On Sat, 15 Nov 2003 02:25:48 GMT, "Ed Huntress"
wrote:

"geoff merryweather" wrote in message
.. .
On Fri, 14 Nov 2003 13:53:13 GMT, "Ed Huntress"
wrote:


If you followed the course of that discussion, no one here was
complaining
about trade with NZ until Geoff made some silly statement to the effect
that
the US is the "most protectionist country in the world," or something
like
that. In fact, our tariffs and quotas are among the lowest in the
developed
world. That's why we're running a $460 billion deficit.

And all I did was point out that balance of trade figures are cyclical
and as in the past you will be ahead again one day. If you are worried
then get out and do something to improve your export figures, don't
just slap on tariff's.

No, I would say the EU would be amongst the most protectionist in the
world. The US is somewhat hypocritical however, wanting free access
without returning the favour.

What you actually said, on Oct. 16th, is " The US is one of the most
protected markets in the world. Geoff

Which is patently untrue. Take a look at the average tariff figures in the
WTO stats and you'll see that the US has among the lower tariffs, as well as
some of the lowest non-tariff barriers. As for "returning the favor," the
trade-balance figures make clear that you're off base on that, as well.

I interpret Geoff's "returning the favour" as asking for the US to
refrain from imposing tariff's at the drop of a hat. We don't and we
ask that you don't either.
There is no reason why trade between two countries needs to be
balanced in any calendar year. If we sell more to the US but you sell
more to Aust and Aust sells more to us, then whats the problem. Add a
few more countries in there and things even out. The only problem is
if you consistently end up in the red, but then your dollar falls and
so you are more competitive and you get your act together and your
exports increase again.

It wouldn't be so grating if it wasn't for the fact that NZ is running a
relatively large trade surplus at the same time he was complaining.

Well, the US has a large population (both physically and numerically
:-)with lotsa money and a "consumerism" culture . It is hardly
surprising they import lots of stuff. Expecting other, poorer
countries with smaller populations to buy an equal quantity is
unrealistic.

No problem. You said you favored that offsets idea. Buy what you can from
us, and we'll buy the same amount from you. That will keep your exports in
line with what you can afford to import. Fair enough?

We can afford to import more from you but there are other countries
also vying for our business, and if you aren't marketing to us or if
your products are too expensive or if they are badly designed then
we'll buy from someone else. Simple as that.
Your suggestion above would involve a massive bureaucracy to monitor
trade flows in and out, and issue licenses. We don't have that level
of regulation.

More to the point, if you want to reduce the trade
deficit, get out and sell stuff. It is a world market, and you have to
be competitive,and unfortunately, in my experience, US companies are
largely domestic focused, and don't realize there is a world outside
the US borders.

The most interesting thing to me in this discussion is the insular,
parochial view you (and perhaps the other New Zealanders) have of what's
really going on in world trade. Geoff, the US is the world's largest
exporter of goods, and the world's largest exporter of services. We "get out
and sell stuff" quite a lot; a lot more than any other country.

You are the world's largest exporter in dollar terms but that is
meaningless. You have a large population, large landmass and lots of
natural resources. Of course you export lots. What is more meaningful
is the value of goods and services as a percentage of GDP. The WTO
gives NZ exports as 32% of GDP in 1992 and US as 23.6% in 1996. If you
can find more recent figures I'd be interested to see them but I don't
think you can accuse us of not knowing about world trade.

As far as parochialism goes, check out the percentage of US citizens
who have never left your boundaries as compared to other countries. I
recall seeing the figure for your national politicians as being only
about 40%, I'd be very surprised if ours was less than 100%. I think
you can expect the general population to be proportionately less than
that in both countries.

As for being competitive, we have (according to the World Bank and other
sources) the most efficient and productive manufacturing in the world.

You just did an interesting switch here. I wonder if you recognize it.
You're living in a country with a gross national income of about 1/3 that of
the US, per capita, so your ability to buy is low, and your costs of
manufacture are also low, despite a poor capital infrastructure. Then you
say the US should try harder. Try harder at what, to sell products to a
country where incomes are a fraction of ours? It's a waste of time and
money.

Well don't complain that we don't buy enough of your products. We have
the whole world to choose from.

My guess is that most of the readers here don't know much about New
Zealand's economy, and it would be useful here to inset a capsule summary.
This is from Nationmaster, and I think it was written in late '01 or early
'02:

"Since 1984 the government has accomplished major economic restructuring,
transforming New Zealand from an agrarian economy dependent on concessionary
British market access to a more industrialized, free market economy that can
compete globally. This dynamic growth has boosted real incomes (but left
behind many at the bottom of the ladder), broadened and deepened the
technological capabilities of the industrial sector, and contained
inflationary pressures. While per capita incomes have been rising, however,
they remain below the level of the four largest EU economies, and there is
some government concern that New Zealand is not closing the gap. New Zealand
is heavily dependent on trade - particularly in agricultural products - to
drive growth, and it has been affected by the global economic slowdown and
the slump in commodity prices."

Actually the move from depending on access to Britain as a market
started in the sixties when Britain joined the then EEC. 1984 onwards
led to the floating of the dollar, freeing up money flow in and out of
the country and the sale of some government owned operations.
The description of NZ as an agrarian economy in 84 is "interesting".
:-)

A little explanation: New Zealand had a post-colonial economy until the
mid-'80s, at which time it decided to join the developed world. Tariffs were
high, foreign investment was low, and the country had neither the resources,
the technology, nor the economic structure necessary to grow into the world
economy on its own.

I think perhaps you need to widen your sources of information!

The NZ government took some very brave action to change this situation, and
they have had considerable success. One of the major steps was to slash
tariffs, although most of that occurred over the past six years. Their
tariffs on manufactured goods are now about the same as those of the US:
averaging the last few years, we're both at about 4% actual, average tariffs
on goods, and both of our tariffs are dropping (although you have a
moratorium on any more reductions until your economic policymakers do an
evaluation in 2005).

The obvious difference between NZ and the US is that we have not had
any tariff's considered by and judged illegal by the WTO. The only
tariff I can recall being imposed recently was against Korean
whiteware manufacturers who were clearly dumping product here.

The evaluation happened this year, the tariff reductions are to
continue, beginning 2005 as previously planned.

Because NZ is so dependent on ag exports, it also dropped ag tariffs to
1.8% -- as a tactic to leverage lower tariffs from its trading partners more
than anything, because the effect of lower tariffs on ag *exports* is many,
many times the effect on ag *imports*. The purpose was to gain freedom to
increase ag exports, in other words. It is one of the lowest ag tariff rates
in the world. It was a smart move.

Another thing the NZ government did was to actively solicit foreign
investment (US investment is only 13% of the total). They also encouraged
high-technology workers to move to NZ, to boost the technological base of
industry. Thus, a good deal of the industrial infrastructure is now
foreign-owned. The benefit to NZ, in both job production and in improving
the standard of living, has been high, and the government is encouraging
even more of it.

One benefit of foreign investment in commercial enterprise is that the
benefits nearly ALWAYS exceed the value of any profits that are taken out,
at least while a country is developing its technological base. Without the
foreign investment, there would have been no returns to take out in the
first place, because the jobs and the economic output wouldn't be there,
either. (This is vastly different from the foreign investment being made in
US government securities, for example, which saddle us with future tax
liabilities.) The only problem with this will come if you maintain a high
rate of foreign ownership *after* you've developed into a world leader in
industrial efficiency, and if your growth rate slows down for an extended
period while that is going on.


Many US sourced products are uncompetitive in the
world market anyway.

Right. That's why we have higher levels of exports than any country in the
world.

See my comments above regarding GDP.

A couple of things I have tried to source from
the US in the past include plastic resin (HDPE, PP and other commodity
plastics, and some engineering plastics), fan motors (3* the cost of
our Taiwanese supplier, 2* the Spanish and even more expensive than
the overpriced Germans) and impellers. Don't bleat if you can't
compete.

Apparently your anecdotal example proves that the WTO world trade data is
all wrong. g

No, but it may explain why you are rightly concerned by the US
performance.
I could add an anecdotal piece about working on a piece of US
manufactured equipment this last week but I don't think it's worth the
effort.

Finally, complaints about trade deficits are a bit thin, when it
doesn't include repatriated profits.

So, if you don't like it, don't accept the foreign investment. Do you have
an objection to the foreign investment in New Zealand? Do you believe that
those investors shouldn't take out profits? And, most importantly, how does
that investment replace jobs or economic activity that you had going on
before?

Actually it was you who was complaining about trade deficits. I
believe Geoff was pointing out that if you total your export receipts
to us, and repatriated profits from here, then you are in the black.
Not usually a thing to complain about.

Obviously, it doesn't, or NZ wouldn't be welcoming all of that investment.
When you run big trade deficits, however, you *may* experience job losses
and other problems. That's where the US is right now -- not because of NZ,
of course, but because of the aggregate numbers.

And the constructive solution is to improve your performance, not
impose tariff's like the steel one which is the topic of this thread.

The lamb tariff's I referred to the other day are an interesting
example of some thinking in the US. I think you'll agree that sheep
meat is not a large selling product in the US. When it became obvious
that the US sheep farmers had succeeded in getting government support
for the tariff, the NZ lamb marketing company approached the US
industry body and suggested they form a joint venture to actually
raise the profile of sheep meat in the US and grow the market. A win
win situation for both parties. The US farmers weren't interested. As
predicted the tariff's were judged illegal and eventually removed, and
the US farmers are still where they were, struggling.
..
Again, if you'll track the course of this discussion, no one here was
bitching about the trade situation with NZ until you started bitching that
the US was "protectionist" and unfair to small countries, all the while
you're running a half-billion-dollar trade surplus with the US. It isn't
that NZ is an annoyance that's on our minds all the time. It's just the
grating reaction we have when a country that's already running a surplus
with the US says they want more, and that we're "hypocrites" for not giving
it to them.

As I said before, I think you are misinterpreting. We don't want more
exports to the US unless we can win the sales openly and fairly.
Slapping tariff's on at your whim is being hypocritical because you
profess to be against them.

Regards
Malcolm
--
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