A WTO ruling today, against Airbus, is bound to throw fat on the protectionist fire, no matter who wins the election.
If you think Hillary scores better than Trump on trade issues, you are mistaken. They are equally bad.
Please consider WTO Gives Boeing Lift With Airbus Ruling.
The EU has failed to eliminate billions of dollars in illegal aid to Airbus, according to the World Trade Organisation, handing US rival Boeing one of the biggest triumphs on the global stage in its 12-year battle with the European aircraft maker.
The WTO also found Airbus’s newest passenger jet, its popular A350 which competes head to head with Boeing’s 787 Dreamliner, would never have flown without the “direct and indirect effects” of past EU subsidies.
Washington, which claims the WTO ruling applies to some $22bn in illegal aid, hailed the findings as a “sweeping victory” that would redress years of damage to the US aerospace industry from wrongful European subsidies.
The row has long been one of the most contentious battles in the global trade system. The dispute reached a head in 2010 and 2011 when the WTO ruled both Boeing — which won government money through contracts for defence and space business — and Airbus — which received aid to launch many aircraft repayable only if they were profitable — had collected billions in unlawful assistance.
Thursday’s ruling determined the EU failed to comply with the 2011 order to unwind the illegal assistance within six months. If the ruling stands, the US would have the right to impose tariffs on any goods imported from the EU; Washington has threatened levies totaling $10bn.
Thursday’s ruling is expected to be followed next year by a similar determination over whether the US has unwound its aid to Boeing. The WTO is also weighing the EU’s claim against tax breaks granted Boeing by Washington state.
The WTO ruling comes as tensions between the EU and US have already hit one of their highest levels following Brussels’ order for Apple to pay up to €13bn in back taxes to Ireland, plus interest. Deep divisions over a transatlantic trade deal have added to the strain in EU-US relations, with little prospect that they will strike a deal this year as planned.
Subsidies? Sure
Undoubtedly the WTO ruling on subsidies is correct. Undoubtedly the US is guilty as well, and in more ways than one: tax breaks are obvious.
But what about constant warmongering that leads to bigger and bigger defense contracts. What about the fact that trillions of dollars of spending vanishes without a clue where it went?
For details, please see 16,000 Files Vanish: Inspector General Says Army Has No Idea How It Spent $6.5 Trillion.
Where did the money go? No one knows precisely, but we do know a bit about cost overruns.
For example: Boeing Racks Up Another $393M In Cost Overruns On KC-46 Program.
In theory, Boeing is supposed to eat those cost overruns? Do they? What about $640 toilet seats? That story goes back to 1985, but the pentagon made headlines with of $640 toilet seats, $660 ashtrays, $7,600 coffee-makers, and $74,000 ladders.
In 2011, Boeing charged the Army $1,678 apiece for rubber cargo-loading rollers that actually cost $7 each.
In 2012, Sen. Tom Coburn (R-Okla.) slammed $68 billion in frivolous Pentagon spending: “Using defense dollars to run microbreweries, study Twitter slang, create beef jerky, or examine Star Trek does nothing to defend our nation,” said Coburn.
In 2013, The military and VA are found to have spent $1.3 billion on a failed health records system for vets. That’s after the Pentagon already spent $2 billion on an unsuccessful upgrade of its electronic medical records system.
Those items are from a 2013 report called The Long, Expensive History of Defense Rip-Offs.
Subsidies, Direct and Indirect
So there are subsidies, and there are hidden subsidies in the form of waste and graft and lies and theft (with the Pentagon purposely turning a blind eye). Competitive bidding? Hah!
The EU-US bickering is a classic example of the pot calling the kettle black.
What to Do About It?
The ideal solution is not tit-for tat tariffs, but the end the graft, end the waste, and end the subsidies. Free trade will benefit the first nation that tries it, regardless of what any other nation does.
Unfortunately, the most likely thing is a destructive round of counterproductive tariffs by the US on the EU, then the EU on the US.
You can already see the start of tit-for-tat responses with EU tax rulings against Apple, partially in response to US fines on Volkswagen.
For my take on Apple, please see Apple Grab: How Should Ireland and US Respond to EU €13 Billion Ruling Against Apple?
Clinton Proposed Trade Prosecutor
For all the fearmongering against Trump’s trade policies, there is every indication that Clinton would be just as damaging.
On August 11, Clinton Pledged a Tougher Line on Trade.
In her address, Clinton promised to create a new position of trade prosecutor and to triple the number of enforcers as she responded to Mr Trump’s hard line agenda on trade and his claims that countries such as China and Mexico have gained an unfair advantage over the US.
Can You Tell Trump, Clinton, Sanders Apart?
Inquiring minds may wish to consider Hillary Sounding Suspiciously Like Trump On Trade.
Finally, please consider my previous quiz of the day: Donald Trump, Bernie Sanders, Hillary Clinton – Who Said It?.
When it comes to trade, don’t just blame Trump. They are all wrong, and to similar degrees.
Mike “Mish” Shedlock
Free trade is something only found in a text book. It is kind of the equivalent of a gun free zone.
It works great until you face the reality of the world and human behavior.
That reality is that free and fair trade doesn’t exist and never will. All trade must be negotiated.
And the gun free zone is effective until someone with a gun shows up!
“Free trade is something only found in a text book.”
And the reason for that:
“When buying and selling are controlled by legislation, the first things to be bought and sold are legislators.” – P. J. O’Rourke
Eliminate graft? Then our Federal Government end…. What a great way to sweep decades of regulations out of the way.
Early salvo? … DOJ $14 billion fine on deutsche bank?
got popcorn?
What about +/- zero pct interest big companies are paying. Subsidies by the population.
The common man needs a free and fair “stealth” market for goods and services, one that is outside government control and regulation, outside multinational corporate influence, impervious to global banks and their medium of fiat exchange and is a direct competitor to the mainstream economy.
It is not a ‘black’ market, it is invisible to all who don’t belong.
It is a secret market similar to the off-books derivative accounts of the banking elite but it is for us, the people. How can this be created?
But no one on this blog ever blames Trump, so what gives?
I have written some pretty nasty things about Trump, both here and elsewhere although not recently. I don’t like his past use of government authority in attempts to seize other people’s property under eminent domain laws. The Vera Coking and Michael Forbes cases are well documented. Eminent domain makes my blood boil, especially when it’s directed homes people have lived in for decades and don’t want to leave.
Nevertheless, Hillary means (nuclear) war with Russia so I’d prefer she lose – without my having to vote.
Woot,
Does it make any sense to vote for Gary Johnson? Political adviser Dick Morris says not to “throw away” your vote and a choice must be made between Donald and Hillary.
Morris knows the Clintons better than anyone and he’s all in for Trump. I don’t know what I’ll do, maybe just sit it out.
Hillary is Corrupt, Bernie and Trump are not, or at least much less so. It is really that simple. So even if Hillary and Trump say the same thing on trade, their actions and the consequences for the USA will be radically different. That is what this election is about.
Parsing words and missing candidate actions, neglects half the equation. Trade Prosecutors provide Hillary extensive leverage to collect contributions (money, bribes, graft, gifts, call it what you want) to the Clinton Foundation. Donors to the Clinton Foundation will not be prosecuted, and will be rewarded (crony capitalism). Hillary has an extensive track record in this regard; take a look at her last job as USA Secretary of State. Of course, Hillary is not the first USA Secretary of State to use the office for monetary gain. But Hillary will use the White House in the same very Self-Serving ways. Corrupt and Immoral to the max, exceed only by her War Mongering and Libyan Killing Fields. If people either like or cannot recognize a totally Corrupt and Immoral politician, then the USA is in bigger trouble than anyone can imagine.
Mike Pence admires Cheney tremendously. I am a fiscal conservative, but a social liberal. I love Jesus, but dislike his fan club.
The Pence quote surprised me, too, but mainstream media (e.g. Washington Post) also reported that Trump Urged Assassination of Hillary, which was simply not true. Put simply, I do not trust the reporting, as it is less about the truth than political propaganda to further an objective (defeat Trump, elect Hillary). In context, Pence meant being active rather than as useless and do-nothing as a bowl of “warmed over spit” (FDR VP, Garner, on VP role). But of course, we associate Cheney with War Mongering. Pence will undoubtedly get grilled on that in the VP debates, and will need to clarify what he meant.
In Gore debates with Bush II, Bush II said he though Jesus was his most admired politician. By association, if you like Jesus than you will love Bush II.
You cannot have “free trade” with a fiat currency, so I assume you will also require exchanges in commodity money and limit credit (fractional reserve banking included).
At Tom Woods, I noted if there was a mercantilist country, we would get all the goods, and they would get all the gold, but there would be inflation and deflation respectively that would end in equilibrium. How would we get goods if we had no gold (and no promises based on nonexistent gold)?
That is just one point. In a horribly distorted abortion of an economy that is interfered with everywhere, having some narrow “free trade”, even if true and not merely cronyism, is still not technically “free trade” by any rational definition.
Airbus may be the only thing holding the EU together.