Transatlantic Free Trade Zone?

[KrazyHorse]

Originally posted by Arrian
That really is a big deal up there, eh? I know precisely nothing about it (other than you all seem pissed about it).

-Arrian

If a foreign government had stolen 5 billion$ from you and was now generously offering to give 4 billion back wouldn't you be pissed too?

[dannubis]

Originally posted by Wezil
What's the point?

The US only respects the parts of free trade they like. Any parts they don't will be ignored. See softwood lumber 'free trade'.

QFT

See also 'steel free trade'

Europe should be working with the asians instead of "against" them

[BeBMan]

What makes you believe that China will alway be nice and fair?

[LordShiva]

Originally posted by dannubis
QFT

See also 'steel free trade'

Europe should be working with the asians instead of "against" them

Europeans presuming to lecture Americans about free trade

[dannubis]

shut up indian !

pay the children that labour in your factories properly and maybe markets will open up...

[Whoha]

Originally posted by KrazyHorse
Nah. Screw that...

[Dinner]

The original NAFTA was proposed by Eisenhower in the 1950's only instead of meaning the North American Freetrade Agreement Eisenhower was proposing a North Atlantic Free Trade Agreement. The Europeans balked at the idea and France especially prefered to work on a European Free Trade Zone.

[Arrian]

Originally posted by KrazyHorse


If a foreign government had stolen 5 billion$ from you and was now generously offering to give 4 billion back wouldn't you be pissed too?

Stolen?

If a friend, ally, neighbor (say, oh, Canada) had put tarrifs on US goods and then offered to meet us 4/5th of the way in order to resolve the dispute I don't think I'd be all that pissed off, unless perhaps it cost me or someone I knew a job.

Again, not knowing the exact details, perhaps I'm wrong. Canada's position I take it is that the US had absolutely no justification whatsoever for the tarrifs?

-Arrian

[Dinner]

Originally posted by VetLegion
Errr, Mexico?

EU + Canada + US would be smooth though

Mexico would be a bigger economic benifet to a North Atlantic Free Trade Zone then a certain small Balkan country you hail from.

[Colon™]

Ok, now that I have time to elaborate: free trade deals that are restricted in territorial extension are inherently worse than global free trade deals, and may even be worse than no free trade deals at all. Why? Because it may lead to trade diversion rather than trade expansion and this diversion may not favour those that produce a given good most efficiently.

Example: country A can buy hammers from country B and country C. It mostly chooses to buy from country B because they produce those hammers 20% more cheaply. Country A also raises an tariff of 30% to all imports of hammers.
After a while country A and country C decide they want a closer relationship and therefore negotiate a free trade deal that removes all tariffs on the imports of hammers from country C. This means country C is now 10% cheaper than country B and the result is that country B sees its exports of hammers fall, even though they're a more efficient producer.

That's trade diversion, and it makes a mockery of the principle that the most efficient producer should win out, no matter where it's located. Granted a transatlantic free trade zone would be somewhat less worse than a bilateral one, because it involves more producers, but it's still inferior to a global free trade zone. The WTO is dedicated to removing trade barriers world-wide. A transatlantic zone may be good mercantilistic politics but it's not good economics.

[LordShiva]

Originally posted by Colon™
Ok, now that I have time to elaborate: free trade deals that are restricted in territorial extension are inherently worse than global free trade deals, and may even be worse than no free trade deals at all. Why? Because it may lead to trade diversion rather than trade expansion and this diversion may not favour those that produce a given good most efficiently.

Example: country A can buy hammers from country B and country C. It mostly chooses to buy from country B because they produce those hammers 20% more cheaply. Country A also raises an tariff of 30% to all imports of hammers.
After a while country A and country C decide they want a closer relationship and therefore negotiate a free trade deal that removes all tariffs on the imports of hammers from country C. This means country C is now 10% cheaper than country B and the result is that country B sees its exports of hammers fall, even though they're a more efficient producer.

That's trade diversion, and it makes a mockery of the principle that the most efficient producer should win out, no matter where it's located. Granted a transatlantic free trade zone would be somewhat less worse than a bilateral one, because it involves more producers, but it's still inferior to a global free trade zone. The WTO is dedicated to removing trade barriers world-wide. A transatlantic zone may be good mercantilistic politics but it's not good economics.

Exactly. QFT.

Trade diversion

[Dinner]

Originally posted by Colon™
Ok, now that I have time to elaborate: free trade deals that are restricted in territorial extension are inherently worse than global free trade deals, and may even be worse than no free trade deals at all. Why? Because it may lead to trade diversion rather than trade expansion and this diversion may not favour those that produce a given good most efficiently.

Example: country A can buy hammers from country B and country C. It mostly chooses to buy from country B because they produce those hammers 20% more cheaply. Country A also raises an tariff of 30% to all imports of hammers.
After a while country A and country C decide they want a closer relationship and therefore negotiate a free trade deal that removes all tariffs on the imports of hammers from country C. This means country C is now 10% cheaper than country B and the result is that country B sees its exports of hammers fall, even though they're a more efficient producer.

That's trade diversion, and it makes a mockery of the principle that the most efficient producer should win out, no matter where it's located. Granted a transatlantic free trade zone would be somewhat less worse than a bilateral one, because it involves more producers, but it's still inferior to a global free trade zone. The WTO is dedicated to removing trade barriers world-wide. A transatlantic zone may be good mercantilistic politics but it's not good economics.

Given that world trade talks have been killed by Brazil and a handful of other third world countries I don't see your point. Surely, more free trade is better then not having more free trade. Sure, it isn't the ideal solution but it is closer to ideal and that is the right direction.

The biggest road block to this would be ag subsidies. If the CAP and the US subsidy program could be negotiated away then I think this would be not just a great deal but also politically possible.

[atawa]

Originally posted by VetLegion
Errr, Mexico?

EU + Canada + US would be smooth though

Cant we just invite Canada to the EU?

pay the children that labour in your factories properly and maybe markets will open up...

Beats working in an asbestos mine without protection

[Drake Tungsten]

Europe should be working with the asians instead of "against" them

The Asian respect for the niceties of trade will have you running back to the evil Yanks in no time...

[lord of the mark]

Originally posted by Arrian


Stolen?

If a friend, ally, neighbor (say, oh, Canada) had put tarrifs on US goods and then offered to meet us 4/5th of the way in order to resolve the dispute I don't think I'd be all that pissed off, unless perhaps it cost me or someone I knew a job.

Again, not knowing the exact details, perhaps I'm wrong. Canada's position I take it is that the US had absolutely no justification whatsoever for the tarrifs?

-Arrian

Its very complicated. The NAFTA panels generally supported Canada, but WTO panels supported the US position, and the legal questions about the various panels, who had authority, etc were rather complex IIUC. That it ended with a compromise was probably best for all concerned, but certain Canadians like to whine, on the presumption they are 100% right in a complex case. Since the compromise was implemented by a particular Canadian govt, I suspect many opinions about it are tied to internal Canadian politics, among other things.