Wednesday, April 21, 2010

Wednesday Quick Hits

There's been a flurry of noteworthy activity over the last couple days, so let's get right to it:
  • Spreading your and my wealth to the world's cotton farmers.  As I noted a week ago, the United States avoided about $830 million in Brazilian trade sanctions by giving Brazil's cotton farmers about $150 million in annual hush money"technical assistance," instead of just eliminating the WTO-illegal US cotton subsidy programs that caused the whole mess in the first place.  Well, apparently USTR wasn't content with bribingsubsidizing only Brazilian farmers because it announced today that this slush fund can also provide US taxpayer money to farmers in Africa, Haiti, and, well, everywhere else.  So instead of reforming our own bloated ($2.8 billion/year), trade-distorting and WTO-inconsistent farm subsidies, we've decided to just subsidize everyone on the planet.  Problem solved!  Final note: Inside US Trade reports that Brazilian retaliation levels will balloon to more than $1 billion later this year, based on 2009 US subsidy amounts and the standard WTO calculation methodology.  Oh, goody.
  • And speaking of Brazil and awful American subsidies....  BNA reports (subscription) today that Sens. Chuck Grassley (R-IA) and Kent Conrad (D-ND) introduced new legislation (S. 3231) to extend through 2015 a whole host of ethanol subsidies (volumetric ethanol excise tax credit, or the blenders' credit; the small ethanol producers tax credit; the cellulosic producers tax credit) and the 54-cent-per-gallon tariff on imported ethanol.  NRO's Kevin Williamson sums up this awesome subsidy/tariff combo best: "Ethanol users are paying a tax penalty to provide a tax break to ethanol producers.  How does that make sense, if using ethanol is a good and worthwhile thing that we want to encourage?  It does not make sense.  Government logic: Ethanol is so important, so green, and so wonderfully job-creating, that we have to give it enormous tax subsidies to maximize the benefits of using it.  And it is so very important… that we have to use punitive import tariffs to keep Americans from maximizing the benefits of using it, if the profits are not captured by our political constituents."  Nice.  The only thing Kevin leaves out, however, is that Brazilian producers of low-cost, cleaner-burning sugar ethanol are howling mad at this development, and justifiably so.  First, as I mentioned a while ago, new US renewable energy standards had given sugar ethanol preferred status in the US biofuels market, something Brazilian producers were very excited about.  Second, Brazil earlier this month announced the elimination of its own tariff on imported ethanol as a good faith sign of support for free global trade in biofuels.  So in one fell swoop, the Grassley/Conrad tariff destroys the benefits of point 1 and spits in the face of point 2.  Classy.
  • Senators Schumer and Graham were, unsurprisingly, unavailable for comment.  The US-China Business Council released today its annual report on US exports to China, broken down by state.  The USCBC press release notes that 19 states exported over a billion dollars in American products in 2009, and that "China is the third-largest US export market, after Canada and Mexico, with $69.6 billion in sales during 2009, down just 0.2 percent over 2008--by far the best record for a major US export market in 2009.  US exports to the rest of the world combined fell nearly 20 percent in 2009."  Cato's Dan Griswold adds, "The USCBC figures tend to undercut complaints that China’s currency policies have stymied U.S. exports to that country.  In fact... since 2005, U.S. exports to China have been growing three times faster than our exports to the rest of the world."  I'd only add that, according to the USCBC study, New York (home to Sen. Chuck Schumer) exported $2.44 billion to China in 2009, second highest ever, and South Carolina (home state of Sen. Lindsay Graham) exported $869 million in the same year, the most ever for that state.  No wonder these guys want to start a trade war with China!  Oh, wait....
  • Great news!  US international labor negotiations will be run by long-time AFL-CIO director!  Wait, what?  The Hill reports (emphasis mine) that "Cathy Feingold has been named by the AFL-CIO as its new director of international affairs, beginning June 1.  She follows Barbara Shailor, who is headed to the State Department to serve as special representative for international labor affairs."  Some of Shailor's past work can be seen here and here.  As you can see, she'll be an unbiased American advocate for free trade, economic growth and global development.  Or not.  (More on the new American approach to trade and labor standards is available here.)
  • And finally, a Cotton/Farm subsidy palette cleanser to make you feel a tiny bit better about America.   Just so you leave here tonight with the warm-fuzzy knowledge that not everyone on Capitol Hill is willing to disregard global trade rules because he/she's in the bag for American agribusiness, I give you this great video of Rep. Jeff Flake (R-AZ) (h/t Andy Roth):



    See?  They're not all bad... and Jeff Flake's definitely one of the good ones.
That's all for tonight, folks.

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