Andy
There are several issues happening here.
1. No one complains that Canada has steel tarifs to protect their steel industry from dumping in the industry. This provide the time need to consilidate and modernize.
2. The steel tarrifs are temporary, so by the time WTO makes a decision this tariff could be gone. I think this is a 3 year tarrif.
3. The steel industry is not exactly here for national defense as only 1% of steel is used for that. But it is a good idea to keep steel production local.
4. This is costing the US as well in higher prices on steel products. From what I understand it is costing us jobs as well. The steel industry is not losing jobs as bad, but other industry is losing jobs because they cheap imported steel they were using, have turned into cheap imported finished products.
This is not a simple problem, nor does it have simple solution.
Well, I agree with you that "one rule for all should apply". It should also be noted that these fines aren't just about steel - but also other industries listed in the article.
Will it be extended given the economy isn't looking great at the moment? What about the other industries?
I was responding to the above posts where the steel industry was deemed essential to the point of "the normal rules shouldn't have to apply".
I don't quite see. Cheaper imports allow US companies to produce cheaper products. Is that bad?
THe WTO to which the US is aligned probably doesn't see it that way. Nor do those trying to compete legitimately. As I said in another post above - how would the US react if an ailing airbus started getting huge tax breaks so to compete with boeing?
Cheers,
Andy
example: SIDMAR (Sidérurgie Maritime) -- Belgian steel mill.
a little bit of history:
from the begin of the industrial revolution the heavy industry in Belgium was concentrated in the south of the country because of the proximity of the coal mines (cokes). These steel mills were rebuilt (with American help) after wwii. In the 60's they realized that with the closing of the coal mines in the south, the steel mills in the south were becoming inefficient (transport costs for the cokes). So they started with the construction of a new steel mill near the belgian coast (this is the 60's -- 20 year after wwii - the new steel mill was financed by ARBED of luxembourg-owner of the steel mills in the south, so no american money!!). Throughout the 70 and 80 there were reorganizations. Divisions of the mills in the south were closed and production of the coastal mill increased. The site grew from 211 ha to 624 ha through the years. They also had a continued investment in the coastal mill to modernize it. The reorganization continues until today!!! . ARCELOR (merger of Aceralia, Arbed and Usinor -- now the largest steel producer in the world) has decided a few months ago to CLOSE down the its last mill in the south and continue with the production at the coastal and modern mill.
This is just one example but you did see the same evolution in Germany (closing of mills in the Ruhr area and relocation to sites with easier acces to the sea).
like I said before, the US failed to modernize its steel mills in the 60, 70, 80 and pay a heavy prize for it. The old american steel mills can not compete.
Also, when Bush started with the protection of the US steel industry he made a mistake. There was the problem that the US could not provide in the production of high quality steel (used in the carindustry etc...). After a few months, the Bush administration had to back down because some parts of the US industry were in problems. They could not import the necessary products and the US steel industry was not capable of providing the necessary steel in big enough quantities because they lacked the necessary tools to produce it. Do some research and you will see that I'm right.
US-Japan steel war escalates
"
...
The US industry has spent $50bn on modernisation in the past 20 years and laid off more than 300,000 employees - almost three-quarters of the workforce.
Its productivity of less than four man-hours per ton of steel is better even than in Germany and Japan.
But a protectionist past has resulted in the US industry being slow to consolidate, while the "big is beautiful" trend has swept the rest of the world.
...
"
Does anyone else see a danger in the trend of the industries to merge and merge into one or two large companies that dominate the market?
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