It’s fairly typical of the ridiculous neo-mercantilist thinking that seems permeate all discussion of trade and, AFAICS, nearly always has and probably always will. It basically amounts to the EU asking the WTO for permission to hammer the US over a fairly ridiculous trade-policy that, in the final analysis, harms US consumers and may well drive down prices for the EU’s own consumer constituency (insofar as that organization _has_ a constituency.)

Pretty much par for the course. :^)

Bernard Guerrero

The WTO ruled in January last year that the Byrd Amendment was illegal, and it still hasn’t been repealed. Furthermore, the EU must go again to the WTO to get permission to have retaliatory sanctions. It seems to me that the WTO process if very slow at getting things done - the USA should have got rid of the Byrd Amendment last year.

As I’ve argued elsewhere the EU should seek to reform the WTO, to get decisions implemented quicker, and if that doesn’t work, the EU should leave the WTO and form its own trade organisation.

Sorry, the URL in the last article should have been
http://www.cabalamat.org/weblog/art_193.html

Ergo, Phil, you’re upset that there hasn’t been more of a rush to lower the price-menu I’m exposed to and raise your own. Your altruism is touching and greatly appreciated, if unlikely to be returned. :^)

Bernard Guerrero, Rabid Consumerist

Bernard,

I’ve no idea what a “price menu” is, but I would have thought repealing the Byrd Amendment would increase wealth (and lower prices) in both the USA and EU. You disagree?

On repealing the Byrd Amendment, this perhaps applies:

“the thesis of Jeffrey Frankel that the parties have switched places, with Democrats becoming the party of fiscal responsibility, free trade, competitive markets, and minimal government, while the Republicans have become the party of trade restriction, big government, and interventionist economics.” http://www.lewrockwell.com/tucker/tucker30.html
and the link to Frankel’s paper at: http://ksghome.harvard.edu/~.jfrankel.academic.ksg/Republicans%20and%20Democrats%20Have%20Switched.PDF

From a recent policy announcement of the Bush administration, it seems Jeffrey Frankel should have included Federal support for Marriage Counselling on the Republican agenda as well, but then:

“Market forces are also threatening psychoanalysis. Of the roughly 15 million people in therapy in the US, few have the time or money for a treatment that typically lasts years and calls for as many as five one-hour, $100 sessions a week. Many patients - and all health insurers - favor short-term psychotherapies that target specific problems rather than delving deeply into a patient’s past. Two popular approaches are cognitive-behavioral therapy, which seeks to alter unwanted habits of thought and behavior, and interpersonal therapy, which focuses on patients’ current relationships with others.” - from: http://www.nichols.edu/faculty/davis/py151/Freud.htm

I think I’m beginning to understand …

Phil,

I refer to “price menu” rather than “price level” because the extent of distortion caused by the Byrd Amendment is likely to be greater for select goods and pretty minimal for the general price level as a whole.

“I would have thought repealing the Byrd Amendment would increase wealth (and lower prices) in both the USA and EU. You disagree?”

I disagree with half of it, in the short term. Any tariff placed on imports to the US will raise the prices that I, as a consumer, encounter. A removal of such impediments will likely lower them. However, the _immediate_ effect of removing Byrd (or any other tariff) would be to _raise_ prices for the specific goods affect in the exporting nation.

Let’s take a European example, say, Bordeaux wines. Assuming that the local wine-growers have a good deal of capital tied up in the fixed costs of wine production and so are loathe to lower volume in the short to medium, it means that there is excess Bordeaux floating around the EU and that the price for Bordeaux is artificially low. When the tariff gets dropped, EU consumers are suddenly placed in competition for Bordeaux with US consumers who have been paying inflated prices for Napa Valley wines, and the EU price goes up. The short to medium term gains from increasing imports to the US from the EU go to the US consumer and the European producer. Gains to the European consumer must come, perforce, from freeing up _imports_.

Therein lies the silliness of the arguments usually presented by both sides. In this case, EU pols will claim that they’re striking a blow for European exporters while US pols will claim that they’re keeping out “unfair” competition or keeping the wily Europeans from stealing a march on us or some such. In both cases, they are arguing for the actions most directly harmful to their own consumers and most helpful to their supposed opponent’s. The fact is, the EU’s consumers would benefit most from a _unilateral_ opening to imports, regardless of US actions. Likewise on the US side. The idea the imports are “bad” while exports are “good” is just neo-mercantilist claptrap designed to benefit a minority of producers (usually relatively well-heeled, whether factory owners or unionized factory workers) at the expense of the majority of folks who just use the product in question.

You can see, I hope, that your own thinking is at least a bit tinged with this poison. You look to setting up a new organization to replace the WTO if actions that benefit Europe’s _exporters_ aren’t implemented quickly enough. This would benefit the average European not at all. He or she, under the current twisted terms of debate, benefits only if the US is active in “cracking open” European markets that a rational European should want opened voluntarily in the first place. And vice versa, of course.

Bernard