Retaliatory Duties against US Wine & Spirits

[wollensak]

Heard Federal Trade Minister Jim Peterson on CBC tonight. The WTO has authorized Canada to impose punitive duties on US Wine and spirits producers
to counter the illegal tarriffs on Canadian softwood lumber. The amount is in the billions, equal to the amount the US treasury department has levied against Canadian lumber producers.

Apparently the Europeans are interested in joining forces with the Canucks to give the Yanks a taste of their own.

I kinda doubt this is going to happen. I think it's better if Canadians just quietly take the hint and don't buy US wines and spirits.

I personally have never bought California wines, and frankly, would it really be a sacrifice for Canadians to stop buying the stuff? We did it when France resumed nuclear testing. I know lots of people who participated in that boycott.

Personally, whether or not this has some economic impact is a moot point for me. But when you are getting screwed over by your neighbours it somehow feels appropriate.

[islandboy]

Damm it. I want your cheaper wood! While the wine in you Jordan region is good - terrible soil, limestone, and the escarpment make for surprisingly good (worlds best ice and good dry reds) wine, I want that wood. With prices as they are I am surprised that Canada chose wine when other cheaper comperitors pose a greater problem - at least they would if your LCBO and importers did not emphasize US wine.

[onthebottom]

So, nation-slamming aside, what is the soft wood lumber issue? What is the US position, what is the Canadian position. I can assure you that 95.4% of Americans are not aware of this burning issue.

OTB

[papasmerf]

So what happens if the US does the same to Canadian booze and berr, in return????

[langeweile]

My favorite issue, trade between the USA and Canada.
Both sides do nothing else than protect certain intrest groups within their own country.
While the Canadians are justified complaining about softwood lumber. There is plenty protectionism and hidden subsidice going on within Canada as well.
The muscle flexing on both sides is merely political posturing to score points internally.
The much touted Nafta is a sad excuse for real free trade between the countries.

OTB
The USA has acussed Canada of dumping cheap softwood on to the US market. As a result the USA has slapped tarifs on to Canadian softwood. Canada has appealed to the WTO and has won it's case last year. The USA has not removed the tarifs yet.
Canada wants the tarifs back retroactively, the price tag is $3 Billion dollars. The USA has not done so yet. In return now Canada is threatening to put tarifs on other US products.
Like I said earlier. Canada has a valid point on the lumber, but has certain issues on it's own.

[someone]

So what happens if the US does the same to Canadian booze and berr, in return????

They would not get WTO approval to do this (the WTO is not going to allow them to retaliate against retaliatory tariffs approved by the WTO) so it would be breaking all the rules of the WTO. If they did this, I am sure Canada would be able to go back to the WTO to get approval for more tarriffs in retaliation to the illegal action.

[papasmerf]

They would not get WTO approval to do this (the WTO is not going to allow them to retaliate against retaliatory tariffs approved by the WTO) so it would be breaking all the rules of the WTO. If they did this, I am sure Canada would be able to go back to the WTO to get approval for more tarriffs in retaliation to the illegal action.



I for one an infavor of fair trade not free trade. Tarrifs imposed aginst US goods would result in the US imposing the same tarrifs on similar goods.

[Guy Lafleuer]

I believe the total compensation Canada has asked for is 4.2 Billion. The tarrifs typically go into the US Federal Reserve but under the Bird Amendment, the 4.2 Billion gets paid to the US Softwood Industry. This is contradictory to every other country in the world, and the Bird Amendment has been in dispute with every country who are members of the WTO and NAFTA. Under the agreements ( WTO & NAFTA ), Canada has a right to use tarrifs as a means of solving the differences. As US accusations have been found to be wrong and unfair under these agreements, they ( WTO & NAFTA ) have given there blessings to Canada in order to get this resolved.

Essentially the US has slapped illegal tarrifs on Softwood Lumber and now have to pay the money back.

Now instead of the Softwood Lumber Industry soliciting Congress for there support, you'll have the Wine & Spirits Industry soliciting Congress to get these tariffs lifted.

Partisan Politics as usual. But unfortunate harm and despair for the people working in the Softwood Lumber Industry in Canada for the last 4 years.

Guy

[langeweile]

I wish the USA , Canada and Mexico would make up their mind on this free trade thing. This hybrid thing called Nafta has caused more problems than necessary.
Free trade within the Americas is essential. It is time to s...t or get of the pot.

[someone]

I for one an infavor of fair trade not free trade. Tarrifs imposed aginst US goods would result in the US imposing the same tarrifs on similar goods.

I think that if you understood something about international trade theory, you would see this differently. I don’t mean to be condescending as I realize that a lot of people share your view. Nonetheless, the fact is that 200 years of economic theory proves it is wrong. Fair trade is just another word for protectionism. The fact is that with very few exceptions, protectionism hurts the county practicing it more than anyone else. Tariffs hurt a country more than it hurts their trading partners. It forces their consumers to pay more than they have too (thus reducing their real income) and gives their producers an incentive to produce goods that have a higher opportunity cost than goods the should be producing instead.

[someone]

The USA has acussed Canada of dumping cheap softwood on to the US market. As a result the USA has slapped tarifs on to Canadian softwood. Canada has appealed to the WTO and has won it's case last year.
Previous to that it also had a lot of success with NAFTA tribunal rulings.

[Guy Lafleuer]

I agree with Langweille for the most part but there has to be some kind of middle ground where we can't just go to Mexico and rape the place. I remember seeing a documetary on Mexico and there were barges of US and Canadian garbage being shipped and dumped in Mexico. The locals actually lived on the dump and spent there days digging through the garbage looking for food. And then you've got oil producers in Brazil dumping there untreated waste into the Amazon River. I don't consider myself left wing but someone has to wake up. You can't rip out all the tree's people. That's where oxygen comes from. We can't pollute our lakes and rivers endlessly. I'm all for making a buck but I'd like it if my kids could one day expect to breath clean air and swim in lakes, rivers, Oceans that aren't a potential death trap. Any Free Trade Agreement has to have the ability for a country to say NO. And have the ability to force the heads of corporations to be responsible for the damage left behind. I live in a town where the factory packed up and left. And now we the taxpayers and City Council are trying to figure out how to get rid of this toxic sludge ( that just happens to be 100 yeards from the river ). I'm ranting...gotta go.

Guy

[langeweile]

My definition of free and fair trade is, that we are all producing, buying and selling our goods under the same rules.
This includes fair treatment of workers, objective and logical concerns for the enviroment and no hidden or open goverment subsidies or goverment protectionism. Let the best supplier win.

[papasmerf]

I think that if you understood something about international trade theory, you would see this differently. I don’t mean to be condescending as I realize that a lot of people share your view. Nonetheless, the fact is that 200 years of economic theory proves it is wrong. Fair trade is just another word for protectionism. The fact is that with very few exceptions, protectionism hurts the county practicing it more than anyone else. Tariffs hurt a country more than it hurts their trading partners. It forces their consumers to pay more than they have too (thus reducing their real income) and gives their producers an incentive to produce goods that have a higher opportunity cost than goods the should be producing instead.


Are you always condensending then apoligetic?

I do not support potectionism but rather fair trade. If a tarrif of say 20% is placed on motorized vechicles made in the US by country XYZ. Then mororized vechicles made in country XZY should carry the same tarrif in the US. You seem to support free trade, as long as it is free to you. I on the other hand believe that like for like would in the end create a level playingfield.

[someone]

My definition of free and fair trade is, that we are all producing, buying and selling our goods under the same rules.
This includes fair treatment of workers, objective and logical concerns for the enviroment and no hidden or open goverment subsidies or goverment protectionism. Let the best supplier win.

Politically it is necessary to take into account the concerns you mention. Thus, I am not arguing with you on practical grounds. However, on economic grounds a country is actually better off if others subsidize exports (subject to very few exceptions). It means that taxpayers in another country are subsidizing their consumption. E.g. if foreigners give Americans oil for free or next to nothing, as a country they would be better off (as a whole, those with investments in American oil fields would clearly be worse off). The subsidies may make the world worse off as a whole but generally, the cost will be imposed on the taxpayers paying for the subsidies.

As far as fair treatment of workers, if the country is democratic, I would leave that for each country to decide on their own. Likewise, in matters of local environmental damage, I would leave it to the country in question to deal with (where environmental damage crosses borders, that is a different matter). I am sure that others here will disagree with me on this issue.

[someone]

Are you always condensending then apoligetic?

I do not support potectionism but rather fair trade. If a tarrif of say 20% is placed on motorized vechicles made in the US by country XYZ. Then mororized vechicles made in country XZY should carry the same tarrif in the US. You seem to support free trade, as long as it is free to you. I on the other hand believe that like for like would in the end create a level playingfield.

The tariff you speak of is making country XYZ worse off. By imposing their own tariff, Americans will be making themselves worse off. When you get right down to it, the economic argument for free trade is a unilateral one. If the intend of the U.S. tariff is to encourage free trade by country XYZ (as is the case of the tariffs on American wine and spirits approved by the WTO) things are more complicated. To the extend that the deterrent effect of such tariffs do encourage free trade, there is an argument that can be made in favour of them. However, it is not clear that they do have a deterrent effect. If they don’t, Canadian consumers are paying more for American wine and sprits for no reason. If they do have a deterrent effect, things are different.

[papasmerf]

The tariff you speak of is making country XYZ worse off. By imposing their own tariff, Americans will be making themselves worse off. When you get right down to it, the economic argument for free trade is a unilateral one. If the intend of the U.S. tariff is to encourage free trade by country XYZ (as is the case of the tariffs on American wine and spirits approved by the WTO) things are more complicated. To the extend that the deterrent effect of such tariffs do encourage free trade, there is an argument that can be made in favour of them. However, it is not clear that they do have a deterrent effect. If they don’t, Canadian consumers are paying more for American wine and sprits for no reason. If they do have a deterrent effect, things are different.


So you agree that country ABC is wrong in requiring X% ABC content in many of the goods sold there or be subject to terrif? And you view this as protectionist?

[someone]

So you agree that country ABC is wrong in requiring X% ABC content in many of the goods sold there or be subject to terrif? And you view this as protectionist?

In general, yes they are wrong in the sense they are hurting themselves by making their consumer pay a higher price than necessary and giving producers and incentive to divert production away from things they should be producing.. There are actually a lot of examples of this type of trade restriction in Canada both in cases of international and interprovincial trade. For example, for a long time most provinces had rules that to sell beer in the province you had to operate a brewery in the province. I think that there are still provinces that do this. At the international level, in most countries processed goods usually have higher tariffs than unprocessed goods. There are many examples that that type of protectionism that you can come up with in all countries and generally they are “wrong” to use your word.

[onthebottom]

Somehow I think it's better if you cut down your trees than if we cut down ours.

OTB

[someone]

papasmerf and other "fair traders" my be interested in the following famous argument against protection that argues against it by taking the protectionist arguement to its logical exterme:

http://bastiat.org/en/petition.html

[papasmerf]

papasmerf and other "fair traders" my be interested in the following famous argument against protection that argues against it by taking the protectionist arguement to its logical exterme:

http://bastiat.org/en/petition.html



Fair trade is not protectionism. But rather let us say that XYZ country has a 20% tarrif on cars made in the US. In return we place a 20% tarrif on cars made in XYZ. But on the flip side country QRS does not impose a tarrif on cars made in the US. In return we have no tarrifs on cars made in QRS. This creates a level playingfield. Not protectionism. Protectionsism is for example country ABC requiring x% ABC content in goods sold inside ABC or face tarrifs.

[someone]

Fair trade is not protectionism. But rather let us say that XYZ country has a 20% tarrif on cars made in the US. In return we place a 20% tarrif on cars made in XYZ. But on the flip side country QRS does not impose a tarrif on cars made in the US. In return we have no tarrifs on cars made in QRS. This creates a level playingfield. Not protectionism. Protectionsism is for example country ABC requiring x% ABC content in goods sold inside ABC or face tarrifs.

The technical term for what you are talking about is reciprocity. As I said before, such retaliation is only useful if it indeed encourages free trade. Otherwise the U.S. is strictly worse off. I’m not going to argue about whether or not it works but I will say that you should be very much in favour of Canada imposing tariffs on American wine and sprits as the intent is the same.

Moreover, as far as your example is concerned, you should not that in general it is only in cases were there is a lot of two way trade in the same commodity that you can impose the tariffs on the same good. For example, if the U.S. imposed tariffs on Kuwaiti oil, the would have to find something else to impose their tariffs. This lead to the horrible possibility of retaliation on retaliation getting out of hand as happened in the 1930s in response to the American passage of the Smoot-Hawley Tariff Act. It is in order to prevent a repeat that the WTO has careful guidelines for the retaliation.

Anyway, it is interesting to hear that you support the tariffs on American wine and spirts.

[langeweile]

Goverments supporting industries with the sole purpose of keeping them alive or giving them a financial edge is a form of protectionism as well.
I wonder if taxbreaks should fall under the same category.

[papasmerf]

Goverments supporting industries with the sole purpose of keeping them alive or giving them a financial edge is a form of protectionism as well.
I wonder if taxbreaks should fall under the same category.




Agreeied and that in and of itself hurts business by preventing competition

[papasmerf]

The technical term for what you are talking about is reciprocity. As I said before, such retaliation is only useful if it indeed encourages free trade. Otherwise the U.S. is strictly worse off. I’m not going to argue about whether or not it works but I will say that you should be very much in favour of Canada imposing tariffs on American wine and sprits as the intent is the same.

Moreover, as far as your example is concerned, you should not that in general it is only in cases were there is a lot of two way trade in the same commodity that you can impose the tariffs on the same good. For example, if the U.S. imposed tariffs on Kuwaiti oil, the would have to find something else to impose their tariffs. This lead to the horrible possibility of retaliation on retaliation getting out of hand as happened in the 1930s in response to the American passage of the Smoot-Hawley Tariff Act. It is in order to prevent a repeat that the WTO has careful guidelines for the retaliation.

Anyway, it is interesting to hear that you support the tariffs on American wine and spirts.



Actually I like canadian beer better. But not purchased here in the US:cool:

[great bear]

So, nation-slamming aside, what is the soft wood lumber issue? What is the US position, what is the Canadian position. I can assure you that 95.4% of Americans are not aware of this burning issue.

OTB

The burning issue is thus: Canadian men can make wood but American men can't! :p

[Magister]

The burning issue is thus: Canadian men can make wood but American men can't!

However, it's very frustrating when you have wood but nowhere to put it :D

[onthebottom]

The burning issue is thus: Canadian men can make wood but American men can't! :p

Ah, now the soft part makes sense!

OTB