Thursday, September 17, 2009

The "buy American" backfire and ther WTO trade considerations

U.S. Chamber of Commerce report says 176,800 jobs could be lost in the US b/c of Buy America policy. The main reason argued is because other countries could implement local/national procurement rules of their own that would erase any gains for U.S. companies.

The USCC report adds that if retaliation escalates, losses could be even deeper.

According to the Chamber of Commerce president Thomas Donohue “Buy American may be the best illustration of how such policies can sound good – but in fact, hurt the very workers and industries they are supposed to protect”.

Indeed, in a world that is complex and intertwined, including the economic and trade systemics, policies have more potential for "misfiring" or even backfiring, I would add.

According to the USCC President, the way to get other countries to buy American products “is through an open trading system where consumers, not the government, decide what they are going to buy”.

Indeed. But that does not nevertheless mean that there are not many countries members of the WTO even, that put up technical and admin and even cultural or complex/multi-dimensional barriers to access to their consumers - markets to companies from other WTO members.

And, in effect, force foreign companies to use intermediaries, either from a choice of private ones, or in some cases, state owned ones.

Which brings us again, IMO, to the issue of WTO based trade and its bugs and flaws. WTO rules are an advancement compared to decades past, one that came over many rounds of GATT trade talks. Yet, in spite of the huge progress, the current situation is not "stable", IMO. The world IMO needs much progress in WTO rules and their application or "back to basics". The current situation is irrational, unfair and un-balanced IMO. And not understood by people, on top of it (too complicated).

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